Statements of Comprehensive Income, Financial Position, and Changes in Equity - Example

Table of Contents Table of Contents 1 Statement of comprehensive income 2 Statement of Financial Position 2 Statement of changes in equity 3 Notes to financial statements 4 Note 1: Statement of significant accounting policies 4 Note 2: Revenue AASB101, Paragraph 97&112 (c) 6 Note 3: Other income AASB 101 Paragraph 98 (c) & 112 (c) 6 Note 4: Analysis of expenses by function AASB 101 Para 99, 103, 104 7 Analysis of expenses by function 7 Note 5: Additional information AASB 101 Paragraph 104 9 Note 6: Cash and equivalents AASB 101 Paragraph 104 9 Note 7: Trade and Other Receivables AASB Paragraph 78 (b) & 112 (c) 9 Note 8: Property, Plant and Equipment AASB 101, Paragraph 10 Note 9: Intangible Assets AASB 138, Paragraph 118 & 119 10 Note 10: Trade and other Payables AASB 101, Paragraph 72 10 Note 11: provision AASB 101, paragraph 78 (d) & 112(c) 11 Note 12: General reserve AASB 101, Paragraph 106 (b) 11 Note 13: Share capital AASB 101, Paragraph 106 (b) 11 Note 14 Retained earnings AASB 101 Paragraph 82 (a) 12 Note 15: Auditors’ Remuneration AASB 101, Paragraph 138.1 (a) & (b) 12 Note 16: Contingent Liability AASB 101, Paragraph 137 13 Note 17: Dividend AASB, Paragraph 37 13 Note 18: Subsequent events AASB 110, Paragraph 21 14 Directors’ declaration 15 Director’s Report 16 Joel Singer Simon Downright Jabez Camel 17 Independent Auditor’s Report 18 Statement of comprehensive income Notes 2015 2014 Revenue Note 2 $50,930,000 XXX Cost of sales ($21,100,000) XXX Other income Note 3 $ 6, 7000,000 XXX Gross profit $36,530,000 XXX Expenses excluding finance cost Note 4 $22,305,000 XXX Finance costs Note 4 $1,645,000 XXX Profit before income tax $12,580,000 XXX Income tax expense $3,774,000 XXX Profit for the period $8,806,000 XXX Other comprehensive income - - Total comprehensive income for the year $8,806,000 XXX Statement of Financial Position Assets Notes 2015 2016 Current assets Cash and Cash Equivalents Note 6 - XXX Trade and other receivables Note 7 $4,200,000 XXX Inventories $13,450,000 XXX Total current assets $17,650,000 XXX Non-current assets Property, plant and equipment Note 8 $45,275,000 XXX Motor vehicles $750,000 XXX Intangible assets Note 9 $9,400,000 XXX Total non-current assets $55,425,000 XXX Total assets $73,075,000 XXX LIABILITIES Current liabilities Trade and other payables Note 10 $10,490,000 XXX Tax payable $3,774,000 XXX Bank overdraft $3,490,000 XXX Provisions Note 11 $3,600,000 XXX Total current liabilities $21,354,000 XXX Non-current liabilities Loan (Big bank) $10,000,000 XXX Total non-current liabilities $10,000,000 XXX Total liabilities $31,354,000 XXX Net assets $41,771,000 XXX Equity General reserves Note 12 $8,550,000 XXX Share capital Note 13 $16,000,000 XXX Retained earnings Note 14 $17,171,000 XXX Total equity $41,771,000 XXX Statement of changes in equity Share capital General reserve Retained earnings Total equity Balance as at 1st July 2014 $16,000,000 $6,350,000 $12,605,000 $34,955,000 Total comprehensive income - - $8,806,000 $8,806,000 Dividends declared and paid - - -$2,040,000 -$2,040,000 Transfer to general reserve - $2,200,000 -$2,200,000 - Balance as at 30th June 2015 $16,000,000 $8,850,000 $17,771,000 $41,771,000 Notes to financial statements Note 1: Statement of significant accounting policies a) Corporate formation b) Basis of operation The financial statements are presented in terms of Australian dollars. On the other hand, both the tangible and intangible assets have been calculated on the basis of historical costs less the depreciation or amortization value. Tangible assets include machinery, motor vehicle, land and buildings. c) Statement of compliance This financial statement comprises of the general financial report incorporating statements of comprehensive income, statement of financial position statement of changes in equity, notes to the financial statements as well as the declaration by directors. The statements have been prepared in line with the corporation’s act, the Australian accounting standards and the IFRS (AASB 101, Paragraph 15). The financial statements presented present a true and fair view of the company’s affairs and can be relied upon by various decision makers. d) Summary of significant accounting policies I Property, Plant and Equipment Buildings, machinery and motor vehicles have been recorded at cost net of depreciation while land has been recorded at historical cost. II Intangible assets III Inventories Inventories have been recorded at lower of cost and net realizable value. IV Trade and other receivables