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ACCG923/ACCG612 Seminar 8
Learning objectives
Going concern
There is an assumption that all entities adopt the going
concern basis of accounting
Exception applies where management intends to
liquidate or cease trading
In such cases a liquidity basis is adopted
Comparative information
Comparative information for the immediately preceding
reporting period must be disclosed for all amounts
(including narrative discussion)
Consistency of presentation
Financial information must be consistently presented from
one period to the next unless:
There has been a significant change in the entitys
operations
A change in presentation or classification will provide
more relevant information
A change in presentation or classification is required
by another accounting standard
Identification of the financial
statements
Assets
Liabilities
Equity
No prescribed format in AASB 101, but assets and liabilities to be
classified on basis of:
Current/non-current
In order of their liquidity (commonly by banks)
Current assets are those realised or consumed within an entitys
operating cycle
Current liabilities are those expected to be settled within an entitys
operating cycle.
An operating cycle is the time taken from acquisition of goods
to the receipt of cash or cash equivalents and can be greater
than 12 months
Statement of Financial Position (SOFP)
Profit or loss
AASB101 adopts an all-inclusive approach to the
determination of a companys profit or loss
All items of income and expense recognised into period
must be included in the companys profit or loss. The only
exclusions relate to
CORRECTIONS OF ERRORS AND THE EFFECTS OF CHANGES IN
ACCOUNTING POLICIES
PROVISIONS WITHIN OTHER AASBS THAT REQUIRE OR PERMIT
COMPONENTS OF OTHER COMPREHENSIVE INCOME TO BE
EXCLUDED FROM PROFIT OR LOSS.
Statement of Profit or Loss and Other
Comprehensive Income
Required
Based on the ledger balances and the additional information provided, prepare a
statement of profit or loss and other comprehensive income (classify expenses by nature),
a statement of financial position and a statement of changes in equity for Star Ltd for the
year ended 30 June 2017, to comply with AASB 101.
[Comparative information must be disclosed in respect of the preceding period for all
amounts reported in the current period's financial statements in accordance with AASB 101
paragraph 38. However this information is not provided in the question].
Example Cont
Workings:
*Depreciation:
Plant $ 9 000
Office furniture 800
Buildings 2 500
12 300
**Other expenses:
Other expenses $ 163 500
Less interest expense (31 000)
132 500
***Gain arising during the year on revaluation of:
Land (300 000 211 500) $ 88 500
Buildings (350 000 (250 000 (2 500 acc. dep. + 2 500 dep.))) 105 000
Example Cont
STAR LTD
Statement of Financial Position
as at 30 June 2017
ASSETS
Current assets
Cash and cash equivalents $ 278 800
Trade and other receivables* 505 450
Inventories 651 100
Total curre nt assets 1 435 350
Non-current assets
Property, plant and equipment** 725 850
Goodwill 200 000
Total non-current assets 925 850
Total assets $ 2 361 200
LIABILITIES
Current liabilities
Trade and other payables*** $ 162 000
Current tax payable 150 000
Total curre nt liabilities 312 000
Non-current liabilities
Long-term borrowings**** 93 500
Deferred tax liabilities***** 111 050
Long-term provisions 75 000
Total non-current liabilities 279 550
Total liabilities $ 591 550
EQUITY
Share capital $ 1 062 500
Reserves 380 450
Retained earnings 326 700
Total equity $ 1 769 650
Workings:
****Long-term borrowings:
Bank loan $ 43 500
Mortgage 50 000
93 500
STAR LTD
Statement of Changes in Equity
for the year ended 30 June 2017
Dividends: 2 cents
Notes