Newsurf Ltd, has been manufacturing and selling surfboards for the last two years. Newsurf Ltd commenced operations on 1 July, 2017 by issuing 500 000 $3.50 shares, payable in full on application. There were no share issue costs.

For the year ending 30 June 2019, the company recorded the following aggregate transactions:

On 1 July 2018 an additional 100 000 fully paid shares were issued and fully paid to raise $400 000.The following additional information was noted during the preparation of financial statements for the year ended 30 June 2019:

• A cash dividend of $180 000 was declared and paid during the 2019 financial year and a final dividend for 2019 of $90 000 was proposed but not recognised in the financial statements.
• Inventory was measured at the lower of cost and net realizable value.
• Buildings, plant and equipment were measured at cost. The benefits were expected to be received evenly over the useful life of the asset.
• Land was revalued upward by $100 000 (related income tax for this transaction was $30 000). The revaluation gain will not be reclassified and has been recorded in the Land Revaluation Surplus. The valuation was conducted by the registered valuer, Fair Valuations Pty Ltd.
• Financial assets held for trading are equity investments that are held for the purpose of selling and short-term profit taking.
• $35 000 of other loans are repayable within 1 year
• $90 000 of bank loans are repayable within 1 year. The remaining amount is payable in full at the end of 2023.
• The provision for employee benefits includes $47 000 payable within 1 year.
• The warranty provision is in respect of a 12-month warranty given on certain goods sold.
• The bank loan is for 5 years and repayable in full at the end of the term. The interest rate is 9% and it is secured over the land.
• NewSurf Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and classifies expenses by function within the statement.
• Summarised account balances are provided below:

Required:

For the year ending 30 June 2019 (NOTE: comparative financial statements are not required),

1. Using the pro forma table supplied in appendix B, prepare a preliminary trial balance for Newsurf Ltd; (5 Marks)
2. Prepare a statement of comprehensive income for Newsurf Ltd in accordance with the requirements of AASB 101. Newsurf Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and classifies expenses by function within the statement; (15 marks)
3. Prepare a statement of changes in equity for Newsurf Ltd in accordance with the requirements of AASB 101; (8 marks)
4. Prepare a statement of financial position for Newsurf Ltd in accordance with AASB 101. Use the currenton-current presentation format; (12 marks)
5. Prepare appropriate notes to the accounts. (You do not need to prepare notes related to income taxes. Include the following note as note 1. You may optionally add accounting policies to this note): (20 marks).

1. Summary of significant accounting policies

Basis of accounting. The financial report is a general purpose financial report which has been prepared on the historical cost basis, except where stated otherwise.

Statement of Compliance. The financial statements have been prepared in accordance with the requirements of the Corporations Act, Australian Accounting Standards which include Australian equivalents to International Financial Reporting Standards (AIFRSs) and AASB Interpretations. Compliance with AIFRSs ensures the financial statements and notes comply with International Financial Reporting Standards

APPENDIX B

(PS. 1. You are to apply the function of expense or cost of sales method to the classification of expenses in the income statement (see AASB101 paras 97-105); 2. You are directed to use the currenton-current format for the statement of financial position (balance sheet) and supply a net assets line item;

3 .The notes are to be simplified equivalences to published reports; that means a list of constituent components of a given line item with their respective dollar amounts, not footnotes; for Part B there is one set of notes to cover all statements, numbered sequentially from 1 (as supplied);

