Reference no: EM132955489

Fergie Ltd records the following expenses and income for the year ended 30 June 2023.

$000

Income

Interest revenue 200

Sales revenue 1600

Expenses

Cost of goods sold 550

Administration salaries 170

Depreciation of office equipment 70

Major loss owing to insolvency of customer 110

Damage caused by 'space junk' re-entering atmosphere 65

Interest expense 25

Income tax expense 150

Opening equity 2460

• The income tax expense of $150 000 is calculated after considering a tax deduction of $21 450, which related to the damage caused by the space Junk. The tax rate is 33 per cent.
• During the year there has also been an increase in the revaluation surplus of $80 000 as a result of a revaluation of land of $80 000. The balance of the revaluation surplus at 1 July 2022 was $nil. A new accounting standard has also been introduced, which has a transitional provision allowing initial write-offs to be recognised as a decrease against retained earnings. The decrease against retained earnings amounts to $50 000. Retained earnings at the beginning of the financial year were $1 950 000, and dividends of $200 000 were paid during the financial year Issued share capital at 1 July 2022 and 30 June 2023 was $510 000.

REQUIRED

Problem 1: Prepare a statement of profit or loss and other comprehensive income (in a single statement with expenses shown by function) and a statement of changes in equity in conformity with AASB 101. Provide only those notes that can be reasonably determined from the above information. LO 16.3, 16.4, 16.5, 16.6, 16.7, 16.9, 16.11 4. How is 'profit' defined for accounting purposes?