They consist of accounts receivables. These are recorded at amortized cost which is the allocation of cost over time less the value of the trade receivables. The allocation of cost is the allowance for doubtful debts. V Cash and cash equivalent They include assets that are conveniently changeable into cash and are recorded as current assets in the statement of financial position. VI Provisions These are recorded when they meet the recognition criteria of present legal obligation arising from past events with probable outflow of resources embodying economic benefit. They include; i) Warranty The entity provides for warranty cost when the product or service is sold based on theoretical warranty data. ii) Annual leave The entity provides for annual leave cost when the employees leave their position within the financial VII Employee benefits They are the benefits provided by employers in addition to the normal wages paid to employees. For instance, the employees are granted paid leave annually. The company has an annual leave policy of giving employees 21 days paid leave in a year. VIII Trade and other payables These have been recorded at their amortized cost. They are composed of revenue paid in advance, accounts payable and dividend payable. Revenue paid in advance will be deemed paid when the goods or services have been delivered. IX Revenue Revenue apples to income that arises from the ordinary activities of the company. They include; i) Sale of goods It is payment by buyers for goods less the costs incurred in making delivery ii) Dividends The company recognizes dividend revenue on the shareholder’s right when related payment has been received iii) Interest It includes revenue generated from the carrying amount of the financial assets times the interest rate provided X Income tax This is the statutory tax that is imposed by the government at 30% on the earning before tax XII) Earnings per share This is calculated based on the net income less dividends on preferred stock divided by the average outstanding shares. Earnings per share is the allocated profit on each issued common share. Note 2: Revenue AASB101, Paragraph 97&112 (c) The company’s revenue included the sales revenue Revenue 2015 2016 Sales revenue $51,950,000 XXX Less sales returns $1,020,000 XXX Sales revenue $50,930,000 XXX Note 3: Other income AASB 101 Paragraph 98 (c) & 112 (c) The company’s other income included proceeds from sale of land, Dividend revenue and rent revenue Other income 2015 2016 Proceeds from sale of land $3,600,000 XXX Rent revenue $1,850,000 XXX Dividend revenue $1,250,000 XXX Total other income $6,700,000 XXX Note 4: Analysis of expenses by function AASB 101 Para 99, 103, 104 The company’s expenses excluding finance costs include selling and distribution expenses, administrative expenses and miscellaneous expenses. Analysis of expenses by function $ Revenue $50,930,000 Cost of sales $21,100,000 Gross profit $29,830,000 Other income $6,700,000 Distribution cost $1,465,000 Administrative expenses $12,323,000 Other expenses $10,162,000 Profit before tax $12,580,000 Administrative expense 2015 2014 $ $ General operating expense $3,335,000 XXX Depreciation –Buildings $950,000 XXX Depreciation-Equipment $4,600,000 XXX Payment to Auditors $480,000 XXX Legal expense $258,000 XXX Leave expenses $ 2,700,000 XXX Total $12,323,000XXX Selling and distribution expenses 2015 2016 $ $ Cost of sales $21,100,000 XXX Depreciation –Vehicle $220,000 XXX Advertising and marketing $1,210,000 XXX Warranty expenses $35,000 XXX Total $22,565,000 XXX Miscellaneous expense 2015 2016 $ $ Printing and postage expense $455,000 XXX Utilities $325,000 XXX Cleaning expenses $55,000 XXX Donation $10,000 XXX Total $845,000 XXX Finance cost 2015 2016 $ $ Interest expense 995,000 XXX Doubtful debt expense 650,000 XXX Total $1,645,000 XXX NB//Finance expense is composed of interest expense (loan interest and bank overdraft interest) and doubtful debt expense. Note 5: Additional information AASB 101 Paragraph 104 According to AASB101 Paragraph 104, additional information will include depreciation and amortization expense as well as employee benefits expense. Depreciation and amortization 2015 2014 $ $ Depreciation –Furniture and office equipment XXX Depreciation –Building 950,000 XXX Depreciation –Machinery 4,600,000 XXX Depreciation –Delivery vehicles 220,000 XXX Total 5,770,000 XXX Employee benefits expense 2015 2014 $ $ Salaries and Wages 6,980,000 XXX Annual leave expense 1,950,000 Long service leave expense 320,000 XXX Total 9,250,000 XXX Note 6: Cash and equivalents AASB 101 Paragraph 104 The company did