Plant costing $240,000 was sold during the financial year ending 31 August 2021 for cash. Accumulated depreciation on this sold plant at the time of sale was $168,000.

Background Assume you are the manager of the accounting department of Chill Limited. Chill Limited is a manufacturer and distributer of snow craft mountaineering equipment and accessories such as ice axes and crampons. The company was incorporated in 2002 under the Companies Act 1993. Chill Limited is located in an industrial area in Christchurch. The business has been growing steadily. The company complies with Tier 1 For-profit Entity financial reporting standards. Your team is in the process of preparing the financial statements for the financial year ending 31 August 2021. The financial statements will be authorised for issue on 30 September 2021. The financial statements will be circulated among the members of the board of directors for their review and approval at the next board meeting on the 25 of September 2021. Introduction The following trial balances have been supplied to you (see page 4): The draft trial balance for the financial year ending 31 August 2021. Some balance date adjustments may be required. The adjusted trial balance for the financial year ending 31 August 2020; and The post-closing trial balance for the financial year ending 31 August 2020. All the financial information for the financial year 2020 has been audited and finalised. Additional information Ignore GST implications. All the assets and liabilities are measured at historical cost except for the land. Land is not depreciated. Since early 2021, Chill Limited has engaged in negotiations with Depp Development Limited for the sale of the land. Chill Limited offered a price of $400.000. Depp Development subsequently made a counter offer of $365,000. The board of directors of Chill Limited passed a resolution to accept the price of $365,000 at the board meeting on 25 September 2021. The final draft of the sale agreement is currently under review by each company's boards of directors. The next board meeting will be held on 24 October 2021. The sale is highly probable to proceed, although it is subject to the shareholders' approval at the annual general meeting on 16 November 2021. Depp Development has secured funds for the acquisition. The settlement date has been set as 30 November 2021. The estimated total cost to sell is $4,000 for Chill. As a related matter, the fair value of land as at 31 August 2021 was determined by the independent valuer Hunters, Bolton and Associates as $360,000. The valuation report was received on 20 September 2021. Buildings, plant and equipment are depreciated using the straight-line method. The useful lives of buildings are between 20 to 50 years, whereas the useful life of plant and equipment is between 3 and 25 years. The depreciation expense of building, plant and equipment has been fully recorded Plant costing $240,000 was sold during the financial year ending 31 August 2021 for cash. Accumulated depreciation on this sold plant at the time of sale was $168.000. An item of equipment was purchased in cash for $288,000 during the financial year ending 31 August 2021. Bad debts are recorded by using the allowance approach. Debtors of $72,000 previously provided for were written off during the year ending 31 August 2021. On 23 September 2021, a news article suggested that a major customer had gone into statutory administration due to its ongoing financial difficulties. The customer owes Chill Limited $96,000 as at 31 August 2021. The collectability of this amount is now in doubt. There was no other impairment of assets during the financial year ending 31 August 2021. Additional shares of $240,000 were issued in March 2021. As at 31 August 2021, the company has 1.2 million ordinary shares on issue. On 25 September 2021, the company declared a dividend of 2 cents per share. This dividend will be paid on 30 November 2021. REQUIRED: Prepare the following financial statements according to the requirements of the New Zealand equivalent to the International Financial Reporting Standards (IFRS) and the International Accounting Standards (IAS). 1. The financial statement that presents the financial performance of the company for the financial year ending 31 August 2021. You may choose to present the financial performance in one single statement or in two statements. The expenses are classified by nature. The comparative statement(s) for the year ending 31 August 2020 is (are) required. 2. The statement of changes in equity for the financial year ending 31 August 2021. The comparative statement for the year ending 31 August 2020 is NOT required. 3. Notes to the financial statements. The notes to the financial statements should include, wherever possible, information about the reporting entity, measurement bases. a statement of relevant accounting policies and other qualitative and quantitative information required by the relevant NZ IFRS and NZ IAS you have studied in weeks 1 to 3. You shall not search for or include information about the company (which is fictitious) in addition to the information supplied in this assignment. Trail balance 2021 2021 Dr Cr (5000) (5000) 574 80 Adjusted trial balance (audited) 2020 2020 Dr Cr ($000) (5000) 422 70 Post-closing trial balance (audited) 2020 2020 Dr Cr ($000) ($000) 422 70 20 140 672 29 117 528 29 117 528 72 72 240 240 960 240 960 240 960 144 96 96 1,008 960 960 Cash Inventory - Raw materials Inventory - Work in progress Inventory - Finished goods Accounts receivable Allowance for doubtful debts Share investment Land Buildings Accumulated depreciation - buildings Plant and equipment Accumulated depreciation - plant and equipment Accounts payable Accrued expenses Income tax payable Bank loans Share capital Retained earnings Copening balance) Retained earnings (closing balance) Sales revenue Cost of sales Doubtful debts Depreciation - building Depreciation - plant and equipment Interest expense Other operating expenses Utilities Salaries and wages Income tax expense Total 96 168 30 208 264 1,200 96 192 24 182 240 960 96 192 24 182 240 960 1,464 1,262 1,464 2,124 1,680 576 480 72 