Financial Statements 01.

Statement of Profit or loss and

02. Statement of financial position
Elements of FS 03. Statement of changes in equity
04.Statement of Cash flows
01. Income 05. Notes to A/c's
02. Expenses SOPL & OCI

03. Equity SOCIE

04.Assets
05. Liabilities SOFP Accounting Equa
f Profit or loss and OCI 01.Statement of Profit or loss and O
of financial position
of changes in equity Revenue
f Cash flows Less: Cost of Sales

Gross Profit

Add: Other Income

(Investment Income- Interest, Divide
Accounting Equation- Assets= Equity + Liability (Profit on sale of NCA)
( Rental Incomes, Discount Received

Less: Administrative Expenses

Less: Selling and distribution Costs

( Any Cost directly incurred to sell th
Ex: Commission, Carriage outwards,
Delivery Costs, Packages, Installation

Profit before Interest and Tax

Less: Finance Cost

(IAS-23, IFRS 16, 9 ,15,37)

Profit Before Tax

Less: Income taxes ( IAS-12)

Profit for the year

Other Comprehensive Income

Revaluation surplus- Gain

Total comprehensive Income

of Profit or loss and OCI

Cost+ Profit= Sale

( Op stock+ Purchases-Closing Stock)
Margin is a perce
(Margin) Gross Profit/ Revenue*100
Sales- 100%
Profit margin of 20
come- Interest, Dividend Income)
of NCA) Cost- 80% + Profit
es, Discount Received)
150 Sales Value
strative Expenses
Sales
and distribution Costs Profit
ectly incurred to sell the goods) Cost
on, Carriage outwards,Advertising costs,
, Packages, Installation

Interest and Tax (PBIT) PBIT/ Revenue *100

(Operating Profit) Margin

16, 9 ,15,37)

axes ( IAS-12)

( Equity- Retained Earnings)

ehensive Income

rplus- Gain (Equity- Reserves and Surplus)

hensive Income
Cost+ Profit= Sales Cost+ Profit= Sales

Margin is a percentage applied on Sale value Mark-up is a percentage applie

Sales- 100% Cost- 100%

Profit margin of 20% Profit Markup- 25%

Cost- 80% + Profit -20%= Sales 100% Cost-100%+ Profit 25%= Sales 12

150 Sales Value Profit margin - 20% Sales Value- 150

100% 150 (80*150/100) Cost 100%

20% 30 Profit 25%
80% 120 Sales 125%

02. Statement of financial position

Equity and Liability
ASSETS
Equity
Non-Current Assets Share Capital
PPE (Property plant and equipment) Sahre Premium
Investment Property Retained Earnings
Intangibles Reserves and Surplus
Financial Asset ( Investments) Other Equity Component(
Right- to use asset
Non-Current Liabilities
Current Assets
Inventory Debentures, Loan notes an
Receivables Redeemable Pref Shares
Cash and Cash Equivalents Bank Loan
Prepayments Lease Liability
Contract asset Deffered Income
Right to receive the goods
Current Liabilities
Total Assets
Payables
Accruals
Short term loans
Contract liability
Lease Liab, Def tax
Def Income
Refund Liability
Bank overdraft, Current ta

Total Equity and Liabilit

percentage applied on cost

rofit 25%= Sales 125%

Profit mark-up- 25%

120 (100*150/125)
30
150

and Liability

Premium
ed Earnings
es and Surplus
Equity Component( IFRS-9) 03.Statement of Changes
urrent Liabilities

ures, Loan notes and Stock Op Bal

mable Pref Shares
Issue of Shares
(Full MP & Rights)
ed Income
Issue of Shares
nt Liabilities (Bonus)

Profit for the year

erm loans Prior period errors

ct liability
Liab, Def tax Excess Depreciation

Liability Dividends
verdraft, Current tax
Revaluation
Equity and Liability
Impairment Loss

Inc in Def tax liab

Convertible Loan Notes

Clo bal
03.Statement of Changes in Equity
Share Capital Sh Premium

Op Bal 1000 1000

Issue of Shares 1000 1000

(Full MP & Rights)

Issue of Shares
(Bonus) 1000 -1000

Profit for the year

Prior period errors

Excess Depreciation

Dividends

Revaluation

Impairment Loss

Inc in Def tax liab

Convertible Loan Notes

Clo bal 1000 1000

Retained Earnings Reserves and Suplues Other Eq Comp

1000 1000 1000

-1000

1000

1000/-1000

1000 -1000

-1000

1000/-1000

-1000

-1000

1000

1000 1000 1000

06.Dividend Calculation & Rights issue
Untill Sep 4 Shares 200000

Rights issue 1 Shares 50000 $1.20 50000*$1= Share Capit

50000*$0.20= Share Pr
After Sep 5 Shares 250000

Dividend Calculation

Before Rights 200M Shares * 4 Cents 8000

After Rights 250M shares * 3 Cents 7500

Total Dividend Payments 15500

Working Notes

01.Revenue

Revenue- 7800 Receivables-7800

130%

Cost of Sales- 100%

6000

02. PPE
Land and Building
CA -1st April 20x6 20000

Depn- Building
(rem UL-15 years)

Depn-Plant 20% RBM

CA-31st March 20X7 20000

174000

Revaluation Surplus 6000

Revalued Amount 180000

03.FV Measurement Clo bal

FV- 12500/1200*1296 13500
Dr- Investments 1000
Cr- FV gain 1000 (SOPL)
50000*$1= Share Capital
50000*$0.20= Share Premium
10000 04. Fraud

