The financial director of St Kitts Limited is in the process of finalizing the financial statements for the year ended 28 February 20X7. The trial balance at that date is as follows:
ST KITTS LIMITEDTRIAL BALANCE AT 28 FEBRUARY 20X7
Ordinary share capital
3 000 000
1 424 200
2 000 000
Property, plant and equipment
4 200 000
1 100 000
1 800 000
Cash at bank
2 059 200
7 100 000
Cost of sales
3 480 000
Net operating expenses
Interest on borrowings
Share issue expenses
20 344 200
20 344 200
The following information is relevant:
• The authorised share capital comprises 10 000 000 ordinary shares of CO.50 each. During the year, 1000 000 shares were issued at a price of C2.00. The issue of the shares has been correctly recorded in the accounting records. Share issue expenses of C150 000 were paid. The financial director wishes to account for these expenses with the minimumimpact on distributable reserves.
• The borrowings relate to a loan taken out by St Kitts Limited on 1 July 20X4 for a three year period. The company does not have the right to defer settlement of the loan.
• The balance on the property, plant and equipment comprises property of C3 150 000 and plant and equipment of Cl 050 000. Property is measured at valuation and plant and equipment is measured at cost. At year end, the directors engaged the services of an independent valuer who has valued the property at C3 950 000.
• During the year, an item of plant and equipment was sold for C330 000. This item of plant had cost C300 000 and to date of sale accumulated depreciation and tax allowances amounted to C120 000.
• The inventory has a net realisable value of Cl 720 000 and the accounts receivable are expected realise C980 000.
• Included in the operating expenses are depreciation of property, plant and equipment amounting to C210 000, salaries of Cl 800 000, advertising of C35 000, repairs to equipment of C28 000 and auditors remuneration of Cl10 000.
• Dividends of C0.05 per share were declared on 25 March 20X7. The financial statements were authorized for issue on 30 March 20X7.
• The financial director wishes to present the face of the statement of comprehensive income and statement of financial position in accordance with the minimum requirements of IAS I.
The current normal income tax rate is 29%.
a) Prepare the statement of comprehensive income of St Kitts Limited for the year ended 28 February 20X7, in accordance with International Financial Reporting Standards
b) Prepare the statement of changes in equity of St Kitts Limited for the year ended 28 February 20X7, in accordance with International Financial Reporting Standards
c) Prepare the current liabilities section of the statement of financial position of St Kitts Limited at 28 February 20X7, in accordance with International Financial Reporting
d) Prepare the following notes to the financial statements in accordance with International Financial Reporting Standards
• Statement of compliance and accounting policy for basis of preparation
• Share capital, profit before tax, taxation expense and dividends