FIJI NATIONAL UNIVERSITY

COLLEGE OF BUSINESS, HOSPITALITY AND TOURISM STUDIES

SCHOOL OF ACCOUNTING
ACC803 ADVANCED FINANCIAL REPORTING
TRIMESTER 1 2017
Tutorial Topic 2

Question 1
ABC Limited is a manufacturer of tennis equipment and fashion wear. The statement of financial
position as at June 2013 and details of expenses and revenues for the year ending 30th June are
as follows:
Statement of comprehensive income ( extract) for the year ended 30 June 2013
2013 2012
($000) ($000)
Income
Sales 31394 27346
Dividends 51 47
Expense
Bad debts -90 -85
Cost of sales -28205 -24611
Doubtful debt -35 -40
Inventory written off -50 0
Provision for warranty -314 0
Depreciation
-Buildings -40 -40
-Plant and equipment -100 -60
Interest -315 -418
Rent -600 -600
Salaries and wages -1324 -1231
Finance charges -7 -90
Profit before tax 365 218
Income tax -215 -90
Profit after tax 150 128
Additional Information
An additional investment of $80000 is acquired for consideration of tennis equipment
costing $80000
Land is devalued against a previous increment in the revaluation reserve. The previous
increment is fully reversed.
Plant and equipment with a cost of $700000 and accumulated depreciation of $500000
are revalued to $1000000 during the year.
Plant and equipment with a fair value of $25000 is acquired under finance lease. The
residual is guaranteed by the lessee.
Plant and equipment is sold for $20000 cash. Cost is $68000 and no profit or loss is made
on the sale.
During the year, one line of wooden tennis equipment is scrapped at a loss of $50000, as
there is little demand for this range.
During the year, an investment is made in an associated company, Squash Pty Ltd.
Consideration is $1000000, funded by cash of $250000 and the balance by the issue of
500000 shares at $1.50 per share. The purchase agreement includes a clause stating that if
profits exceed $110000 in the first financial year after purchase, additional amount are
payable amounting to $50000
Rent expense of $600000 is accrued within accruals
Interest expense is paid during the year, and dividends are received
Salaries and wages expense includes the expense for employee entitlements
The tax rate is 30%

Required:
Prepare the statement of cash flow in accordance with IAS7 for the year ending 30th June 2013.
Comparatives are not required.

Question 2

The summarized general ledger trial balance of XYZ Limited, a manufacturing company for the
year ended 30th June 2013 is detailed below:
 DR CR
Sales of goods 4469000
Interest Income 6000
Cost of goods sold 2987000
Distribution expenses 86000
Sales and marketing expenses 820000
Adminstration expenses 252000
Interest expenses 44000
Other borrowing expenses 4000
Income tax expense 85000
Cash on Hand 4000
Cash on deposit, a call 150000
Bank overdraft 50000
Trade debtors 450000
Allowance for doubtful debts 14000
Other debtors 93000
Raw materials 188000
Finished goods 714000
Listed investment( available for sale)225000
Land and buildings 257000
Accumulated depreciation - Buildings 36000
Plant and euipment 1260000
Accumulated depreciation - Plant and equipment 564000
Patents 45000
Goodwill 870000
Bank Loans 66000
Other loan 570000
Trade creditors 510000
Employee benefit provisions 93000
Warrenty provision 37000
Current tax payable 25000
Deferred tax liability 135000
Retained earnings, 30th June 2012 326000
Dividends paid 150000
Land revaluation reserve 50000
Investment revaluation reserve 42000
Share Capital 1691000
$ 8,684,000 $ 8,684,000
Additional Information
Share issues during 2010 were $120000
Share capital was $1541000 at 30th June 2012 of the $150000 dividends, $30000 was
reinvested as part of a dividend reinvestment plan
The balance of the land revaluation reserve and the investments revaluation reserve at 30
June 2012 were $15000 credit and $35000 credit respectively
The following revaluations were recognized during the year ended 30 June 2013: Lan
revalued upward by $50000 ( related income tax $15000) and available for sale
investment revalued upward by $10000 (related income tax $3000)
XYZ Ltd uses the single statement format for the statement of comprehensive income
and classifies expense by function.
The available for sale investments are held as part of a long term investment strategy
$30000 of bank loans is repayable within 1 year
$110000 of bank loans is repayable within 1 year
Employee benefit provisions include $62000 payable within 1 year.
The warranty provision is in respect of a 9 month warranty given on certain goods sold.
The bank overdraft facility is subject to annual review and could be withdrawn.

Required:
Prepare the statement of financial position, statement of comprehensive income and statement of
changes in equity of XYZ Limited for the year ended 30th June 2013 in accordance with the
requirement of IAS1.

THE END