The accountant of Bacon Co. has returned to work after a sabbatical break of some years. She is unaware of the issue of HKAS 1 (revised) or the new Companies Ordinance and has prepared draft financial statements as follows in accordance with what she remembers of HKAS 1 prior to the revision:

The following information is also relevant:

1. The accountant has prepared a working schedule of non-current assets as follows:

		Land and buildings		Fixtures and fittings		License		Total
		$		$		$		$
Cost b/f		700,000		200,000		30,000		930,000
Additions		-		15,000		-		15,000
Cost c/f		700,000		215,000		30,000		945,000
Depreciation b/f		337,500		60,000		2,500		400,000
Charge for the year		12,500		5,000		2,500		20,000
Depreciation c/f		350,000		65,000		5,000		420,000
Carrying value		350,000		150,000		25,000		525,000

There have been no disposals of non-current assets in the period.

1. A property was bought on 1 January 20X8 at a cost of $208,000. Management estimates the property will be used for four years and have a $8,000 residual value. Depreciation is charged on a straight-line basis. On 1 January 20X9, a re-assessment of the remaining useful life has been done. The remaining useful life of the property is five years with $10,000 residual value. These changes have not been reflected in the financial statements.

2. Current liabilities include a tax liability of $33,700.

3. The company has acted as a guarantor for a bank loan $20,000 given to a related party. The loan is to be due next year. At the year end, the company has disclosed the fact in the notes as a contingent liability. On 24 January 20Y0, the related party was found to be bankrupt.

4. The long-term receivable balance relates to a loan to a director which is receivable in two years.

5. The company measures the license under revaluation model and it was revalued to $35,000 on 31 December 20X9.

6. Retained earnings at 1 January 20X9 is HK$332,890.

Required:

Re-draft the financial statements of Bacon Co., including a statement of changes in equity in accordance with HKAS 1 (revised). Comparatives are not required. Ignore tax effect on any necessary adjustments.

Balance sheet at 31 December 20X9 $ Non-current assets Long term receivable $ 525,000 10,000 535,000 Current assets Inventories Receivables Cash 31,200 56,450 10,900 98,550 633,550 Share capital and reserves Ordinary share capital (40,000 shares) Profits reserve 40,000 379,540 419,540 Liabilities Current liabilities Loan stock 2016 114,010 100,000 214,010 633,550 Income statement for the year ended 31 December 20X9 Turnover Cost of sales Administrative expenses Distribution and other expenses Operating profit Interest payable Profit before tax Tax Profit after tax Dividends Retained profit 1,235,000 (740,000) (267,020) (115,230) 112,750 (7,400) 105,350 (33,700) 71,650 (25,000) 46,650 Balance sheet at 31 December 20X9 $ Non-current assets Long term receivable $ 525,000 10,000 535,000 Current assets Inventories Receivables Cash 31,200 56,450 10,900 98,550 633,550 Share capital and reserves Ordinary share capital (40,000 shares) Profits reserve 40,000 379,540 419,540 Liabilities Current liabilities Loan stock 2016 114,010 100,000 214,010 633,550 Income statement for the year ended 31 December 20X9 Turnover Cost of sales Administrative expenses Distribution and other expenses Operating profit Interest payable Profit before tax Tax Profit after tax Dividends Retained profit 1,235,000 (740,000) (267,020) (115,230) 112,750 (7,400) 105,350 (33,700) 71,650 (25,000) 46,650