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On January 1, Year 6. HD Ltd., 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 $100,000 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 Ltd. and Olympic for the year ended December 31 Year 6 were as follows. HD Ltd. wym Homes 360,000 Assets Properties under renovation Investment In Olympic Homes Inventory Cash other assets $ 100,000 410,000 50,000 1,200,000 $1,760,000 36,000 229,000 $1,125,000 $ 500,000 220,000 Shareholders' Equity and liabilities Ordinary shares/capital contributed Retained/accumulated earnings Mortgage payable Loan payable to Mr. Saeid Accounts payable Other liabilities $ 300,000 39,000 267,000 126,000 195,000 198,000 $1,125,000 380,000 660.000 $ 1,760,000 INCOME STATEMENTS For the Year Ended December 31, Year 6 HD Ltd. Olympic Homes Sales $ 1,700,000 $ 1,140,000 Income from Olympic 40,000 1.740.000 1,140,000 Cost of goods sold 1,176,000 720,000 Selling expenses 250,000 150,000 Other expenses 110,000 111,000 Income tax expense 80,000 1.616,000 981,000 Profit 5 124,000 $ 159,000 Additional information: During Year 6, HD had sales of $102,000 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 $30,000 Olympic completed two projects under the joint operations. Olympic distributed $40,000 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 S sign in your response RELTO STATEMENTS OF FINANCIAL POSITION At December 31, Year 6 Assets Properties under renovation Inventory Cash Other assets Shareholders' Equity and Liabilities Ordinary shares Retained earnings Mortgage payable Loan payable to tr. Saeid Accounts payable Other labilities HD LTD. INCOME STATEMENTS For the Year Ended December 31, Year 6 Sales $ Income from Olympic $ Cost of goods sold Selling expenses Other expenses Income tax expense $ Profit
