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Workshop Solution Presentation of Financial Statements

Exercise 19.6 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Required

Prepare the statement of profit or loss and other comprehensive income of Lachlan Ltd for the year ended 30 June 2013, showing the analysis of expenses in the statement.

Lachlan Limited

Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2013

$'000

Revenue

1 200

Cost of sales

(840)

Gross profit

360

Other income

54

Selling and distribution expenses

(76)

Administrative expenses

(35)

Finance costs

(18)

Profit before tax

285

Income tax expense

(85)

Profit for the year

200

Other comprehensive income:

Revaluation gain on land, net of tax

4

Revaluation loss on available-for-sale financial assets, net of tax

(1)

Total comprehensive income for the year

203

Calculations:

Other income comprises:

$’000

Gain on sale of plant

5

Interest income

24

Valuation gain on trading securities

20

Dividend revenue

5

54

Multiple Choice Questions:

  1. The primary source of information about an entity’s financial position is to be found in its:
  2. statement of profit or loss and other comprehensive income

*b. statement of financial position

  1. statement of changes in equity
  2. statement of cash flows.
  1. According to AASB 101, a required format for the presentation of a statement of financial position is:
  2. not prescribed and no guidance is provided in the standard

*b. not prescribed but guidance is provided in the standard for a suitable format

  1. prescribed by the standard
  2. not prescribed by the standard but details are found in the Corporations Act.
  1. Which of the following items, if it exists, must be presented as a line item in the statement of financial position?

*a. Trade and other receivables

  1. Revenue
  2. Cost of sales
  3. Share of profit of associates.
  1. An entity is required to classify its assets and liabilities as current or non-current unless it is considered more relevant and provide more reliable information to present them according to their:
  2. value

*b. liquidity

  1. age
  2. physical nature.
  1. If a liability satisfies the following criterion it will be classified as non-current:
  2. due to be settled within twelve months of the balance date
  3. expected to be settled in the entity’s normal operating cycle

*c. due to be settled more than twelve months after the statement of financial position date

  1. it is held primarily for the purpose of being traded.
  1. Which of the following items, if it exists, does NOT have to be presented as a line item on the face of a statement of profit or loss and other comprehensive income?
  2. revenue

*b. closing inventory

  1. profit or loss attributable to non-controlling interests
  2. post-tax profit or loss of discontinued operations.
  1. A set of financial statement prepared in accordance with AASB 101 comprises:
  1. A statement of financial position

II.A statement of profit or loss and other comprehensive income

III. A statement of cash flows.

  1. A statement of changes in equity.
  2. Notes.
  1. I, II, and IV;

*b. I, II, III IV and V:

  1. I, III and IV;
  2. I, II, III and IV.
  1. Under AASB 101, financial statements must be prepared and presented at least:

*a. annually;

  1. half-yearly;
  2. each three months;
  3. at the end of each month of operations.
  1. Examples of classification of expenses by their nature are:
  2. Employee expenses and distribution expenses.
  3. Depreciation and marketing expenses.
  4. Borrowing costs and distribution expenses.
  5. Employee expenses and depreciation expenses. **
  1. If it is found that an error had been made in a prior period:
  2. The error should be rectified by including the item of income or expense in the period in which the error was discovered.
  3. AASB 101 does not cover this concept and so no entry is required.
  4. AASB 108 requires that errors are corrected via an adjustment to opening retained earnings.**
  5. Material errors discovered in the current reporting period must be included in that period’s income statement, while non-material errors may be corrected with an adjustment to opening retained earnings.

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