Financial Reporting and Analysis - 825 Words

Financial Reporting and Analysis (Other (Not Listed) Sample) Content: Financial Reporting and AnalysisName:Course:Date:HOUSE OF GLASS PTY LTDSTATEMENT OF FINANCIAL POSITIONAT 31 DECEMBER 2014ASSETSNon-current assetsCost $Accumulated depreciation $ NBV $Delivery vehicles105,500(32500)73,000Total non-current assets73,000Current assetsCash at bank329,530Account receivables67500Less: provision for doubtful debts(3,625)63,875Inventory69,250Prepaid expenses15600Total current assets478,255Total assets551,255Equity and liabilitiesLiabilitiesCurrent liabilitiesAccounts payable38,000Accrued expenses payable19,690Dividend payable15,000Income tax payable67,000Total current liabilities139,690Long-term liabilitiesLoan40000Total liabilities179,690EquityContributed capital 150,000Retained earnings 221,565Total equity371,565Total equity and liabilities551,255HOUSE OF GLASS PTY LTDINCOME STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2014Sales: $Cash sales243,000Credit sales541,500Total sales784,500Less: cost of goods sold(401,000)Gross profit3835 00Less expensesAnnual rent72,000Operating expenses6,750Vehicle running expenses32,700Electricity bill2,760Depreciation expense21,750Loan interest1,000Provision for doubtful debts3,225Total expenses (140,185)Profit before tax243,315Dividend payable(15,000)Income tax payable(67,000)Profit after tax161,315Add: retained earnings brought forward60,250Retained earnings carried down221565HOUSE OF GLASS PTY LTDCASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2014Retained earnings carried down221,565Non-cash itemsDepreciation21,750243,315Operating activitiesIncrease in accounts receivables(13,500)Decrease in accounts payables(11,000)Increase in accrued expenses payable14,715Decrease in inventory116,500Cash flow from operations106,715350,030Cash flow from investing activitiesDelivery vehicle(15,500)Cash flow from financing activitiesDividend (45,000)Loan 40000Cash flows from financing activities(5,000)Net cash flows329,530Part BQuestion 1: Revaluation of the Companyà ¢Ã¢â€š ¬s Lan dRevaluation is the process of either decreasing or increasing the carrying value of fixed assets. Revaluation is caused by the prevailing changes in the fair value of a fixed asset. The IFRS (International Financial Reporting Standard) states that the assets of a company should be recorded at their cost values. IFRS also provides for later adjustments in the assets depending on the market forces that are dynamic. The company bought the piece of land at $100000, and the current value of the land according to our reputable valuation expert is $250000. Therefore, the value of the land has increased by an amount of $150000. The asset of the company, in this case, is the piece of land that increases value by $150000. However, the double entry of the transaction is the surplus of the revaluation amount. The revaluation is not recorded in the income statement but rather, it is treated as equity. The revaluation surplus is however recorded in the statement of comprehensive income, only whe n the company wants to recover an initial or past loss.For the purpose of keeping records, the asset account is debited with the amount of the revaluation surplus. To complete the double entry, the revaluation surplus account is credited with the revaluation surplus.Dr. Land Account by $150000Cr. Revaluation Surplus Account by $150000.Question 2: Accounting ConventionsEffects of the Reduction in the Inventory Value to the Assets, Liabilities and Shareholdersà ¢Ã¢â€š ¬ EquityIn this case, the assets will decrease by $50000 due to the decrease in the value of the stock as the director feels that the stock cannot fully recover its price. The corresponding decrease in the stock value is caused by the previous losses made by the inventory. The loss is caused by the deterioration of the market conditions and hence a negative impact on the demand for the products of the company.For the shareholderà ¢Ã¢â€š ¬s equity, the value also decreases by an amount of $50000. The decrease is caused by the ...