Exor Ltd manufactures and distributes printing equipment. The company is based in the northern suburbs of Johannesburg. You are provided with the following information for the reporting period ended 30 June 2020. Note R Retained earnings 5 350 325 Ordinary share capital 2 9 000 000 15% Non-redeemable preference shares 3 360 000 12% Redeemable preference shares 750 000 Additional Notes: 1. Exor Ltd’s authorized and issued share capital on 01 July 2020 consists of the following: Authorized share capital 4 000 000 ordinary shares 500 000 15% non-redeemable preference shares 150 000 12% redeemable preference shares Issued share capital 1 800 000 ordinary shares issued at R5 per share 180 000 15% non-redeemable preference shares issued at R2 each 150 000 12% redeemable preference shares issued at R5 each 2. An additional 750 000 ordinary shares were issued on 01 September 2020 to fund the construction of a new factory. Costs incurred to issue the shares amounted to R7 235. Proceeds from the issue amounted R3 750 000. 3. 80 000 15% non-redeemable preference shares were also issued on 1 March 2021 to fund the construction of the factory. R160 000 was received from this issue. Costs incurred to issue the preference shares amounted to R5 410. 4. At a meeting of the board of directors on 01 May 2021 the following took place based on the management accounts produced: 

• Based on the performance of the company for the year so far and the forecasts of the profits for the remainder of the year, the directors declared a dividend of 32 cents per share. This dividend was paid on the 29 June 2021. 

• Due to technological developments in the printing industry it was decided that the depreciation of manufacturing equipment acquired on 1 October 2018 for R1 437 500 (incl. 15% VAT) should be accelerated by reducing the useful life of the asset from 5 years to 4 years. Depreciation for the current reporting period had already been accounted for. 

• The financial director noticed that a printer Model XC115 that was purchased by the company on 1 July 2019 for R304 750 (incl. 15% VAT) did not appear in the asset register for the year ended 2020. On further investigation it was found that the printer was accidentally recognised as inventory. To rectify this, the financial accountant included the printer in the asset register for the current year and depreciated it accordingly. However, he is unsure how to account for this oversite for the previous year. The company depreciates its own printers at 15% per annum on the straight line method.

QUESTION 1 (CONTINUED)

5. Profit for the period amounted to R1 235 340 before any of the above were taken into account. 6. Assume a tax rate of 28%.

REQUIRED: 

1.1 Prepare the Statement of Changes in Equity for Exor Ltd for the reporting period ended 30 June 2021. (25) 

1.2 Disclose the following notes to the financial statements of Exor Ltd for the reporting period ended 30 June 2021. 

• Change in accounting estimate 

• Prior period error