Reference no: EM132625821
Olive A/S, incorporated with an authorised capital consisting of one million ordinary shares of A1 each, employs 646 persons, of whom 428 work at the factory and the rest at the head office.
The trial balance extracted from its books as at 30 September 20X4 is as follows : $000 $000
| Land and buildings (cost $600,000) |
520 |
|
| Plant and machinery (cost $840,000) |
680 |
|
| Proceeds on disposal of plant and machinery |
180 |
|
| Fixtures and equipment (cost $120,000) |
94 |
- |
| Sales |
- |
3,460 |
| Carriage inwards |
162 |
- |
| Share premium account |
- |
150 |
| Advertising |
112 |
- |
| Inventory on 1 Oct 20X3 |
211 |
- |
| Heating and lighting |
80 |
- |
| Prepayments |
115 |
- |
| Salaries |
820 |
- |
| Trade investments at cost |
248 |
- |
| Dividend received (net) on 9 Sept 20X4 |
- |
45 |
| Directors' emoluments |
180 |
- |
| Pension cost |
100 |
- |
| Audit fees and expense |
65 |
- |
| Retained earnings b/f |
- |
601 |
| Sales commission |
92 |
- |
| Stationery |
28 |
- |
| Development cost |
425 |
- |
| Formation expenses |
120 |
- |
| Receivables and payables |
584 |
296 |
| Interim dividend paid on 4 Mar 20X4 60 - 12% debentures issued on 1 Apr 20X4 |
- |
500 |
| Debenture interest paid on 1 Jul 20X4 |
15 |
- |
| Purchases |
925 |
- |
| Income tax on year to 30 Sept 20X3 |
- |
|
| Other administration expenses |
128 |
- |
| Bad debts |
158 |
- |
| Cash and bank balance |
38 |
- |
| Ordinary shares of A1 fully called |
- |
600 |
|
5,960 |
5,960 |
You are informed as follows:
(a) As at 1 October 20X3 land and buildings were revalued at A900,000. A third of the cost as well as all the valuation is regarded as attributable to the land. Directors have decided to report this asset at valuation.
(b) New fixtures were acquired on 1 January 20X4 for A40,000; a machine acquired on 1 October 20X1 for A240,000 was disposed of on 1 July 20X4 for A180,000, being replaced on the same date by another acquired for A320,000. 218
Regulatory framework - an attempt to achieve uniformity
(c) Depreciation for the year is to be calculated on the straight-line basis as follows: Buildings: 2% p.a. Plant and machinery: 10% p.a. Fixtures and equipment: 10% p.a.
(d) Inventory, including raw materials and work-in-progress on 30 September 20X4, has been valued at cost at A364,000.
(e) Prepayments are made up as follows: B000 Amount paid in advance for a machine 60 Amount paid in advance for purchasing raw materials 40 Prepaid rent 15 A115
(f) In March 20X3 a customer had filed legal action claiming damages at A240,000. When accounts for the year ended 30 September 20X3 were finalised, a provision of A90,000 was made in respect of this claim. This claim was settled out of court in April 20X4 at A150,000 and the amount of the underprovision adjusted against the profit balance brought forward from previous years.
(g) The following allocations have been agreed upon: Factory Administration Depreciation of buildings 60% 40% Salaries other than to directors 55% 45% Heating and lighting 80% 20%
(h) Pension cost of the company is calculated at 10% of the emoluments and salaries. (i) Income tax on 20X3 profit has been agreed at A140,000 and that for 20X4 estimated at A185,000. Corporate income tax rate is 35% and the basic rate of personal income tax 25%.
(j) Directors wish to write off the formation expenses as far as possible without reducing the amount of profits available for distribution.
Required: Prepare for publication:
Question (a) The Statement of Comprehensive Income of the company for the year ended 30 September 20X4, and
Question (b) the Statement of Financial Position as at that date along with as many notes (other than the one on accounting policy) as can be provided on the basis of the information made available.
Question (c) the Statement of Changes in Equity