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On January 1, Year 6, HD Lid., a building supply company, JC Lid., a construction company, and Mr. Saeid, a private investor, signed an agreement to carry out a joint operation under the following terms and conditions: A partnership under the name of Olympic Homes would be established. JC would identify the homes for renovation. Olympic Homes would purchase the home and arrange a first mortgage on the property when the home is purchased for renovation and resale. JC would perform the renovation work at a discounted fee. HD would supply all of the construction materials at a reduced markup from its regular sales. Mr. Saeid would guarantee the payment of the mortgage and would lend money to Olympic for the down payment on the purchase of the property and to finance the cost of materials and labour during the renovation. The loans would be interest free with no monthly payments and would be repayable out of the proceeds on sale of the property. All three parties would contribute $156,000 as start-up capital, would have a one-third interest in the assets, be responsible for one- third of the liabilities and would receive one-third of the profit from the Partnership. All three parties must agree on major operating and financing decisions with respect to operations carried out by Olympic. Condensed financial statements for HD Lid. and Olympic for the year ended December 31, Year 6, were as follows: STATEMENTS OF FINANCIAL POSITION At December 31, Year 6 Olympic HD Ltd. Homes Assets Properties under renovation $ $ 528,000 Investment in Olympic Homes 156 , 000 Inventory 438,000 Cash 78, 000 52 , 800 Other assets 1, 256,000 771, 000 $1, 928, 000 $1, 351, 800 Shareholders' Equity and Liabilities Ordinary shares/capital contributed $ 528,000 S 468,000 Retained/accumulated earnings 304, 000 48, 000 Mortgage payable 225,000 Loan payable to Mr. Saeid 138,000 Accounts payable 408,000 237,000 Other liabilities 688, 000 235, 800 $1, 928, 000 $1, 351, 800INCOME STATEMENTS For the Year Ended December 31, Year 6 Olympic HD Ltd. Homes Sales $ 2, 400,000 $ 1, 560,000 Income from Olympic 51,000 0 2, 451, 000 1, 560,000 Cost of goods sold 1, 680,000 1, 014,000 Selling expenses 278,000 192,000 Other expenses 138,000 153,000 Income tax expense 108,000 0 2, 204,000 1, 359,000 Profit $ 247,000 $ 201,000 Additional information: . During Year 6, HD had sales of $144,000 to JC at a markup of 20 percent of selling price. At December 31, Year 6, the property under renovation included supplies purchased from HD of $72,000. . Olympic completed two projects under the joint operations. Olympic distributed $51,000 of income to each of the partners in December. HD accounts for its share of income from the joint operations when it is received from Olympic. HD pays income tax at a rate of 40%. The income earned by Olympic is not taxed in Olympic. It is flowed through and taxed in the hands of the partners.Required Prepare corrected Year 6 financial statements for HD in accordance with IFRS 11. (Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values. Omit $ sign in your response.) HD LTD. STATEMENTS OF FINANCIAL POSITION At December 31, Year 6 Assets Properties under renovation 171200 Inventory 438000 Cash 17600 Other assets 125792( $ 1884720 Shareholders' Equity and Liabilities Ordinary shares S 528000 Retained earnings 301120 Mortgage payable 75000 Loan payable to Mr. Saeid 46000 Accounts payable 408000 Other liabilities 688000 S HD LTD. INCOME STATEMENTS For the Year Ended December 31, Year 6 Sales Income from Olympic Cost of goods sold S Selling expenses Other expenses Income tax expense Profit
