Hiffmax Motor Services Company (Hiffmax) is an European corporation that manufactures commercial vehicles and passenger cars in many countries in North America, South America, Asia and Europe; it also provides financial services. To finance the automotive operations, Hiffmax has raised capital from share issues and external bonds issues. Its shares are listed on the London Stock Exchange and it has been using IFRS for financial reporting purposes.

Due to the economic recession and the fierce competition in the South America, Hiffmax has experienced low sales in this market in recent years. As a result, Hiffmaxs board of directors decided to dispose of its South America unit in 2019. Negotiation with SSS Group was ongoing in 2020 and a purchase agreement was reached on November 1, 2020. On January 8, 2021, the company finalized the sale to SSS Group for a total cash price of $1.05 billion. Some of the proceeds from the sale (220 million) were used to reduce its pension liabilities two weeks later, with the remaining amount available for operating requirements and investments. For comparative purposes, the same South America units assets were held for sale at a net book value of $1.137 billion as of December 31, 2020. The division had a small operating loss of $3.52 million before income taxes in 2020. No deprecation was recorded for the divisions assets since it ceased operations later during the year.

It is now January 25, 2021. Hiffmax is in the process of preparing its year-end financial statements for an audit. However, necessary adjustments must be made to several account before books for the year can be closed. As an accounting intern of Hiffmax, your supervisor asked you to complete this project and finalize the balance sheet and income statement (including the earnings per share disclosures) for the year ended December 31, 2020. You are aware that proper calculations for income tax returns have been completed. The draft copy of the consolidated balance sheet as of December 31, 2020 and consolidated income statement for the year ended December 31, 2020 with accompany notes (Appendix 1) have been provided for your reference. The applicable income tax rate for 2020 is 21%.

If a revision or an adjustment is necessary, please enclose supporting discussions, along with necessary calculations, adjusting entries, and closing entries.

Note: for convenience, all values in this case have been converted into the US dollars.

Appendix 1 (Draft Copy) Statement of Financial Position

(In millions of US dollars)

Assets	31-December -2020
Current assets:
Cash and cash equivalents	3,935.6
Marketable securities	832
Accounts and notes receivable, net of allowance	812.8
Hiffmax Financial receivables, net	2,049.7
Inventories	1,068.8
Other current assets	505.6
Assets held for sale	1,867.8
Total current assets	11,072.3
Non-current assets:
Hiffmax Financial receivable, net	2,129.5
Property, plant and equipment, net	3,623.7
Goodwill and intangible assets, net	586.7
Deferred income tax assets	2,789.4
Other non-current assets	5,781.4
Total non-current assets	14910.7
Total assets	25,983
Liabilities
Current liabilities:
Accounts payable	2,337.8
Short-term debt and current portion of long-term debt	2,689.3
Accrued liabilities	2,597.5
Other current liabilities	7.3
Liabilities held for sale	731
Total current liabilities	8,363
Non-current liabilities:
Long-term debt	6,736.3
Post retirement benefits other than pensions	593.3
Pension liabilities	1,375.4
Other non-current liabilities	1,452.2
Total non-current liabilities	10,157.2
Total liabilities	18,520.1
Shareholders equity:
Common stock, $0.01 par (Note 1)	2.2
Preferred stock, $1 par (Note 2)	50
Additional paid-in capital	5,135.7
Less: Cost of treasury stock	-340
Retained earnings	2,615
Total shareholders equity	7,462.9
Total liabilities and equity	25,983

Hiffmax Motor Company

(Draft copy) Consolidated Income Statement

For the Year Ended December 31, 2020

(In millions of US dollars)

		2020
Net sales and revenue
Automotive		$13,357
Hiffmax Financial		1,216
Total net sales and revenue		14,572
Costs and expenses
Automotive cost of sales		11,359
Hiffmax Financial interest, operating and other expenses		1,144
Automotive selling, general and administrative expense		926
Total costs and expenses		13,428
Operating income		1,144
Automotive interest expense		58.8
Other income		90.2
Income from continuing operations before income taxes		1,175
Income tax expense		246.8
Income from continuing operations after income taxes		929
Loss from discontinued operations:
Loss from discontinued operations, before income tax		-3.52
Loss from discontinued operations, after income taxes		-2.78
Net income		925.8

Note 1:

Hiffmax had 150 million outstanding common shares with $0.01 par value, as of January 1, 2020.

Note 2:

During the year, for the first time, Hiffmax issued 50 million, cumulative, nonconvertible, preferred $1 par value shares at $20 each, 6% dividend. Preferred dividends have not been declared for the year 2020.

Question - finalize the balance sheet and income statement (including the earnings per share disclosures) for the year ended December 31, 2020