Annual Report Of ABC Limited:

Financial statements:

In the books of XYZ limited Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper
Income Statement
for the year ended 30th June,2016
Particulars	Note Para 81(A)(c) and 82 Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	Amount
Sales Revenue		$41,359,400
Less: Sales Return		$2,130,000
Net Sales Revenue		$39,229,400
Services Revenue		$13,593,000
Net Total Revenue		$52,822,400
Less: Cost of Sales		($21,490,000)
Gross Profit		$31,332,400
Operating Expenses:
Employee Expenses	1	($8,647,000)
Provision for Annual Leave	2	($43,000)
Provision for Warranty Expense	3	($1,586,000)
General Operating Expenses		($4,560,000)
Sponsorship to Employee		($1,500)
Depreciation Expense	4	($1,314,000)
Doubtful Debts Expense		($1,492,000)
Auditors’ Fees		($815,000)
Other Misc. Expenses		($3,837,600)
Net Operating Profit		$9,036,300
Other Non-Operating Income/(Expenses):
Rent Revenue		$83,400
Profit on Sale of Old Furniture	5	$125,000
Strategic Review Costs	6	($465,000)
Interest Income		$1,250
Provision for Legal Claim	7	($575,000)
Net Profit before Interest & Tax		$8,205,950
Finance Cost	8	($536,500)
Net Profit before Tax		$7,669,450
Less: Income Tax Expenses		($2,300,835)
Net Profit for the period		$5,368,615

Particulars	Share Capital	Retained Earnings	General Reserve
Opening Balance as on 1/07/2015		$9,101,050	$400,000
Fully Paid Shares	$2,750,000
Partly Paid Shares	$1,500,000
Paid-up Capital	$4,250,000
Receipt of Calls	$900,000
Dividend Paid		($412,500)
Net Profit for the year		$5,368,615
Dividend Declared		($360,000)
Share Issuance Cost	($39,000)
Transfer to General Reserve		($4,600,000)	$4,600,000
Closing Balance as on 30.06.16	$5,111,000	$9,097,165	$5,000,000

In the books of XYZ limited
Balance Sheet
As on 30th June,2016
Particulars (Paragrapgh 54)	Amount	Amount
Current Assets:
Cash at Bank		$490,000
Accounts Receivable	$4,218,600
Less: Allowance for doubtful debts	($297,000)	$3,921,600
Inventory		$2,348,420
Prepaid Rent Revenue		$13,900
Deferred Revenue Expenditure:
Analysis by Auditors	$805,000
Future Trend Analysis	$850,000
Shop Improvement Analysis	$280,000	$1,935,000
Total Current Assets		$8,708,920
Non-Current Assets:
Shop Furniture & Fittings,net,		$5,980,000
Equipment,net	$2,024,000
Add: Overstatement of Depreciation	$260,000	$2,284,000
Buildings,net		$4,950,000
Land,at cost		$6,320,400
Total Non-Current Assets		$19,534,400
Total Assets		$28,243,320
Current Liabilities:
Provision for Annual Leave		$490,000
Current Portion of Provision for Warranty Expense		$640,900
Accounts Payable		$74,000
Accrued Expenses	$17,320
Add: Interest Payable	$267,000	$284,320
Dividend Payable		$360,000
Tax Payable		$2,300,835
Total Current Liabilities		$4,150,055
Non-Current Liabilities:
Loan from WB Bank		$4,000,000
Provision for Warranty expenses		$345,100
Provision for Legal Claim		$540,000
Total Non-Current Liabilities		$4,885,100
Total Liabilities		$9,035,155
Equity:
Share Capital		$5,111,000
Retained Earnings		$9,097,165
General Reserve		$5,000,000
Total Equity		$19,208,165
Total Equity & Liabilities		$28,243,320

The consolidated financial statement of ABC limited is prepared in accordance with Australian Accounting standard Borad101. The standard is in accordance with International Financial reporting standard that is issued by the international standard board. At the end of the financial year 2016, the consolidated financial statement of ABC limited is prepared in accordance with the requirement of

Australian Accounting standard board 101
Is prepared as a going concern

In accordance with the AASB 101, the preparation is not applicable to content and structure condensed in the interim financial statements. ABC limited is a profit making entity and the terminology is suitable to be used. There are three different paragraphs that have been referred with and statements bare pre3eparesd in accordance with the AASB 101.

In Paragraph 54 of AAASB 101, the items are included that are sufficiently different in nature or function. According to this paragraph, there are several items that have to be included in the financial statements. The items are deferred tax assets and liabilities along with the current tax assets and liabilities as defined by AASB 112 of the income tax. Many other items are also included in the preparation of balance sheet. Income statement has been prepared in accordance with the paragraph 81(A) to 82. In addition to the paragraph 85 requirement.

