Illustrations of accounting policies-financial statement, Financial Accounting

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Illustrations of Accounting Policies

A Ltd., has decided to change its policy of writing off borrowing costs to capitalizing the same. As at 31st December, 2003, the company had written off borrowing costs amounting to £200,000. During the year ended 31/12/04.  The company reported profit for the period of £450,000 but after charging borrowing costs of £50,000.  As at 31/12/03 the retained profits were £1,500,000. Other transactions were:-

•    Transfer from revaluation reserve on sale of PPE - £40,000
•    Transfer from retained profits to general reserve - £50,000
•    Interim dividends paid - £200,000

Required: 
Prepare the statement of changes in equity extract for the year-ended 81/12/04

 

Retained profits

 

£

Balance as at 1.1.2004

1,500,000

Change in accounting policy

  200,000

Balance as restated

1,700,000

Transfer from revaluation reserve on sale of PPE

40,000

Profit for the period (450,000 + 50,000)

500,00

Transfer to general reserve

(50,000)

Interim dividends paid

(200,000)

Balance as at 31/12/2004

1,990,000


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