Case Study 5

The accounts of Eemi Ltd as at 1 July 2019 show:

$000

Share Capital - 9,000,000 fully paid ordinary shares

9,000

Retained Earnings (credit balance)

500

General reserve

200

Asset Revaluation reserve

300

Available for Sale Investments - Revaluation reserve

200

The following relates to the year ending 30 June 2018:

Profit after tax

4,500

Dividends paid/declared:

Interim dividend paid

90

Final dividend declared

220

Amount transferred to general reserve

80

Shares issued (2,000,000 shares payable fully on application)

6,000

Other Gains or (Losses) not yet recognised in the accounts for year ended 30 June 2018

$000

Gain on Revaluation of land (valuation by independent valuer)

90

Revaluation Decrement (loss) on available-for-sale investments

(65)

Additional Information

The valuation decrement on available-for-sale investments is to be recognised in the available-for-sale investments - revaluation reserve.

The company tax rate is 30%

Task 5

a.Prepare journal entries to record the valuation adjustments, including any tax effect.

b.Prepare statement of changes in equity for the year ended 30 June 2018.