Preparation of a statement of financial position

You are the chief accountant of Wisdom, a big accounting firm in town. You requested one of your trainee accountants, Matthew to prepare the balance sheet for one of your clients, DL Vision Ltd which is a manufacturing company. Matthew later presented you with the following balance sheet of DL Vision Ltd for the year ended 30 June 2016, which you are not very happy with.

DL Vision Ltd Statement of financial position for the year ending 30 June 2016
Assets	$		Liabilities and Capital	$
Cash at bank	5,000		Allowance for doubtful debts	6,000
Cash on deposits, at call	37,500		Acc. depreciation machinery	15,250
Trade debtors	185,000		Acc. depreciation land and building	235,000
Other debtors	38,500		Bank loans	27,750
Loan to employee	65,000		Other loans	202,500
Raw materials inventory	13,250		Trade creditors	205,000
Finished goods inventory	297,500		Provision for employee benefits	38,250
Investment in associates	108,750		Provision for restructuring	15,500
Machinery	106,500		Current and deferred tax liabilities	32,500
Land and building	525,000		Provision for warranty	10,000
Goodwill	362,500		Share capital	730,000
Dividends paid	37,500		Retained earnings, 1 July 2015	190,000
			Revaluation reserve	3,750
			Profit for the year	70,500
	1,782,000			1,782,000

Additional information related to DL Vision Ltd: Current tax payable is $7,500 and deferred tax liability amounted to $25,000. Provision for warranty is in respect of a 6-month warranty on certain goods sold. $6,250 of bank loans is repayable within 1 year. $100,000 of other loans is repayable within 1 year. Loan to employee includes $12,500 receivable within 1 year. Provision for employee benefits includes $27,500 payable within 1 year. The planned restructuring is intended to be fully implemented within 1 year.

Required:

Write a memo to Matthew outlining the key problems with the statement of financial position prepared, with references made clearly to requirements of AASB101 where appropriate. Show the corrected version of the statement of financial position of DL Vision Ltd for the year ended 30 June 2016 and attach it at the end of the memo. Your corrected statement of financial position should be prepared in accordance with AASB101, using the captions that a listed company is likely to use. At this stage, you would not worry about the notes to the accounts.