Newsurf Ltd, has been manufacturing and selling surfboards for the last two years. Newsurf Ltd commenced operations on 1 July, 2017 by issuing 500 000 $3.50 shares, payable in full on application. There were no share issue costs.
For the year ending 30 June 2019, the company recorded the following aggregate transactions:
| Accounts | $ |
| Sales | 5 385 000 |
| Interest income | 11 000 |
| Cost of Sales | 3 409 000 |
| Gain on sale of plant | 25 000 |
| Employee benefit expenses – Admin | 136 000 |
| Depreciation expense- Admin | 54 000 |
| Selling & Distribution Expenses | 932 000 |
| Insurance expense – Admin | 60 000 |
| Doubtful debts expense | 5 000 |
| Interest expense | 38 000 |
| Other borrowing expenses | 4 000 |
| Income tax expense | 268 000 |
The following additional information was noted during the preparation of financial statements for the year ended 30 June 2019:
- On 1 July 2018 an additional 100 000 fully paid shares were issued and fully paid to raise $400 000.
- A cash dividend of $180 000 was declared and paid during the 2019 financial year and a final dividend for 2019 of $90 000 was proposed but not recognised in the financial statements.
- Inventory was measured at the lower of cost and net realizable value.
- Buildings, plant and equipment were measured at cost. The benefits were expected to be received evenly over the useful life of the asset.
- Land was revalued upward by $100 000 (related income tax for this transaction was $30 000). The revaluation gain will not be reclassified and has been recorded in the ‘Land Revaluation Surplus’. The valuation was conducted by the registered valuer, Fair Valuations Pty Ltd.
- Financial assets held for trading are equity investments that are held for the purpose of selling and short-term profit taking.
- $35 000 of other loans are repayable within 1 year.
- $90 000 of bank loans are repayable within 1 year. The remaining amount is payable in full at the end of 2023.
- The provision for employee benefits includes $47 000 payable within 1 year.
- The warranty provision is in respect of a 12-month warranty given on certain goods sold.
- The bank loan is for 5 years and repayable in full at the end of the term. The interest rate is 9% and it is secured over the land.
- NewSurf Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and classifies expenses by function within the statement.
- Summarised account balances are provided below:
| Year-end balances, 30 June 2019 | $ |
| Accounts receivable – trade | 977 000 |
| Allowance for doubtful debts/ impairment | 12 000 |
| Bank Overdraft | 86 000 |
| Cash on Hand | 15 000 |
| Cash on deposit, at call | 442 000 |
| Other receivables | 77 000 |
| Raw Materials inventories, 30 June 2019 | 176 000 |
| Finished goods inventories, 30 June 2019 | 726 000 |
| Land | 416 000 |
| Buildings | 160 000 |
| Accumulated depreciation – buildings | 45 000 |
| Plant and equipment | 1 350 000 |
| Accumulated depreciation – plant and equipment | 495 000 |
| Patents | 46 000 |
| Accumulated amortisation of patent | 5 000 |
| Goodwill | 910 000 |
| Financial assets held for trading | 215 000 |
| Bank loans | 110 000 |
| Other loans | 527 000 |
| Accounts payable- trade | 535 000 |
| Provision for employee benefits | 88 000 |
| Provision for warranty | 67 000 |
| Current tax liability | 65 000 |
| Deferred tax asset | 34 000 |
| Retained earnings, 30 June 2018 | 796 000 |
| Share Capital | 2 150 000 |
| Dividends paid | 180 000 |
| Land revaluation surplus | 228 000 |
Required:
For the year ending 30 June 2019 (NOTE: comparative financial statements are not required),
- Using the pro forma table supplied in appendix B, prepare a preliminary trial balance for Newsurf Ltd;
- Prepare a statement of comprehensive income for Newsurf Ltd in accordance with the requirements of AASB 101. Newsurf Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and classifies expenses by function within the statement.
- Prepare a statement of changes in equity for Newsurf Ltd in accordance with the requirements of AASB 101;
- Prepare a statement of financial position for Newsurf Ltd in accordance with AASB 101. Use the current/non-current presentation format.
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