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  • 1.
    • Disclosure & Reporting of
    • Company Financial Statements:
    • Statements of Financial Position & Performance
    Text : Leo & Hoggett Chap 5 & 6
  • 2. Objectives
    • Be able to prepare company financial statements in accordance with required accounting standards (AASBs)
    • Week 1- Statement of Financial Performance
    • - Statement of Financial Position
    • Week 2 - Additional notes to financial
    • statements
  • 3. A pplication of Reporting Entity
    • This standard is a means of differential reporting
      • SAC1 reporting entities that reasonable to expect the existence of users dependent on general purpose reports
      • General Purpose Reports
      • where users cannot demand special purpose reports these must be prepared in accordance with AASB’s
    • We assume all companies reporting entities
    AASB1025
  • 4. Legislative Requirements
    • Company Financial Statements
      • as per Corporations law coy must prepare Profit & Loss Statement & Balance Sheet
        • AASB 1018 Statement of Financial Performance (interpreted as P & L)
        • AASB 1040 Statement of Financial Position (interpreted as Balance Sheet)
        • Cash Flow Statements - not covered in this unit
    • Plus
      • Notes to Financial Reports
      • Directors Statement/Report
      • Auditors Report
  • 5. Financial Statements
    • Financial Statements
      • Must be prepared in accordance with the AASB s provided a REPORTING ENTITY- AASB 1025
    • In the 2 weeks we will look at the major standards covering the requirements for preparation of Financial Reports
  • 6. Overriding Accounting Standards
    • AASB 1001 Accounting Policies
    • AASB 1031 Materiality
  • 7. AASB 1001 Accounting Policies
    • Setting policy
      • Basic rules adopted when preparing reports
      • Consider whether relevant and reliable
    • Changing policies
      • Entity required to report the changes made to policy from previous years ie so comparable over the years
    • Disclosures of policies
      • Standard requires the entity to set down the rules used in a NOTE to the accounts (refer text for example)
        • Measurement adopted
        • Specific policies
        • Uncertainty re going concern
  • 8. Materiality
    • The concept of “TRUE & FAIR” does not mean absolutely complete and accurate rather implies reasonably correct
      • ie some errors & omissions may occur
    • All accounting information is assessed against the concept of materiality
    • An item is material when its omission , mis-statement or non-disclosure in a financial report could jeopardise the quality of decision making and evaluations based on the report.
    AASB1031
  • 9. Materiality
    • Para 4.1.6 Guidelines
      • if 10% or more of the base material
      • if 5% or less of the base immaterial
      • between 5% and 10% - own judgement
    • Base (select largest % impact)
      • balance sheet either total equity or the relevant balance sheet class
      • profit and loss- the operating profit or appropriate revenue/expense
    AASB1031
  • 10. The Trilogy
    • 3 main standards of presentation
      • AASB 1018 Statement of Financial Performance
      • AASB 1034 Financial Report Presentation & Disclosure
      • AASB 1040 Statement of Financial Position
  • 11. AASB 1034 Financial Report Presentation & Disclosure
    • Sets out the General Requirements para 4
      • Must be in English
      • Must be in Australian Currency
      • Must provide comparative figures
      • Must display _
        • Name of reporting entity
        • reporting date or period covered
  • 12. Statement of Financial Performance
    • No format specified however appendix 1 to the standard gives an example
    • Starting Point- Profit and Loss Statement use this to prepare the Statement of Financial Performance
    AASB1018
  • 13.
    • Bulldog Ltd
    • Profit & Loss Statement
    • for the year ended 30 June 2003
    • Revenues
    • Sales 1 540 000
    • Other 280 000 1 820 000
    • Expenses
    • Selling Expenses 1 265 300
    • cost of Sales etc
    • Administration Expenses 280 000
    • details
    • Financial Expenses
    • details 35 900 1 581 200
    • Net Profit 238 800
    • Tax Expense 71 640
    • Net Profit after tax $ 167 160
  • 14.
