problem 1: Bandana Ltd has an authorized share capital of 750 000 Rs 1 ordinary shares. On 31 December 2009, the given balances were extracted from its books:
The given information is relevant:
1) Stock on hand at 31 December 2009 amounted to Rs 114 500
2) Provision for bad debts is to be adjusted to 2 percent of the outstanding debtors as on 31 December 2009
3) Provision is to be made for:
a) Audit fee Rs 10 000
b) Depreciation on leasehold land and buildings at 5% on cost, plant and machinery 10% on cost and motor vehicles at 20% on cost.
4) The directors wish to transfer Rs 100 000 to general reserve and propose a final dividend of 10%
5) Administrative expenses comprise insurance payments of Rs 20 000 that cover a 15 months period to 31 March 2010.
6) The company is being sued for Rs 190 000 in respect of costs occurring from the expiration of a lease on a property formerly occupied by the company. The company’s legal advisers are of the opinion that the company will not be held liable for this amount.
Make the following financial statements for the year ended 31st December 2009 for Bandana Ltd in accordance with IAS 1 Presentation of the Financial Statements:
A) An Income Statement.
B) A Statement of Financial Position (Balance Sheet) showing the statement of changes in equity.
problem 2: As per IAS1, preparation of financial statements is based, inter-alia, on the given concepts:
a) The Matching concept
b) The Consistency concept
c) The Prudence concept
d) The Concept of Materiality
In brief describe any two of the above-mentioned concepts.