Acca f3 Financial Accounting (int) Study Text
Part F Preparing basic financial statements
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Part F Preparing basic financial statements 21: Preparation of basic financial statements for companies 363 1.7 Statement of comprehensive income ABC CO STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 20X2 Illustrating the classification of expenses by function 20X2 20X1 $'000
$'000 Revenue
X X Cost of sales (X) (X)
Gross profit X X Other income X X Distribution costs (X)
(X) Administrative expenses (X) (X)
Other expenses (X)
(X) Finance cost (X) (X)
Profit before tax X X Income tax expense (X)
(X) Profit for the year X X Other comprehensive income: Gains on property revaluation X X
X X Questions in the exam may refer to an income statement: this means the entries from Revenue to Profit for the year. References to other comprehensive income means the last 3 lines. However a reference to statement of comprehensive income means the whole statement shown above. 1.8 Notes to the financial statements These notes are given as illustrations. For your exam, you only need to know five and these are listed in Section 1.9. (1)
Accounting policies
This will generally be the first note to the accounts and is governed by IAS 1 Presentation of financial statements. Disclosure of the following policies is likely. Depreciation Inventories
Revaluation of long-term assets (2) General statement of financial position disclosures
Restrictions on the title to assets Security given in respect of liabilities
Contingent assets and contingent liabilities, quantified if possible Amounts committed for future capital expenditure
Events after the reporting period (3) Property, plant and equipment
Land and buildings Plant and equipment
Other categories of assets, suitably identified Accumulated depreciation
Separate disclosure should be made of leaseholds and of assets being acquired on instalment purchase plans. Exam focus point Exam focus point 364 21: Preparation of financial statements for companies Part F Preparing basic financial statements (4)
Include, if applicable, the method and period of depreciation and any unusual write-offs during the period. Long-term investments stating the market value of listed investments if different from the carrying amount in the financial statements Long-term receivables – Accounts and notes receivable: trade – Receivables from directors – Other Goodwill
Patents, trademarks, and similar assets Development costs capitalised and their movements during the period (5)
For marketable securities, the market value should be disclosed if different from the carrying amount in the financial statements. (6)
Receivables
Accounts and notes receivable: trade Receivable from directors
Other receivables and prepaid expenses (7) Cash Cash includes cash on hand and in current and other accounts with banks. Cash which is not immediately available for use, for example balances frozen in foreign banks by exchange restrictions, should be disclosed. (8)
The following disclosures should be made separately. Share capital: disclose the following for each class of share capital. – Number of shares issued and partly paid, and issued but not fully paid – Par value per share or that the shares have not par value – Reconciliation of number of shares outstanding at the beginning and end of the year – Rights, preferences, and restrictions with respect to the distribution of dividends and to the repayment of capital – Shares in the enterprise held by itself or related companies – Shares reserved for future issue under options and sales contracts, including the terms and amounts. – Description of the nature and purpose of each reserve – Dividends proposed but not formally approved for payment – Cumulative preferred dividends not recognised Statement of changes in equity (9)
Exclude the portion repayable within one year. Secured loans
Unsecured loans
A summary of the interest rates, repayment terms, covenants, subordination and conversion features should be shown. Part F Preparing basic financial statements 21: Preparation of basic financial statements for companies 365 (10) Other liabilities and provisions The significant items included in other liabilities and in provisions and accruals should be separately disclosed. You are unlikely to meet any items of this nature in your syllabus. (11) Payables
Accounts and notes payable: trade Payables to directors
Taxes on income Other payables and accrued expenses 1.9 Examinable notes For the purposes of your syllabus, you need to be able to produce the following notes to the accounts. (a)
Statement of changes in equity (see Chapter 20 of this Study Text) (b)
Tangible non-current assets (see Chapter 9 of this Study Text) (c)
Events after the reporting period ( Chapter 22 ) (d)
Contingent assets and contingent liabilities ( Chapter 13 ) (e)
Research and development ( Chapter 10 ) Question Pro forma Before we go any further, take a blank sheet of paper and write out the 'pro forma' statement of comprehensive income and statement of financial position shown above. Mark which items are likely to require further disclosure, either by note or on the face of the statements. You must be able to account for these items when preparing the accounts of limited liability companies. Taxation
Ordinary and preference shares Shareholders' equity (share premium, revaluation surplus, reserves and retained earnings) 2 Items in the income statement and statement of comprehensive income 2.1 Revenue There are important rules on revenue recognition and these are the subject of IAS 18 Revenue. We will look at this in detail in Section 6 of this chapter. 2.2 Cost of sales This represents the summary of the detailed workings we have used in a sole trader's financial statements. 2.3 Expenses Notice that expenses are gathered under a number of headings. Any detail needed will be given in the notes to the financial statements. FAST FORWARD Yüklə 3,78 Mb. Dostları ilə paylaş:
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