Task 1 Hussain Co prepared the following trial balance on 31st December 2020 before taking account of the additional information below Hussain Co Trial balance as on 31st December 2020 Debit Credit OMR OMR Revenue 2,070,000 Purchases 1,176,000 Building Cost 350,000 Building accumulated depreciation at 1 January 2020 75,000 Fixtures fitting Cost Fixtures fitting accumulated depreciation at 1 January 386,000 2020 76,600 Land Cost 300,000 Trade and other receivables 37,500 Trade and other payables 83,200 6 Debentures (redeemable at par on 1 September 2022) 40,000 Cash and cash equivalents 29,000 Retained earnings 72,700 Share Capital (R O 1 shares) 420,000 Share premium 99,000 Distribution costs 276,000 Administrative expenses 289,000 Inventories as at 1 January 2020 12,000 Dividend paid for year ended December 2020 84,000 2,939,500 2,939,500 Additional information Inventories on 31st December 2020 had a cost of OMR 18,000 and a net realisable value of OMR 15,000 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 On 1st January 2020 one of Hussain Co s premises had a refit costing 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 On 1st January 2020 the board of directors made the decision to revalue the companys land to OMR 700,000 Depreciation has yet to be charged and should be recognised in administrative expenses Hussain Co charges depreciation as follows Buildings 2 on cost Fixtures and fittings 15 reducing balance Interest has not been accounted for on the 6 debenture for the year ended on 31st December 2020 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 The income tax charge for the year is estimated at OMR 74,900 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)

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Task 1 Hussain Co. prepared the following trial balance on 31st December 2020 before taking account of the additional information below: Hussain Co. Trial balance

Task 1

Hussain Co. prepared the following trial balance on 31st December 2020 before taking account of the additional information below:

Hussain Co. Trial balance as on 31st December 2020
	Debit			Credit
	OMR			OMR
Revenue				2,070,000
Purchases	1,176,000
Building Cost			350,000
Building accumulated depreciation at 1 January 2020					75,000
Fixtures & fitting Cost Fixtures & fitting accumulated depreciation at 1 January			386,000
2020					76,600
Land Cost			300,000
Trade and other receivables			37,500
Trade and other payables					83,200
6% Debentures (redeemable at par on 1 September 2022)					40,000
Cash and cash equivalents			29,000
Retained earnings					72,700
Share Capital (R.O 1 shares)					420,000
Share premium					99,000
Distribution costs			276,000
Administrative expenses		289,000
Inventories as at 1 January 2020		12,000
Dividend paid for year ended December 2020		84,000

2,939,500 2,939,500

Additional information:

Inventories on 31st December 2020 had a cost of OMR 18,000 and a net realisable value of OMR 15,000.

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.

On 1st January 2020 one of Hussain Co.s premises had a refit costing 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.

On 1st January 2020 the board of directors made the decision to revalue the companys land to OMR 700,000.

Depreciation has yet to be charged and should be recognised in administrative expenses. Hussain Co. charges depreciation as follows:

Buildings 2% on cost

Fixtures and fittings 15% reducing balance

Interest has not been accounted for on the 6% debenture for the year ended on 31st December 2020.

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.

The income tax charge for the year is estimated at OMR 74,900.

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)