    • Bulldog Ltd
    • Statement of Financial Performance
    • for the financial year ended 30 June 2003
    • Revenue from ordinary activities 1 820 000
    • Expenses from ordinary activities (1 579 700)
    • Borrowing Costs (1 500)
    • Profit from Ordinary act before tax 238 800
    • Income tax expenses from ord act. (71 640)
    • Profit from ord act after tax 167 160
    • Profit or Loss on extraordinary items - after tax -
    • Net Profit or Loss 167 160
    • Increase in asset revaluation reserve 60 000
    • Total changes in equity other than those resulting
    • from transactions with owners $227 160
  • 15. Statement of Financial Performance
    • Extraordinary Items
      • Must be disclosed
    • Must meet 2 tests to be considered extraordinary:-
        • Outside normal operations
        • & non-recurring in nature
      • extremely rare
      • e.g. Earthquake or other natural disaster - however if region subject to such disasters then not extraordinary
    AASB1018
  • 16. Statement of Financial Position
    • Starting point the Balance Sheet
    • No prescribed format however para 4.1 & 4.2 asstes & liabilities must be classified as either
      • Current /Non-current or
      • Liquidity if more appropriate
    • Basic Formats refer appendix to standard
    • Use Current/Non-current classification for this unit
    AASB1040
  • 17.
    • Bulldog Ltd
    • Balance Sheet as at 30 June 2003
    • Current Assets Current Liabilities
    • Cash 64 000 Accounts Payable 60 000
    • Accounts Rec . 218 000 Interest Payable 9 300
    • Allow. for D Debts 10 900 207 100 Tax Payable 79 640
    • Inventory 250 000 Provision for Dividend 120 000
    • Prepaid Insurance 6 000
    • Non-Current Assets Non-Current Liabilities
    • Land - at cost 100 000 Loan Payable 12 000
    • Motor Vehicles 300 000
    • Acc Depn (180 000) 120 000 Equity
    • Store Equip 585 000 Capital 887 000
    • Acc Depn (65 000) 520 000 Reserves
    • Goodwill 140 000 ARR 160 000
    • Amortisation (7 000) 133 000 General Reserve 75 000
    • Research & Dev 100 000 Retained profits 87 160
    • Amortisation (10 000) 90 000
    • $1 490 100 $ 1490 100
  • 18.
    • Bulldog Ltd
    • Statement of Financial Position
    • as at 30 June 2003
    • Current Assets 527 100
    • Cash assets 64 000
    • Receivables 207 100
    • Inventories 250 000
    • Other 6 000
    • Non-Current assets 963 000
    • Property, plant & equipment 740 000
    • Intangible assets 133 000
    • Other 90 000
    • Total Assets $ 1 490 100
    • Current Liabilities 268 940
    • Payables 69 300
    • Current tax liabilities 79 640
    • Provisions 120 000
    • Non- current liabilities 12 000
    • Interest-bearing liabilities 12 000
    • Total Liabilities $280 940
    • Equity
    • Contributed 887 000
    • Reserves 235 000
    • Retained Profits 87 160 $1 209 160
  • 19. Other Requirements - AASB 1018
    • Revision of accounting Estimates
      • eg doubtful debts / depreciation
      • effect to be recognised in reporting period
    • Errors
      • correct in period discovered or can amend & re-issue accounts
    • Fundamental errors
      • (so signiicant material effect on accounts)
      • re-issue accounts however if too costly then alternative
      • disclosure this year (refer appendix 4 AASB1018)
        • nature of error
        • separate line item & tax effect
        • note to accounts
    @*# JOHNSON
  • 20. Tutorial Questions
    • Question 1 - Exercise 6.1
      • Amend the Selling & Administration Exps to $60 000)
    • Question 2 - Exercise 6.4
    • Question 3 - Exercise 6.5
    @/*# JOHNSON

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