QUESTION 1 (30 Marks: 63 minutes) The following is the trial balance of Eskimo Limited at 31 December 20x8: ESKIMO LIMITED TRIAL BALANCE AT Debit Credit Retained earnings (1/1/20x8) 145 000 Non- current liabilities: Loan from AB Bank 25 000 Revaluation surplus (1/1/20x8) 20 000 Ordinary share capital 240 000 Revenue: Sales 580 000 Interest income 12 500 Rent income 23 000 Cost of sales 300 000 Interest on bank overdraft 9 500 General expense 113 000 Bad debts expense 20 000 Repairs and maintenance expense 30 000 Marketing expense 22 000 Fuel expense 40 000 Depreciation expense 25 000 Salaries 50 000 Investments in listed companies 50 000 Accounts receivable 250 000 Bank 23 000 Current tax payable 12 800 Inventories 120 000 Accounts payable 225 000 Land 200 000 Equipment: Cost 100 000 Equipment: Accumulated depreciation 40 000 Income tax expense 1 800 Dividends 15 000 1 346 300 1 346 300 Additional information: ? Share capital constitutes 120 000 ordinary shares of no par value. 20 000 shares were issued for N$40 000 on the first day of the year. ? The interest and rental income are incidental to main business operations.

Page 16 of 21 ? Eskimo Limited classified expenses according to their function. Management categorise the functions of the business into the areas of sales, administration and distribution. ? Salaries of N$ 30 000 relate to the administrative function and N$20 000 the distribution function. ? Depreciation on equipment of N$10 000 relates to the administrative function and N$15 000 to the distribution function. ? The bad debts and marketing expenses relate to the administration function. ? The repairs and maintenance and fuel expenses relate to the distribution function. ? Dividends of N$15 000 in respect of the year ended 31 December 20x7 were declared and paid during January 20x8. Dividends of N$20 000 in respect of the year ended 31 December 20x8 were declared on 15 January 20x9 ? There are no movements in other comprehensive income. Required: a) Prepare the statement of profit or loss and other comprehensive income (use the expenses by function method) including earnings per share (EPS) of Eskimo Limited for the financial year ended 31 December 20x8 in accordance with International Financial Reporting Standards. (15 marks) b) Prepare the statement of financial position of Eskimo Limited at 31 December 20x8 in accordance with International Financial Reporting Standards. (12 marks) c) Prepare the following notes to the financial statement in accordance with International Financial Reporting Standards: (3 marks) a. Summary of significant policies b. Revenue