In addition to the requirement of Australian accounting standard in preparation of profit and loss statement, it has been prepared by referring to the AASB 101. The statement have been prepared in accordance with paragraph 81 (A) and 82.It is required to include tax expense, revenue and finance cost. For the relevanvcce3 of understanding the financial position of the company, it is required to present subtotals, additional line items and headings in the income statement.

Paragraph 106 of AASB 101 has been used in preparing the statement of changes in equity. As per the requirement of paragraph 10, the statements of changes in equity have been prepared. The items used in preparing the statement of changes in equity of ABC limited involve the items of comprehensive income. In accordance with AASB 108, each component of equity is recognized as per AASB 102.

Cash and cash equivalent- Cash and cash equivalent are subjected to some significant changes risk of change in value and they comprise of cash at bank, cash in hand and all short-term deposits that are readily converted into amount of cash. The component has been mentioned in accordance with paragraph 54.

Financial guarantee- Financial guarantee are recognized as financial liability and as in accordance with paragraph 54 of AASB 101. Valuation of financial lioability is done at subsequently higher price and at fair value.

Depreciation- Depreciation of assets of ABC limited is calculated over the estimated useful life of assets. With respected to internally constructed assets, depreciation are calculated from the date of acquisition. Under finance lease, ABC limited will obtain the life of assets. Useful lives of assests are revalued annually. It has been mentioned in accordance with the Para 81(A)(c).

Finance costs-Finance cost is calculated using the effective interest method and is comprised of interest that is payable on borrowing. The interest rate that is applicable to ABC limited is used for calculating the cost of borrowing. Note 8 of the financial statement depict finance cost and it is valuated according to the paragraph 82 of AASB 101.

Income Statement

Provision on legal claim- This comprised of cost that is required in addressing the potential legal claim of ABC limited. This is the component of income statement that is mentioned accordance with AASB 101 in paragraph 81(1)(c). Some of the other components are represented in the income statement under same paragraph in the note 5, note 4 and note 6.

Tax expense- ABC limited is paying expected amount of tax that is payable in the year 2016. At the balance sheet, tax amount6 is substantially enacted and the tax payable in previous year is adjusted to tax amount of that year. The amount of tax that is payable is mentioned and depicted according to the paragraph 82 of AASB 101.

Post balance date events- There would be material impact of date of any other report on consolidated financial statements.

Notes :

Employee Expenses	9430000
Less: Annual Leave Expenses	783000
Net Employee Expenses	8647000

Provision for Annual Leave:
Closing Balance	490000
Add: Annual Leave Expense	783000
	1273000
Less: Opening Balance	1230000
Annual Provision for Annual Leave	43000

Provision for Warranty Expense:
Closing Balance	986000
Add: Annual Warranty Expense	1290000
	2276000
Less: Closing Balance	690000
Annual Provision for Warranty Expense	1586000

Depreciation Expense:
Shop Furniture & Fittings		747000
Equipment	487000
Less: Wrongly Overstated	260000	227000
Buildings		340000
Total Depreciation Expense		1314000

Profit on Sale of Old Furniture:
Sale Proceedings	865000
Less: Carrying Cost of Sold Furniture	740000
Profit on Sale	125000

Strategic Review Cost:
Analysis by Auditors	1150000
Less: Deferred Revenue Expenditure @ 70%	805000	345000
Future Trend Analysis	850000
Less: Deferred Revenue Expenditure @ 100%	850000	0
Shop Improvement Analysis	400000
Less: Deferred Revenue Expenditure @ 70%	280000	120000
Annual Strategic Review Costs		465000

Provision on Legal Claims:
Annual Claim Paid	285000
Add: New Provision	540000
	825000
Less: Opening Balance	250000
	575000

Finance Cost:
Loan Fees	2500
Interest Paid on Loan	267000
Interest Accrued on Loan	267000
Total Finance Cost	536500

ABC limited in accordance with the directors’ resolution declares that:

Financial report of ABC limited complies with the International Financial reporting standard.
Australian accounting standards that are applicable aligns with the financial statements components.
Report of management as per the directors’ best knowledge includes financial position and business development and fair value performance.
A true and fair view of liabilities, assets and financial position, profit and loss statement is clearly depicted in the financial statements.

The business portfolio of ABC limited is generating cash over time and the main reasons are its strong corporate governance principles complying with ASX principles. The main focus of company is managing the cash flow and reduces the cost. It is sought by ABC limited for maintaining strong balance sheet so that they provide the shareholders with strong return.

A net total revenue of $ 522822400 is generated by the company in the financial year 2016. Company ha s made payment of $ 74000 to the suppliers and the amount payable by company as an employee expense stood at $ 8647000. The financial statement of ABC limited is clearly depicting dividend payment of amount $ 412500 to the shareholders. Retained earnings of ABC limited in financial year 2016 at $ 9101050. $ 4600000 is the amounts that have been transferred to general reserves. The value of paid up share capital of ABC limited as on 30^th June, 2016 stood at 4250000. Compared to previous year, the amounts of retained earnings have increased.