not have cash and cash equivalent balances Note 7: Trade and Other Receivables AASB Paragraph 78 (b) & 112 (c) 2015 2016 Accounts receivable $5,450,000 XXX Less sales returns $600,000 XXX Less Allowance for doubtful debts $650,000 XXX Total $4,200,000 XXX Note 8: Property, Plant and Equipment AASB 101, Paragraph They include machinery, buildings, land and motor vehicles 2015 2016 Equipment $22,600,000 XXX Land $8,400,000 XXX Buildings $14,275,000 XXX Motor vehicle $750,000 XXX Total $46,025,000 XXX Note 9: Intangible Assets AASB 138, Paragraph 118 & 119 According to AASB 138 paragraph 118, each class of intangibles should be disclosed according to paragraph 119 (a), there should be separate disclosure of brand names which also include trademarks. However, the company did not have any of the above assets Note 10: Trade and other Payables AASB 101, Paragraph 72 2015 2016 Unearned revenue $2,100,000 XXX Accounts payable $7,695,000 XXX Accrued expenses $1,050,000 XXX Prepaid expenses ($355,000) XXX Total $10,490,000 XXX Note 11: provision AASB 101, paragraph 78 (d) & 112(c) 2015 2016 Annual leave $1,850,000 XXX Long service leave $1,750,000 XXX Total $3,600,000 XXX In accordance to AASB 137 Paragraph 84, the company ought to disclose carrying amounts at the beginning and at the end of the period, additional provisions as well as the amounts of provision used during the period. Provision Annual leave Warranties Legal cases Total Beginning balance $3,680,000 - - $3,680,000 Additional provisions $2,190,000 - - $2,190,000 Amount used $2,270,000 - - $2,270,000 Closing balance $3,600,000 $3,680,000 Note 12: General reserve AASB 101, Paragraph 106 (b) 2015 2014 Balance as at 1 July 2014 $6,350,000 XXX Transfer from retained earnings $2,200,000 XXX Balance as at 30 June 2015 $8,550,000 XXX Note 13: Share capital AASB 101, Paragraph 106 (b) 2015 Balance as at 1st July 2014 $12,428,000 Share issue $3,572,000 Balance as at 30th June 2014 $16,000,000 The information below relates to the total number of shares issued Date Amount Par value Total $ $ 1 July 2009 5,000,000 2 $9,946,000 1 February 2013 1,000,000 2.50 $2,482,000 1 February 2015 1,200,000 3.50 $3,572,000 Total 7,200,000 2.22 $16,000,000 Note 14 Retained earnings AASB 101 Paragraph 82 (a) Balance as at 1st July 2014 $12,605,000 Total comprehensive income $8,806,000 Dividends declared and paid $2,040,000 Transfer to general reserve ($2,200,000) Balance as at 30 June 2014 $17,771,000 Dividend declared and paid $720,000 Final dividend $1,728,000 Total dividend $2,448,000 Note 15: Auditors’ Remuneration AASB 101, Paragraph 138.1 (a) & (b) An entity is required to disclose the amounts paid to the auditor of the organization for the audit or review of the financial statements of the entity. In addition, the entity shall disclose separately regarding non-audit services; the nature and the amount of each services provided by the auditors. Payment to auditors 2015 2014 Audit services Audit $390,000 Non audit service Consultancy $90,000 Total $480,000 Note 16: Contingent Liability AASB 101, Paragraph 137 On 5th July 2015, Lawyers notified the company that a law suit had been lodged in June claiming that as a result of defective products sold by the company to one of their major customers in May 2015, damage had been caused to a building under construction and the customers was seeking damages of $3,250,000. The company’s lawyers have advised that they believe there is a 405 probability that the company would be held liable. However, in the event that the case was lost they have estimated that the damages awarded would range between $2,500,000 and $2,900,000. Note 17: Dividend AASB, Paragraph 37 Date Cents per share Total amount Date of payment 15th January 2015 Interim 4.5 $720,000 5th January 2015 30th June 2015 Final 10.8 $1,728,000 1st October 2015 Total 15.3 $2,448,000 Date 30th June 2014 Final 8.25 $1,320,000 1st October 2014 Total 8.25 $1,320,000 Note 18: Subsequent events AASB 110, Paragraph 21 On 1st August 2015, the directors decided to reduce the debt levels due to an expected increase in interest rates. The impact of this is that future cash dividends paid to shareholders over the next two years will be reduced to around half of current dividend payments Directors’ declaration In accordance with a resolution of the Directors of the Ultimate Company limited, the Directors declare that: a) In the opinion of the Directors and to the best of their knowledge the financial statements and notes, set out above are in accordance with the Australian Corporations act, including: i) Complying with the applicable accounting