Your firm has been engaged to examine the financial statements of Almaden AG for the year 2022. The bookkeeper who maintains the financial records has prepared all the unaudited financial statements for the company since its organization on January 2, 2017. The client provides you with the following information.

Current assets include:
Cash (restricted in the amount of €300,000 for plant expansion) ..................................... € 571,000
Investments in land ...................................................................................................................... 185,000
Accounts receivable less allowance of €30,000 ....................................................................... 480,000
Inventories (weighted-average) ................................................................................................. 645,100
.................................................................................................................................................. € 1,881,100

Other assets include:
Prepaid expenses ....................................................................................................................... € 62,400
Plant and equipment less accumulated depreciation of €1,430,000 ................................ 4,130,000
Notes receivable (short-term) .................................................................................................... 162,300
Goodwill ......................................................................................................................................... 252,000
Land ............................................................................................................................................... 564,700
................................................................................................................................................... € 5,171,400

Current liabilities include:
Accounts payable ...................................................................................................................... € 510,000
Notes payable (due 2025) .......................................................................................................... 157,400
Estimated income taxes payable .............................................................................................. 145,000
Share premium—ordinary ......................................................................................................... 150,000
...................................................................................................................................................... € 962,400

Non-current liabilities include:
Unearned revenue ................................................................................................................... € 489,500
Dividends payable (cash) ........................................................................................................... 200,000
8% bonds payable (due May 1, 2027) ...................................................................................... 750,000
................................................................................................................................................. € 1,439,500

Equity includes:
Retained earnings ................................................................................................................ € 2,810,600
Share capital—ordinary, par value €10; authorized 200,000 shares, ................................. 184,000
shares issued ............................................................................................................................ 1,840,000
.................................................................................................................................................. € 4,650,600

The supplementary information below is also provided.

1. On May 1, 2022, the company issued at par €750,000 of bonds to finance plant expansion. The long-term bond agreement provided for the annual payment of interest every May 1. The existing plant was pledged as security for the loan.

2. The bookkeeper made the following mistakes. a. In 2020, the ending inventory was overstated by €183,000. The ending inventories for 2021 and 2022 were correctly computed.

b. In 2022, accrued wages in the amount of €225,000 were omitted from the statement of financial position, and these expenses were not charged on the income statement.

c. In 2022, a gain of €175,000 (net of tax) on the sale of certain plant assets was credited directly to retained earnings.

3. A major competitor has introduced a line of products that will compete directly with Almaden’s primary line, now being produced in a specially designed new plant. Because of manufacturing innovations, the competitor’s line will be of comparable quality but priced 50% below Almaden’s line. The competitor announced its new line on January 14, 2023. Almaden indicates that the company will meet the lower prices, which are high enough to cover variable manufacturing and selling expenses, but permit recovery of only a portion of fixed costs.

4. You learned on January 28, 2023, prior to completion of the audit, of heavy damage because of a recent fire in one of Almaden’s two plants; the loss will not be reimbursed by insurance. The newspapers described the event in detail.

Instructions

Analyze the preceding information to prepare a corrected statement of financial position for Almaden in accordance with IFRS. Prepare a description of any notes that might need to be prepared. The books are closed, and adjustments to income are to be made through retained earnings.

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Almaden AG Statement of Financial Position December 31, 2022 Assets Liabilities Equity €4,650,600 Other assets €5,171,400 Non-current liabilities 1,439,500 Current assets 1,881,100 Current liabilities 962,400 €7,052,500 €7,052,500