Question 2 (46 marks) Kayak Limited (Kayak') is a company listed on the Hong Kong Stock Exchange. It has its financial year end at 31 December. The following financial information has been summarized from the books of Kayak on 31 December 2018: Credit Sm Debit Plant, property and equipment (PPE) Accumulated depreciation Inventory Trade receivables Cash and bank balances Share capital Asset revaluation reserve at 1 January 2018 Retained profits at 1 January 2018 Trade payables Tax payables Long-term bank loans Provision for bad debts 1 January 2018 Provision for audit fee Sales Cost of sales Tax expense Selling and distribution expenses General and administrative expenses 1,478,000 - PPE 436,000 220,000 128,000 300,000 700,000 80,000 156,885 165,000 45,900 278,000 6,300 15 1,103,000 650,000 35,600 92,700 66,800 2.971.100 2.971.100 The above financial data does not take into consideration the following issues From past experience, the management estimated that 4% of trade receivables were uncollectible 1 ii On 28 February 2019, Kayak received the bil from the auditor for the audit fee of 2018 financial statements. The invoice amount was $20 million. iii Land is measured using the revaluation model. In late January 2019, Kayak received confirmation that land should be revalued upwards by S10,000 million as at 31 December 2018. Land is not subject to depreciation. iv The financial statements were to be published on 25 April 2019 Required: With reference to relevant financial reporting standards in Hong Kong a Explain whether each of the above items (i) to (iii) should be included in the financial statements for the year ended 31 December 2018. If the answer is yes, what should be the amount? (15 marks) b Prepare the statement of profit or loss and other comprehensive income of Kayak for the year ended 31 December 2018. (14 marks) Prepare the statement of financial position of Kayak for the year ended 31 December 2018. c (17 marks)