Problem 1:
The Trial Balance of XYZ Ltd at 30 June 2012 as follows:
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Debit
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Credit
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Ordinary Share Capital (1 500 000 shares)
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$2 125 000
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General Reserve (1/7/10)
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350 000
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Retained Earnings (1/7/11)
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209 000
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Revaluation Reserve (1/7/10)
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120 000
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Mortgage Loan
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100 000
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Bank Loan
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87 000
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Accounts Payable
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264 000
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Provision for Employee benefits(long-term)
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150 000
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Deferred Tax Liability
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6 000
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Allowance for Doubtful Debts
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75 000
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Accumulated Depreciation-Plant
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19 000
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Accumulated Depreciation-Office Furniture
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1 700
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Accumulated Depreciation-Buildings
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5 000
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Land (at cost)
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$ 423 000
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Factory Building (at cost)
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500 000
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Available-for-sale financial assets
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301 400
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Accounts Receivable
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1 085 900
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Plant (at cost)
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180 000
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Inventory
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1302200
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Office Furniture (at cost)
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12000
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Goodwill
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400 000
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Cash at Bank
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300 000
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Employee benefitexpense
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25 000
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Sales
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3 461 000
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Proceeds from sale of plant available-for-sale financial assets
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93 800
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Carrying amount of available-for-sale financial assets sold
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50 000
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Raw materials and consumables used
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2 166 200
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Changes in inventories of F. Goods & work in progress
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6 200
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Other expenses (excluding depreciation but including interest exp $31 000 on bank loan and mortgage)
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327 000
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Total
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$7 072 700
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$7 072 700
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Additional Information:
a) Depreciation is to be provided for:
Plant $18 000
Office Furniture 1600
Buildings 5 000
b) The estimated total tax expense relating to profit or loss items only for 2011 is $400,000, consisting of $300 000 for the current liability and $100 000 as a deferred tax liability
c) Final dividends of 4c per share were declared by directors
d) Directors decided to transfer $20 000 from retained earnings to general reserve.
e) Following expert advice, the directors decided on 30 June 2011 to revalue the land and factory buildings to reflect current fair values. Consequently, directors placed a value of $600 000 on land and $700,000 on the buildings.
f) An increase in fair value of $15,000 for available-for-sale financial assets on hand at 30 June 2011 is yet to be recognized.
g) The revaluation reserve balance at 1 July 2010 includes $14 000 (net of deferred tax) resulting from an increase in the fair value of available-for-sale financial assets. Of this amount $3,500 relates to the available-for-sale financial assets sold during the year.
h) Company Tax rate is 30%.
Required:
Based on the above information, Prepare & analyse the following statements in accordance to the requirements of AASB 101:
1. A comprehensive income statement for XYZ ltd for the year ended 30 June 2012
2. A statement of financial position for XYZ ltd as at 30 June 2012
3. A statement of changes in equity for XYZ ltd for the year ended 30 June 2012.
Problem 2:
a) A ltd is a catering company specialising in providing catering services to remote area mine sites. Its main theatre of operations is Australia but during the current year the company acquired significant long-term contracts in Pakistan and Nigeria.
AASB 114 Segment Reporting requires entities to disclose material geographical segment information but A ltd has failed to comply with this requirement
Required:
Discuss whether the non-disclosure of information about operations in Pakistan and Nigeria would be material.
b) The statement of financial position of W ltd as at 30 June 2011 includes an asset 'Debenture money receivable $500,000 and a liability 'Debenture $500 000'. Note 12 to the accounts reveals that the issue of the debentures to a private investor was approved by the board of directors on 28 June 2011 but the debenture issue did not take place until July 2011.
Required:
Comment on the accounting treatment of the debenture issue in accordance with the requirements of the AASB 110.