Accounts Sales Interest income Cost of Sales Gain on sale of plant Employee benefit expenses - Admin Depreciation expense-Admin Selling & Distribution Expenses Insurance expense - Admin Doubtful debts expense Interest expense Other borrowing expenses Income tax expense 5385 000 11 000 3 409 000 25 000 136 000 54 000 932 000 60 000 5 000 38 000 4 000 268 000 Year-end balances, 30 June 2019 Accounts receivable - trade Allowance for doubtful debts impairment Bank Overdraft Cash on Hand Cash on deposit, at call Other receivables Raw Materials inventories, 30 June 2019 Finished goods inventories, 30 June 2019 Land Buildings Accumulated depreciation - buildings Plant and equipment Accumulated depreciation - plant and equipment Patents Accumulated amortisation of patent Goodwill Financial assets held for trading Bank loans Other loans Accounts payable-trade Provision for employee benefits Provision for warranty Current tax liability Deferred tax asset Retained eamings, 30 June 2018 Share Capital Dividends paid Land revaluation surplus 977 000 12 000 86 000 15 000 442 000 77 000 176 000 726 000 416 000 160 000 45 000 1 350 000 495 000 46 000 5 000 910 000 215 000 110 000 527 000 535 000 88 000 67 000 65 000 34 000 796 000 2 150 000 180 000 228 000 Newsurf Ltd - Trial Balance as at 30 June 2019 DR CR S'000 S'000 Sales Interest income Gain on sale of plant Cost of sales Employee benefit expenses- Administration Depreciation expense - Administration Selling & Distribution expenses Insurance expenses Doubtful debts expense Interest expense Other borrowing expenses Income tax expense Bank Overdraft Cash on hand Cash on deposit, at call Accounts receivable - trade Allowance for doubtful debts/impairment Other receivables Raw materials inventories, 30 June 2019 Finished goods inventories, 30 June 2019 Land Buildings Accumulated depreciation - buildings Plant and equipment Accumulated depreciation - plant and equipment Patents Accumulated amortisation of patent Goodwill Financial Assets held for trading Bank loans Other loans Accounts payable -Trade Provision for employee benefits Provision for warranty Current tax liability Deferred tax asset Retained eamings, 30 June 2018 Dividends paid Land revaluation surplus Share capital Totals Accounts Sales Interest income Cost of Sales Gain on sale of plant Employee benefit expenses - Admin Depreciation expense-Admin Selling & Distribution Expenses Insurance expense - Admin Doubtful debts expense Interest expense Other borrowing expenses Income tax expense 5385 000 11 000 3 409 000 25 000 136 000 54 000 932 000 60 000 5 000 38 000 4 000 268 000 Year-end balances, 30 June 2019 Accounts receivable - trade Allowance for doubtful debts impairment Bank Overdraft Cash on Hand Cash on deposit, at call Other receivables Raw Materials inventories, 30 June 2019 Finished goods inventories, 30 June 2019 Land Buildings Accumulated depreciation - buildings Plant and equipment Accumulated depreciation - plant and equipment Patents Accumulated amortisation of patent Goodwill Financial assets held for trading Bank loans Other loans Accounts payable-trade Provision for employee benefits Provision for warranty Current tax liability Deferred tax asset Retained eamings, 30 June 2018 Share Capital Dividends paid Land revaluation surplus 977 000 12 000 86 000 15 000 442 000 77 000 176 000 726 000 416 000 160 000 45 000 1 350 000 495 000 46 000 5 000 910 000 215 000 110 000 527 000 535 000 88 000 67 000 65 000 34 000 796 000 2 150 000 180 000 228 000 Newsurf Ltd - Trial Balance as at 30 June 2019 DR CR S'000 S'000 Sales Interest income Gain on sale of plant Cost of sales Employee benefit expenses- Administration Depreciation expense - Administration Selling & Distribution expenses Insurance expenses Doubtful debts expense Interest expense Other borrowing expenses Income tax expense Bank Overdraft Cash on hand Cash on deposit, at call Accounts receivable - trade Allowance for doubtful debts/impairment Other receivables Raw materials inventories, 30 June 2019 Finished goods inventories, 30 June 2019 Land Buildings Accumulated depreciation - buildings Plant and equipment Accumulated depreciation - plant and equipment Patents Accumulated amortisation of patent Goodwill Financial Assets held for trading Bank loans Other loans Accounts payable -Trade Provision for employee benefits Provision for warranty Current tax liability Deferred tax asset Retained eamings, 30 June 2018 Dividends paid Land revaluation surplus Share capital Totals