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ACCA FR · Guided practice (Show me how)

Chapter 3: Presentation of Financial Statements (IFRS 18)

Statement of profit or loss and financial position from a trial balance

Statement of profit and loss, and statement of financial position. You are the accountant of Trott Ltd, a business that buys and sells cricket equipment. The trial balance at 31 December 20X7 was as follows:

Additional information:

1. Trott has not made any additions or disposals of tangible non-current assets in the year. Its depreciation policy is as follows: motor vehicles - 20% reducing balance; buildings - 25 years straight line. The depreciation expense for the year is charged to cost of sales.

2. Inventory at the end of the year was valued as follows (cost / NRV, $): bats 2,500 / 4,000; gloves 650 / 500; pads 1,000 / 2,000; total 4,150 / 6,500.

3. Staff costs are to be apportioned one-third to cost of sales, and two-thirds to operating expenses.

4. The balance of tax on the tax account represents the over/under provision for the prior year. An estimate of $1,500 has been made for the tax payable at the year-end.

Prepare the statement of profit or loss for the year ended 31 December 20X7 and the statement of financial position at that date.

  1. Workings: closing inventory and PPE

    Calculate Trott Ltd's closing inventory and the carrying amount of its property, plant and equipment at 31 December 20X7.

  2. Statement of profit or loss

    Prepare Trott Ltd's statement of profit or loss for the year ended 31 December 20X7.

  3. Statement of financial position

    Calculate Trott Ltd's retained earnings and total current liabilities at 31 December 20X7.

Opening this exercise…