The statement of financial position of Champion Ltd as at 31 December 2019 is presented below:

Statement of Financial Position as at 31 December 2019

	Cost	Accumulated depreciation
	000	000	000
ASSETS
Non-current assets
Property, plant and equipment
Building	1250	(249)	1001
Plant and Equipment	720	(144)	576
Motor vehicles	116	(55)	61
	2086	448	1638
Current Assets
Inventories			820
Trade receivables			430
Prepayments			5
Cash			18
			1273
Total assets			2911
EQUITY AND LIABILITIES
Equity
Share capital
1,200,000 ordinary shares of 1 each, fully paid			1200
Retained earnings			458
			1658
Non-current liabilities
Borrowing (secured 10% loan notes)			300
Current liabilities
Trade payables			953
Total equity and liabilities			2911

The following additional information is available:

1. The buildings have an estimated useful life of 25 years and an estimated residual value of 5,000. The straight-line method is applied to calculate annual depreciation expense. The fair value of the buildings as of 31 December 2020 was estimated to be 1,200,000 and the company revalued the buildings to their fair value on that day.

2. The plant and equipment are depreciated using the reducing balance method at a rate of 20 percent. The plant and equipment are valued using the cost model.

3. The motor vehicles consisted of a heavy truck with a cost of 76,000 and a light truck with a cost of 40,000. Both trucks had an estimated useful life of 8 years. The heavy truck had an estimated residual value of 4,000 and the light truck had an estimated residual value of 2,000. The trucks are valued using the cost model. As of 31 December 2019, both trucks had been used for 4 years. On 1 January 2020, the operating manager considered that the useful life of the heavy truck only remained 3 years. The residual value remained unchanged. The trucks are depreciated using the straight-line method. The light truck was sold on 30 June 2020 for 20,000 and the full amount was received in cash on that day.

4. The prepayments of 5,000 as of 31 December 2019 represented prepaid property insurance for the period from 1 January 2020 to 31 March 2020. On 1 April 2020, the company paid 24,000 for insurance, 6,000 of which were prepaid insurance for the period from 1 January 2021 to 31 March 2021.

5. On 1 May 2020, the company made a one-for-six bonus issue to the existing shareholders. The bonus issue was funded by the retained earnings. Immediately after the bonus issue, the company made a one-for-four right issue at 1.60 per share.

6. The loan notes were issued by a commercial bank to the company as of 31 December 2019. The loan notes are secured and have an annual interest rate of 10%. Payment for the interest associated with the loan is made every half year. On 1 July 2020, the company paid the loan interest for the first half-year. As of 31 December 2020, the loan interest for the second half-year had not been paid.

7. During the 2020 financial year, the company purchased inventories on credit for 710,000 and sold inventories (which cost 1,350,000) on credit for 2,900,000.

8. During the 2020 financial year, receipts from trade receivables totaled 1,387,500.

9. A dividend of 0.20 per share was approved by the board on 1 December 2020. The dividend was declared to the shareholders but was unpaid as of 31 December 2020.

10. Electricity expense for the first three quarters of the 2020 financial year totaled 26,000 and was paid on 1 October 2020. The electricity bill for the fourth quarter was not received by the company as of 31 December 2020. The company estimated that the electricity expense for the fourth quarter was approximately 8,000.

11. Wages totaling 654,000 were paid in cash during the 2020 financial year. Wages for casual staff, amounting to 12,000, had not been paid as at 31 December 2020.

12. Petrol costs totaling 9,000 were paid in cash during the 2020 financial year.

13. Payments to trade payables totaled 970,000 during the 2020 financial year.

14. An accounting error caused sales revenue of the 2020 financial year to be overstated by 240,000.

Required:

(a) Champion Ltd Income statement for the year ended on 31 December 2020

	000	Note
Revenue	Answer
Cost of sales	Answer
Gross profit	Answer
Operating expense
Depreciation expense	Answer
Wages expense	Answer
Electricity expense	Answer
Petrol expense	Answer
Insurance expense	Answer
Operating profit	Answer
Interest expense	Answer
Gain (loss) on asset disposal	Answer
Profit for the year	Answer

(b) Champion Ltd Statement of Changes in Equity for the year ended on 31 December 2020

	Share capital	Share premium	Asset revaluation reserve	Retained earnings	Total
	000	000	000	000	000
Opening equity	Answer	Answer	Answer	Answer	Answer
Bonus share issue	Answer	Answer	Answer	Answer	Answer
Rights issue	Answer	Answer	Answer	Answer	Answer
Gain on asset revaluation	Answer	Answer	Answer	Answer	Answer
Profit for the year	Answer	Answer	Answer	Answer	Answer
Dividend	Answer	Answer	Answer	Answer	Answer
Closing equity	Answer	Answer	Answer	Answer	Answer