4000- Receivables- have been received and stolen

Dr- Retained Earnings 1500

Dr- SOPL 2500
Cr- Receivables 4000

05.Tax

Def tax liability

Dr- Revaluation surp
Op bal 19200 Dr- SOPL-Income ta
Cr- Def tax laib
Inc in Def tax
(10000*20%) 2000
RS - TTD 6000*20%
Clo bal 21200 SOPL- TTD 4000*2

Current tax liab- Current year tax estimation

Dr- Income tax Exp 11400

Cr- Current tax laib 11400
01. Reduce profit b
02. Reduce Profit b

De-Recognise Revenue 03. Profit will Incre

Receivables-7800 04.Retained earning
Dr- Revenue 7800
Cr- Receivables 7800 05. Def tax liab - SO

De-Recognise Cost of Sales 06. Dividend Payme

Dr- Inventory 6000

Cr- Cost of sales 6000

Land and Building Plant

165000 180500

-11000

-36100

154000 144400
eived and stolen

Dr- Revaluation surplus 1200

Dr- SOPL-Income tax exp 800
Cr- Def tax laib 2000

RS - TTD 6000*20%
SOPL- TTD 4000*20%

tax estimation
01. Reduce profit by 1800, Dec Receivables by 7800,Inc inventory- 6000
02. Reduce Profit by 47100(11000+36100) Depn, Revaluation surplus- OCI 6000,
CA of Land and buildings- 180000 & Plant 144400- SOFP
03. Profit will Increase by 1000, Investment will appear as 13500- SOFP
04.Retained earnings will reduce by 1500, Profit will red by 2500
overall receivables will reduce by 4000
05. Def tax liab - SOFP- 21200, Red RS by 1200, Profit by 800(Def tax), Profit red by 1140
Current tax- SOFP- 11400
06. Dividend Payments 15500 Reduce RE

02.Statement of Changes in Equity

Share Capital Share Premium

Bal at 1st April 20x6 200000 30000

Rights issue 50000 10000

Fraud

Revalauation gain

Def tax liab

Re-Calculated Profit

Dividend Payments

Clo bal 250000 40000

(8 Marks)
s- OCI 6000,

ax), Profit red by 11400( Cr tax)

(8 Marks)

(4 Marks)
Premium Retained Earnings Res & Surplus

12300 18000

-1500

6000

-1200

49600

-15500

44900 22800
03.Lease Liability

Right - of use asset= Lease Liab+Intial Deposit

25000- Leased Plant= (x)+2000

Lease Liab- Initial Measurement- 23000

Op bal Eff ROI @ 10% Less: Lease Payments Clo bal

23000 2300 -6000 19300

19300 1930 -6000 15230

Lease Liab 19300 NCL- 15230

CL-4070

04. Fraud

4000- Receivables- have been received and stolen

Dr- Retained Earnings 1000

Dr- SOPL 3000
Cr- Receivables 4000

05.Tax

Current year tax estimation

Dr- Current tax Refund (asset ) 2400

Cr- Income tax exp ( Refund) Income in SOPL 2400

Current Tax- Dr -800 ( Under Provision)

Dr- Income tax exp 800

Cr- Current tax (Liab) 800

Def tax Liab

Op bal 3200
Dr- Def tax liab 200
Dec in def tax liab -200 Cr- Income tax exp 200

Clo bal 12000*25% 3000

Working Notes

01.Rights issue

Suspense A/c Bal- Cr 13500 Correct Entry

Dr-Cash 13500
Rights issue Cr- Share Cap 9000
Cr- Share Prem 4500
Ordinary sh capital 45000
Shares 50cents each Actual Entry
Dr- Cash 13500
No -of Shares 45000/0.50 90000 Shares Cr- Omitted (Suspense

Rights issue was 1 for 5 @ $0.75

90000/5*1 18000 Rights issue @ $0.75 13500

02.PPE
Property Leased Plant
CA as at 1st April 20x6
(48000-16000) 32000 25000

Revaluation surplus 4000

Revalued amount 36000

Depreciation
Property - Rem UL 8 years -4500

Leased Plant- Lease term 5 years -5000

Plant and Equip-RBM 20%

CA as at 31st March 20x7 31500 20000

Transfer of Excess Depn Original Depn

Cost- 48000 /12 yrs 4000

New Depn- 4500

Excess Depn- 500
Dr- Revaluation Surplus 500
Cr- Retained Earnings 500
Tax
Refund 2400
Exp- -800
Cr- Exp 200

1800
01.Suspense A/c will get canceled, Share Cap inc by
& Share Prem will inc by 4500
Correct Entry 02. Total Depn (4500+5000+2800)12300 will be adde
Dr-Cash 13500 CA of Property- 31500, Leased Plant - 20000 & P&E
Cr- Share Cap 9000 Revaluation surplus (4000- Excess Depn 500)3500- S
Cr- Share Prem 4500
03.Finance Cost 2300, LL NCL- 15230 , CL 4070
Actual Entry
Dr- Cash 13500 04.Retained earnings will reduce by 1000, Profit will
Cr- Omitted (Suspense A/c Bal)13500 overall receivables will reduce by 4000

Rectified Entry 05. Income tax refund- Cr entry in SOPL 1800, Def
Dr- Suspense A/c 13500 Current tax asset- 2400- SOFP Assets
Cr- Share cap 9000
Cr- Share Prem 4500

Plant and Equipment

(47500-33500)
14000

-2800

11200
celed, Share Cap inc by 9000

2800)12300 will be added to Cost of sales,

sed Plant - 20000 & P&Equip 11200- SOFP
Excess Depn 500)3500- SOFP, Inc of 500 Retained Earnings

CL- 15230 , CL 4070

duce by 1000, Profit will red by 3000

will reduce by 4000

ntry in SOPL 1800, Def tax liab Clo bal - SOFP- 3000
2400- SOFP Assets