Question 1 (20 marks] You are the financial accountant of Berjaya Ltd, which commences operations from 1 July 2019. A trainee accountant prepared its first statement of profit or loss and other comprehensive income, and statement financial position from the trial balance. Berjaya Ltd Statement of profit or loss and other comprehensive income for the year ended 30 June 2020 $/ Sales revenue Interest income Marketing expense Rental expense Cost of sales Depreciation expense Insurance expense Annual leave expenses Prepaid insurance Repair & maintenance Salaries and wages Office expense Utilities expense Warranty expense 1,542,500 2,000 (120,000) (20,000) (695,000) (30,000) (31,000) (26,000) (4,000) (32,000) (120,000) (9,500) (18,000) (12,000) Profit before tax Finance costs Income tax expense 427,000 (15,000) (145,000) 267,000 Profit for the year Other comprehensive income: Bad debts Total comprehensive income for the year (8,500) 258,500 Berjaya Ltd Statement of financial position as at 30 June 2020 $000 Assets Cash at bank Trade receivables Less: Trade payables Inventory Property, plant, equipment and intangible assets Repair costs for property, plant and equipment Cash management account Total assets 128,300 122,000 (25,000) 98,000 320,000 25,000 88,000 756,300 Liabilities Provision for warranty Allowance for doubtful debts Accumulated depreciation - property, plant and equipment Loan - Westpac Loan - Commonwealth Bank Current and deferred tax liabilities Provision for annual leave Total liabilities 297.800. Net assets 1.054.100 4,300 9,500 30,000 150,000 39,000 57,000 8,000 Equity Retained earnings Share capital - ordinary shares Total equity 258,500 200,000 458,500 Additional information: Berjaya Ltd is a reporting entity in accordance with the requirements of Australian's Conceptual Framework. The following expenses are allocated for administrative expenses and distribution costs for the #urposes of preparation of the statement of profit or loss and other comprehensive income: Administrative expenses Distribution costs . Marketing expense 100% Rental expense 50% 50% Depreciation expense 30% 70% Insurance expense 50% 50% Annual leave expenses 60% 40% Repair & maintenance 30% 70% Salaries and wages 60% 40% Office expense 50% 50% Utilities expense 50% 50% Warranty expense 50% 50% Bad debts 100% The intangible assets included in the property, plant and equipment amounted to $20,000 relates to a patent acquired on 1 July 2019. The patent allows Berjaya td to trade a unique product in the market for a period of 5 years. Provision for warranty related to warranty provided to customers that are expected to be claimed within the next 6 months. On another note, $2,000 of the provision for annual leave is expected to be paid off within the next 12 months. Current tax liability for the financial year amounted to $32,000. Bank loans from Westpac and Commonwealth Bank are repayable after two years. Berjaya Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and the directors would like to present an analysis of expenses by function on the statement. In relation to the statement of financial position, where AASB 101 requires entities to disclose further sub-classifications of the minimum line items on the face of the statement or in the notes, the directors of Berjaya Ltd want to report only the minimum line items on the face of the statement, and leave the sub-classifications to be disclosed in the notes. . . . Required: (0) Review the financial statements prepared by the trainee accountant. Explain to the trainee accountant of the corrections and/or changes need to be made to the financial statements to ensure that they comply with the requirements of AASB 101. Provide references to relevant paragraphs in the accounting standards where appropriate to support your response given. (ii) Prepare corrected statement of profit or loss and other comprehensive income and statement of financial position of Berjaya Ltd for the year ended 30 June 2020, in line with the advice provided above. Notes: 1. You are not required to discuss any hote disclosures or notes to the accounts; and 2. In preparing the above statements, you should use the line items that a listed company is likely to use and refer to paragraphs 54, 82, and 82A of AASB 101 in determining the line items to be presented. Marking guide for Question 1 Max. marks allocated Discuss corrections/changes needed 7 References 3 Corrected SPLOCI 3 Corrected SFP 5 Presentation 2 Total 20