REQUIRED

a. As far as the information permits, prepare a statement of comprehensive income and a statement of changes in equity for Hussain Co. for the year ended 31 December 2020 and a statement of financial position as at that date, in a form suitable for publication. (40Marks)

b. Discuss the importane and limitations of financial statements. (10Marks)

Administrative expenses 289,000 12.000 Inventories as at 1 January 2020 Dividend paid for year ended December 2020 84,000 2,939,500 2,939,500 Additional information: (1) Inventories an 31st December 2020 had a cost of OMR 18,000 and a net realisable value af OMR 15,000. Task 1 121 On 1st June 2020Hussain Co. Issued 300,000 OMR1,000 ordinary shares at a cash price of OMR1.250 per share. The full amount has been recognised in ordinary share capital. Hussain Co. prepared the following trial balance on 31st December 2020 before taking account of the additional information below: (31 On 1st January 2020 one of Hussain Co.'s premises had a refit casting OMR 120,000 and this was recognised in administrative expenses. However, on further investigation, it was discovered that half of the amount should have been recognised as part of fixtures and fittings in accordance with IAS 16 Property, plant and Equipment. Hussain Co. Trial balance as on 31st December 2020 Debit Credit OMR OMR 41 On 1st January 2020 the board of directors made the decision to revalue the company's land to OMR 700,000 2,070,000 1.176.000 350.000 (51 Depreciation has yet to be charged and should be recognised in administrative expenses. Hussain Co. charges depreciation as follows: 75,000 Buildings -2% on cost Fixtures and fittings - 15% reducing balance 386,000 76,600 (6) Interest has not been accounted for on the 6% debenture for the year ended on 31st December 2020. 300,000 Revenue Purchases Building - Cost Building - accurnulated depreciation at 1 January 2020 Fixtures Refitting - Cost Fixtures & fitting -accumulated depreciation at 1 January 2020 Land - Cost Trade and other receivables Trade and other payables 6% Debentures fredeemable at par an 1 September 2022] Cash and cash equivalents Retained earnings Share Capital (R.O 1 shares Share premium Distribution costs 37,500 83,200 40,000 171 Hussain Co. is defending a court case as a customer is claiming damages due to accidentally slipping off the stairs in one of the retail outlets. The legal advisors have indicated that there is an 80% chance that Hussain Co. will have to pay OMR20,000 and a 20% chance they will have to pay OMR50,000. The case will be settled during 2021. Any related expense should be recognised in administrative expenses. 29,000 72,700 420,000 99,000 181 The income tax change for the year is estimated at OMR 74,900. 276,000 Pg.4 Version 1 Pg. Version 1 | Administrative expenses 289,000 12.000 Inventories as at 1 January 2020 Dividend paid for year ended December 2020 84,000 2,939,500 2,939,500 Additional information: (1) Inventories an 31st December 2020 had a cost of OMR 18,000 and a net realisable value af OMR 15,000. Task 1 121 On 1st June 2020Hussain Co. Issued 300,000 OMR1,000 ordinary shares at a cash price of OMR1.250 per share. The full amount has been recognised in ordinary share capital. Hussain Co. prepared the following trial balance on 31st December 2020 before taking account of the additional information below: (31 On 1st January 2020 one of Hussain Co.'s premises had a refit casting OMR 120,000 and this was recognised in administrative expenses. However, on further investigation, it was discovered that half of the amount should have been recognised as part of fixtures and fittings in accordance with IAS 16 Property, plant and Equipment. Hussain Co. Trial balance as on 31st December 2020 Debit Credit OMR OMR 41 On 1st January 2020 the board of directors made the decision to revalue the company's land to OMR 700,000 2,070,000 1.176.000 350.000 (51 Depreciation has yet to be charged and should be recognised in administrative expenses. Hussain Co. charges depreciation as follows: 75,000 Buildings -2% on cost Fixtures and fittings - 15% reducing balance 386,000 76,600 (6) Interest has not been accounted for on the 6% debenture for the year ended on 31st December 2020. 300,000 Revenue Purchases Building - Cost Building - accurnulated depreciation at 1 January 2020 Fixtures Refitting - Cost Fixtures & fitting -accumulated depreciation at 1 January 2020 Land - Cost Trade and other receivables Trade and other payables 6% Debentures fredeemable at par an 1 September 2022] Cash and cash equivalents Retained earnings Share Capital (R.O 1 shares Share premium Distribution costs 37,500 83,200 40,000 171 Hussain Co. is defending a court case as a customer is claiming damages due to accidentally slipping off the stairs in one of the retail outlets. The legal advisors have indicated that there is an 80% chance that Hussain Co. will have to pay OMR20,000 and a 20% chance they will have to pay OMR50,000. The case will be settled during 2021. Any related expense should be recognised in administrative expenses. 29,000 72,700 420,000 99,000 181 The income tax change for the year is estimated at OMR 74,900. 276,000 Pg.4 Version 1 Pg. Version 1 |