You are the recently appointed accountant of ICANS Ltd. The following list of balances as at 31 December 2015 and additional information is presented to you:

Amount in (N$)

Account details

Issued share capital:

Ordinary share capital ( 1 500 000 shares of N$ 1 each)

12% Declared Preference share capital (200 000 shares of N$ 2.5 each)

Retained earnings (01/01/2015) General reserve

Share premium

2% ACCRA Mortgage bond Trade and other payables

Land and buildings at cost Delivery vehicles at cost Office furniture at cost Computer equipment at cost Accumulated depreciation: Delivery vehicles

Office furniture

Computer equipment

Inventory (01/01/2015)

Trade and other receivables

Cash and cash equivalents

Sales

Rental income

Purchases

Return inwards

Return outwards

Freight on purchases

Freight on sales*

Sales commission*

Salaries and wages

Fuel and maintenance expenses* Stationery

Telephone expenses

Water and electricity

Credit losses

Provision for credit losses (01/02/2015)

1 500 000

500 000 965 235 70 000 125 000

1 575 000 75 215

1 750 000 550 275 235 132 150 000

125 135 85 000

55 000

20 000 105 000 185 000

1 525 000 60 000 650 000 10 000

15 000 2 500

3 500 15 000 350 000 1 750 15 000 6 752 18 500 1 321

5 100

*Sales distribution expenses

The companys authorized share capital consists of:

2 000 000 ordinary shares of N$ 1 each

500 000 12% preference shares of no par value

The following additional information should be taken into consideration:

1. The inventories amounted to N$ 55 000 on 31 December 2015.

2. Carriage on purchases of N$ 1 525 is not yet paid.

3. Part of the administration building was rented out from 01 August 2015 for N$

15 000 per month.

4. On 01 July 2015, a delivery van that was purchased on 31 July 2013 for N$

35 000 and with an accumulated depreciation of N$ 12 000 on 01 January 2015,

was sold for N$ 16 500 cash.

5. Depreciation is provided for as follows:

No depreciation is provided for on land and buildings

Office furniture- 15% per annum on cost

Delivery vehicles- 20% per annum on diminishing balance method (used

for the distribution of sales only)*

Computer equipment- 25% on cost

6. Water and electricity for the month of December amounted to N$ 1 026. This account was only received on 05 January 2016 and is not recognized yet.

7. The loan was received on 01 January 2014 and is secured by land and buildings, the interest rate is 2% per year on the outstanding balance and the loan is repayable in annual instalments of N$ 87 500 over 20 years every 31 October. Provision should be created for interest on loan for 31 December 2015.

8. The telephone expense of N$ 702 is still outstanding and must be paid.

9. The allowance for credit losses must be adjusted to 5% of outstanding debtors.

10.The company purchased land and buildings (Erf 151, Klein Windhoek) on 01

January 2014 for N$ 1 750 000 by taking out a loan from ACCRA bank. The companys accounting policy states that land and buildings should be revalued. Mr Pieters, a sworn appraiser, revalued the land and buildings on 31 December at a fair value of N$ 2 100 000. No entries pertaining to the revaluation have been recorded.

11.The shareholders approved a final dividend of 25c per share on 31 December 2015.

12.Assume a tax rate of 28%.

REQUIRED:

Prepare the following financial statements for ICANS Ltd to comply with the requirements of IAS 1 and Companies Act 71 of 2008.

1. Statement of profit or loss and other comprehensive income for the year ended 31 December 2015 according to the function of expenses method. (25 marks)

2. Statement of changes in equity for the year ended 31 December 2015.