Question 4 The Boatyard Limited is a distributor of boats that are used by fishermen and recreational users for ocean and freshwater use. The draft trial balance of the company for the year ended 31 December 20x6 is as follows:

THE BOATYARD LIMITED DRAFT TRIAL BALANCE AT 31 DECEMBER 20X6

	Debit	Credit
Ordinary share capital		2,000,000
Retained earnings		1,592,500
Land: Cost	5,000,000
Office equipment: Cost	1,100,000
Office equipment: Accumulated depreciation		550,000
Motor Vehicles: Cost	2,000,000
Motor Vehicle: Accumulated depreciation		800,000
Accounts receivable	675,000
Inventory	2,225,000
Cash and Bank	1,477,500
Borrowings		5,600,000
Accounts payable		760,000
Sales		9,125,000
Cost of Sales	5,475,000
Salaries expense	905,000
Bad debts expense	62,500
Marketing Expense	100,000
Depreciation: Motor vehicles	400,000
Depreciation: Office equipment	275,000
Repairs and maintenance	30,000
Travel expense	82,500
Other costs	275,000
Interest expense	220,000
Dividends declared	125,000
	20,427,500	20,427,500

Additional information:

• The ordinary share capital consists of 1 600 000 share issued at $1.25.
• $500,000 of the borrowings are repayable on 31 July 20x7.
• Boatyard Limited classifies expenses according to their function. Management categories the functions of the business into the areas of sales, administration and distribution.
  • Salaries of $555,000 relate to the administrative function and $350,000 to the distribution function. o The bad debts, marketing and depreciation on office equipment relate to the administration function.
  • The repairs and maintenance, travel and depreciation on motor vehicles relate to the distribution function.
  • The other costs are all individually not material and relate $162,500 to administration and $112,500 to distribution.

• The land is being held with the intention of building its own distribution and viewing outlet thereon, so as to save on renting costs.
• Depreciation on office equipment is recognized on the straight line basis over for years with no residual value.
• The motor vehicles are all delivery vehicles used to deliver boats to customers. Depreciation on motor vehicles is recognized on the straight line basis over five years with no residual value.
• Interest of $20,000 for December 20x6 has not yet been paid and is not yet included in the draft trial balance.
• An amount of $30,000 of the marketing expense included on the draft trial balance has been paid in advance in respect of the following period.
• The income tax expense for the current year has been correctly calculated at $162,000 and has not yet been processed or paid.
• The final dividend for the year ended 31 December 20x5 of $125,000 was declared on 18 January 20x5. The final dividend for the year ended 31 December 20x6 of $150,000 was declared on 15 March 20x7. No interim dividends were declared. Ignore the effects of dividends tax.
• There are no components of other comprehensive income.
• The financial statement has not yet been authorized for issue.

REQUIRED:

a.) Prepare the statement of profit or loss and other comprehensive income of the Boatyard Limited for the year ended 31 December 20x6 in accordance with International Financial Reporting Standards?

b.) Prepare the current assets and current liabilities sections only of the statement of financial position the Boatyard Limited at 31 December 20x6 in accordance with International Financial Reporting Standards?

c.) Prepare the statement of changes in equity of Boatyard Limited for the year ended 31 December 20x6 in accordance with International Financial Reporting Standards?