48 48 168 26 168 90 480 208 5,698 144 24 96 48 384 182 4,804 5,698 4,804 3.326 3,326 Background Assume you are the manager of the accounting department of Chill Limited. Chill Limited is a manufacturer and distributer of snow craft mountaineering equipment and accessories such as ice axes and crampons. The company was incorporated in 2002 under the Companies Act 1993. Chill Limited is located in an industrial area in Christchurch. The business has been growing steadily. The company complies with Tier 1 For-profit Entity financial reporting standards. Your team is in the process of preparing the financial statements for the financial year ending 31 August 2021. The financial statements will be authorised for issue on 30 September 2021. The financial statements will be circulated among the members of the board of directors for their review and approval at the next board meeting on the 25 of September 2021. Introduction The following trial balances have been supplied to you (see page 4): The draft trial balance for the financial year ending 31 August 2021. Some balance date adjustments may be required. The adjusted trial balance for the financial year ending 31 August 2020; and The post-closing trial balance for the financial year ending 31 August 2020. All the financial information for the financial year 2020 has been audited and finalised. Additional information Ignore GST implications. All the assets and liabilities are measured at historical cost except for the land. Land is not depreciated. Since early 2021, Chill Limited has engaged in negotiations with Depp Development Limited for the sale of the land. Chill Limited offered a price of $400.000. Depp Development subsequently made a counter offer of $365,000. The board of directors of Chill Limited passed a resolution to accept the price of $365,000 at the board meeting on 25 September 2021. The final draft of the sale agreement is currently under review by each company's boards of directors. The next board meeting will be held on 24 October 2021. The sale is highly probable to proceed, although it is subject to the shareholders' approval at the annual general meeting on 16 November 2021. Depp Development has secured funds for the acquisition. The settlement date has been set as 30 November 2021. The estimated total cost to sell is $4,000 for Chill. As a related matter, the fair value of land as at 31 August 2021 was determined by the independent valuer Hunters, Bolton and Associates as $360,000. The valuation report was received on 20 September 2021. Buildings, plant and equipment are depreciated using the straight-line method. The useful lives of buildings are between 20 to 50 years, whereas the useful life of plant and equipment is between 3 and 25 years. The depreciation expense of building, plant and equipment has been fully recorded Plant costing $240,000 was sold during the financial year ending 31 August 2021 for cash. Accumulated depreciation on this sold plant at the time of sale was $168.000. An item of equipment was purchased in cash for $288,000 during the financial year ending 31 August 2021. Bad debts are recorded by using the allowance approach. Debtors of $72,000 previously provided for were written off during the year ending 31 August 2021. On 23 September 2021, a news article suggested that a major customer had gone into statutory administration due to its ongoing financial difficulties. The customer owes Chill Limited $96,000 as at 31 August 2021. The collectability of this amount is now in doubt. There was no other impairment of assets during the financial year ending 31 August 2021. Additional shares of $240,000 were issued in March 2021. As at 31 August 2021, the company has 1.2 million ordinary shares on issue. On 25 September 2021, the company declared a dividend of 2 cents per share. This dividend will be paid on 30 November 2021. REQUIRED: Prepare the following financial statements according to the requirements of the New Zealand equivalent to the International Financial Reporting Standards (IFRS) and the International Accounting Standards (IAS). 1. The financial statement that presents the financial performance of the company for the financial year ending 31 August 2021. You may choose to present the financial performance in one single statement or in two statements. The expenses are classified by nature. The comparative statement(s) for the year ending 31 August 2020 is (are) required. 2. The statement of changes in equity for the financial year ending 31 August 2021. The comparative statement for the year ending 31 August 2020 is NOT required. 3. Notes to the financial statements. The notes to the financial statements should include, wherever possible, information about the reporting entity, measurement bases. a statement of relevant accounting policies and other qualitative and quantitative information required by the relevant NZ IFRS and NZ IAS you have studied in weeks 1 to 3. You shall not search for or include information about the company (which is fictitious) in addition to the information supplied in this assignment. Trail balance 2021 2021 Dr Cr (5000) (5000) 574 80 Adjusted trial balance (audited) 2020 2020 Dr Cr ($000) (5000) 422 70 Post-closing trial balance (audited) 2020 2020 Dr Cr ($000) ($000) 422 70 20 140 672 29 117 528 29 117 528 72 72 240 240 960 240 960 240 960 144 96 96 1,008 960 960 Cash Inventory - Raw materials Inventory - Work in progress Inventory - Finished goods Accounts receivable Allowance for doubtful debts Share investment Land Buildings Accumulated depreciation - buildings Plant and equipment Accumulated depreciation - plant and equipment Accounts payable Accrued expenses Income tax payable Bank loans Share capital Retained earnings Copening balance) Retained earnings (closing balance) Sales revenue Cost of sales Doubtful debts Depreciation - building Depreciation - plant and equipment Interest expense Other operating expenses Utilities Salaries and wages Income tax expense Total 96 168 30 208 264 1,200 96 192 24 182 240 960 96 192 24 182 240 960 1,464 1,262 1,464 2,124 1,680 576 480 72 48 48 168 26 168 90 480 208 5,698 144 24 96 48 384 182 4,804 5,698 4,804 3.326 3,326