One of the important aspects for the business operation is the well being of economic. Operational activities are carried out by organization by committing to strong fundamentals and good prospects. In order to provide satisfactory return to the shareholder4s of the company, ABC limited should need to put some efforts. With the help of financial discipline and managing the diversified portfolio in an exceptional way, organization will meet its primary objective of providing shareholders with the satisfactory return. Each division of organization is overseen by divisional board of directors. One of the key focuses of organization development of operational management and strong management capability. The annual report of the organization also outlines the risks and operations in addition to summarizing the prospects. In is required by users of financial statement to read such review along with the financial statements.

As compared to the revenue generated in the previous year of $ 4300000, reve3nue generated from ordinary activities stood at $ 52822400.
The value of retained earnings has increase as compared to previous year and the amount stands at $ 9097165.
Totals assets valuation has also increased to $ 28243320 compared to value in previous year of $ 8094209.
Shareholder4s have received higher amount of dividend per share in this year at the rate of $ 2.54 per share.
Amount of profit also includes tax impairment and the value is up from previous year at $ 5368 615.

Auditor of company is KPMG and in terms of engagement with the auditors, it has been agreed by the organization several liabilities to the parties concerned attributing from the audit engagement. Nonetheless, any act resulting from the activities of KPMG would not be extended to indemnity.

Operating Expenses

In an attempt to recognize the needs of corporate behavior and standards of accountability, the directors of ABC limited have complied with the recommendations and principles of corporate governance as listed on Australian stock exchange.

There are various authorities of Australia that regulates the activities of organization that bare subjected to environmental regulation. Some of the activities that are regulated by providing the licenses are hazardous material, carrying of waste and water, disposal of waste and other environmental concerns. During its year of operation, organization has not breached any conditions of generating licenses.

The accompanying financial report of ABC limited is audited by KPMG and the financial statements comprise of consolidated income statement, statement of equity and statement of financial position or balance sheet dated 30^th June, 2016. The report comprise of declaration by directors in addition to explanatory information and summarizing and examination of significant accounting policies of organization.

Expressing opinion on the financial statements of the organization is the responsibility of auditors. Auditing of the statements of ABC limited by KPMG has been conducted in accordance with the Australian Accounting standards. Auditors are required to obtain reasonable assurance regarding the financial statements of organization that it is free from any material misstatements. Evidence of audit relating to the amount depicted in the financial report and the disclosure presented in conducting the audit has been obtained by performing several auditing procedures. Based on the selected procedures, the auditors have formed their judgment. Assessment of the financial risk of the statements and the data presented that might result in occurrence of fraud and error is the main objective of carrying out auditing of the organization. Regarding the internal control ineffectiveness of the organization, an auditor does not make any opinion. However, internal control is considered for assessment of risks that is regarded significant for financial report preparation and designing the audit procedures.

The financial statements of ABC limited has been audited by auditors and this involve comprehensive income statement, balance sheet and statement of changes in equity for the year ended 2016. Moreover, auditors have audited the declaration made by directors and the remuneration report.

While conducting the audit, several tasks has been done such as evaluating the appropriateness of the procedures of audit and reasonable of the accounting estimates. The overall presentation of financial report of ABC limited has also been evaluated by auditors. It is assessed that auditors for providing the audit opinion have found sufficient and appropriate audit evidence.

The auditors have arrived at audit opinion by consideration the changes that have been witnesses on operations carried out on year to year.

The values of portfolio of assets have been affected by change in the price and market volatility. The assessment of estimated future cash flow of cash generating unit of the assets is used for revaluating the value of property, plant and equipment along with intangible assets. Value of property, equipment and plant at end of financial year 2016 stood at $ 2284000. One of the key area of judgment is cash generating unit. It is required to apply some key inputs for arriving at relevant judgment as determining the future cash flow is inherently difficult. The value of materiality of audit report of ABC limited stood at 4 AUS 8 million.

Following key procedures have been performed by auditors:

Evaluation of the forecasted price of assets impairment of organization is done by comparing the input with data available in the market and benchmarks that are externally available.
Testing of the key controls have been performed for asset valuation of organization and several terms and items involved in impairment and reversal of assets are also involved.
Auditors have compared the prices of commodity, inflation rates along with risks by making use of authentic and reliable data available in the market.
Within the business model, the competency and objectivity of experts responsible for producing reserve statement have been evaluated. Consideration of personal qualification and experience is done for making such evaluation.

According to the opinion of KPMG, the financial report of ABC limited is prepared in accordance with Australian Accounting standard board (AASB 101) and followings are included:

Compliance with the Australian Accounting boards 101.
ABC limited financial position represents a true and fair view as on 30^thJune, 2016.

Reference:

Giles, R., 2014. Finance & Accounting New 4th Edition. Lulu. com.

Hoyle, J.B., Schaefer, T. and Doupnik, T., 2015. Advanced accounting. McGraw Hill.

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