standards; and ii) Giving a true and fair view of the assets, liabilities, financial position and profit or loss of the company as at 30th June 2015. b) The financial report also complies with International Financial Reporting Standards , as disclosed in note 1; c) To the best of the Directors knowledge, the management report includes a fair review of the development and performance of the business and the financial position of the company . d) In the Director’s opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. The Directors have been given the declarations required by section 295A of the Australian Corporations Act 2001 from the Managing Director and Finance Manager for the financial year ended 30th June 2015. Signed in accordance with a resolution of the board of Directors JSN Joel Singer Chairman SND Simon Downright Managing Director Dated this 25th Day of September 2015 Director’s Report The following is the directors’ report on the entity Ultimate Choice Limited for the year ended 30 June 2015 pursuant to the board’s resolution. Principal Activity The company’s principal activity during the financial year was operating a retail chain of businesses. There are no significant changes expected during the year. Financial Performance The company’s net profit for the year was $8,806,000. The profit was realized after deducting income tax of $3,374,000. The Company’s overall financial position is presented on page 3 of the report. Dividends The dividends paid during the year are as follows: Dividend Date declared Date paid Dividend per share Total dividend Interim dividend for the year ended 30th June 2013 15/1/2015 15/1/2015 4.5 Cents $720,000 Final dividend for the year ended 30 June 2013 30/6/2015 4/1/2015 10.8 cents $1,728,000 On 1st October 2014, the company paid a dividend of $1,320,000 which had been declared on 30th June 2014 from retained earnings. Significant changes in the state of affairs There were no significant changes in the company’s state of affairs during the financial year ended 30th June 2015. Events occurring after the end of the financial year The directors are not aware of any matter or circumstance that has arisen since the year end that may significantly affect the Company’s operation’s in future. However, the board has noted the subsequent events that may have a significant effect on the company’s finances in the Notes to the statements. Details of Directors and Executives There has not been any significant change to the Company’s directors during the financial year. The following are the company’s directors: Chairman -Joel Singer Executive Directors - Simon Downright, Jabez Camel This report was prepared on 10th September 2013 and signed in accordance to a resolution of the board: Joel Singer Simon Downright Jabez Camel Independent Auditor’s Report To the general meeting of shareholders of Pioneer International limited We have audited the financial statements set out on page 2-17 which form part of the annual report and accounts of Ultimate Choice Limited for the year ended 30 June 2015, which comprise statement of comprehensive income, statement of financial position, statement of changes in equity and notes to the financial statements which comprise of a summary of significant accounting policies and other explanatory information. As the company’s auditors, we declare to the best of our knowledge and belief, There has not been any contraventions of: i) The auditors’ independence requirements according to corporations Act 2001 in relation to the audit and ii) Any applicable code of professional conduct in relation to the audit. It is our opinion that: 1. The annual report of Ultimate Choice Ltd has been prepared in accordance with the Corporation’s Act 2001, including: a) Compliance with Accounting Standards in Australia b) The financial statements give a true and fair view of the financial position of Ultimate Choice Ltd as at 30 June 2015 and of the company’s performance for the year ended 30 June 2015. 2. The company has a) Availed to us all information and explanations and accorded us the assistance needed for the conduct of the audit. b) Kept and availed financial records in a manner sufficient to enable the preparation and audit of the annual financial report. c) Maintained other records and registered in accordance to the Corporations Act 2001. MCKENZIE ROZIE References: Tesco annual report 2014, Retrieved on 31st March 2015, from: http://www.tescoplc.com/index.asp?pageid=548#ref_index.asp?pageid=540 Jared, B2010, Advanced financial accounting, London, Rutledge. CPA (2011), Accounting Handbook 2011, Pearson, Australia Read More