RequiredPrepare a statement of comprehensive income for Firewatch Ltd in accordance with the requirements of AASB 101. Firewatch Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and classifies expenses by function within the statement. You are to apply the function of expense or cost of sales method to the classification of expenses in the income statement (see AASB101 paras 97-105).
Firewatch Ltd, has been manufacturing and selling fire fighting equipment for the last two years. Firewatch Ltd commenced operations on 1 July, 2017 by issuing 500 000 $3.50 shares, payable in full on application. There were no share issue costs. For the year ending 30 June 2020, the company recorded the following aggregate transactions: Accounts Sales 6 588 000 Interest income 11 000 Cost of Sales 4612 000 Gain on sale of plant 75.000 Employee benefit expenses - Admin 136 000 Depreciation expense Admin 54000 Selling & Distribution Expenses 932 000 Insurance expense. Admin 60 000 Doubtful debts expense 5.000 Interest expense Other borrowing expenses Income tax expense 268 000 The following additional information was noted during the preparation of financial statements for the year ended 30 June 2020: On 1 July 2019 an additional 100 000 fully paid shares were issued and fully paid to raise $400 000. A cash dividend of $180 000 was declared and paid during the 2020 financial year and a final dividend for 2020 of $114 000 was proposed but not recognised in the financial statements. Inventory was measured at the lower of cost and net realizable value. Buildings, plant and equipment were measured at cost. The benefits were expected to be received evenly over the useful life of the asset. Land was revalued upward by $100 000 (related income tax for this transaction was $30 000). The revaluation gain will not be reclassified and has been recorded in the *Land Revaluation Surplus'. The valuation was conducted by the registered valuer, Fair Valuations Pty Ltd. Financial assets held for trading are equity investments that are held for the purpose of selling and short-term profit taking. $35 000 of other loans are repayable within 1 year .$90 000 of bank loans are repayable within 1 year. The remaining amount is payable in full at the end of 2024. The provision for employee benefits includes $47 000 payable within 1 year. The warranty provision is in respect of a 12-month warranty given on certain goods sold. The bank loan is for 5 years and repayable in full at the end of the term. The interest rate is 8% and it is secured over the land. Firewatch Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and classifies expenses by function within the statement. . Summarised account balances are provided below: Year-end balances, 30 June 2020 Accounts receivable - trade 1 013 000 Allowance for doubtful debts/ impairment 48 000 Bank Overdraft 186 000 Cash on Hand 29 000 Cash on deposit, at call 428 000 Other receivables 77000 Raw Materials inventories, 30 June 2020 176 000 Finished goods inventories, 30 June 2020 726 000 Land 416 000 Huildings 160 000 Accumulated depreciation buildings 45 000 Plant and equipment 1 350 000 Accumulated depreciation plant and equipment 495 000 46 000 Accumulated amortisation of patient 5000 Koodill 910 000 Financial assets held for trading 215 000 Other loans 110 000 Bank loans 527 000 Accounts payable-trade 535 000 Provision for comployee benefits 8000 Provision for warranty 67 000 Current tax liability 65 000 Deferred tax asset 14 000 Retained carings, 30 June 2019 796 000 Share Capital 2 150 000 Dividends paid 180 000 and evaluation surplus 228 000 Patients 2. Prepare a statement of comprehensive income for Firewatch Ltd in accordance with the requirements of AASB 101. Firewatch Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and classifies expenses by function within the statement; (15 marks) 9. You are to apply the 'function of expense' or 'cost of sales' method to the classification of expenses in the income statement (see AASB101 paras 97-105); 10. You are directed to use the currenton-current format for the statement of financial position (balance sheet) and supply a "net assets line item; Firewatch Ltd, has been manufacturing and selling fire fighting equipment for the last two years. Firewatch Ltd commenced operations on 1 July, 2017 by issuing 500 000 $3.50 shares, payable in full on application. There were no share issue costs. For the year ending 30 June 2020, the company recorded the following aggregate transactions: For the year ending 30 June 2020, the company recorded the following aggregate transactions: Accounts Sales Interest income Cost of Sales Gain on sale of plant Employee benefit expenses - Admin Depreciation expense- Admin Selling & Distribution Expenses Insurance expense - Admin Doubtful debts expense Interest expense Other borrowing expenses Income tax expense 6 588 000 11 000 4 612 000 25 000 136 000 54 000 932 000 60 000 5 000 38 000 4 000 268 0001 The following additional information was noted during the preparation of financial statements for the year ended 30 June 2020: On 1 July 2019 an additional 100 000 fully paid shares were issued and fully paid to raise $400 000. A cash dividend of $180 000 was declared and paid during the 2020 financial year and a final dividend for 2020 of $114 000 was proposed but not recognised in the financial statements. Inventory was measured at the lower of cost and net realizable value. Buildings, plant and equipment were measured at cost. The benefits were expected to be received evenly over the useful life of the asset. Land was revalued upward by $100 000 (related income tax for this transaction was $30 000). The revaluation gain will not be reclassified and has been recorded in the 'Land Revaluation Surplus'. The valuation was conducted by the registered valuer, Fair Valuations Pty Ltd. Financial assets held for trading are equity investments that are held for the purpose of selling and short-term profit taking. $35 000 of other loans are repayable within 1 year $90 000 of bank loans are repayable within 1 year. The remaining amount is payable in full at the end of 2024. The provision for employee benefits includes $47 000 payable within 1 year. The warranty provision is in respect of a 12-month warranty given on certain goods sold. The bank loan is for 5 years and repayable in full at the end of the term. The interest rate is 8% and it is secured over the land. Firewatch Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and classifies expenses by function within the statement. Summarised account balances are provided below: Year-end balances, 30 June 2020 Accounts receivable - trade 013 000 Allowance for doubtful debts/ impairment 48 000 Bank Overdraft 86 000 Cash on Hand 29 000 Cash on deposit, at call 428 000 Other receivables 77 000 Raw Materials inventories, 30 June 2020 176 000 Finished goods inventories, 30 June 2020 726 000 Land 416 000 Buildings 160 000 Accumulated depreciation - buildings 45 000 Plant and equipment 1 350 000 Accumulated depreciation - plant and equipment 495 000 Patents 46 000 Accumulated amortisation of patent 5 000 Goodwill 910 000 Financial assets held for trading 215 000 Other loans 110 000 Bank loans 527 000 Accounts payable-trade 535 000 Provision for employee benefits 88 000 Provision for warranty 67 000 Current tax liability Deferred tax asset 34 000 Retained earnings, 30 June 2019 796 000 Share Capital 150 000 Dividends paid 180 000 Land revaluation surplus 228 000 65 000
