Festo Limited, a manufacturing company dealing in specialised components in aeronautics industry. The company has been profitable
Question:
Festo Limited, a manufacturing company dealing in specialised components in aeronautics industry. The company has been profitable since inception 15 year ago. The company has a 31 July year-end.
An Extract from the statement of financial position as at 31 July 2019 is as follows:
Ordinary share capital
1 800 000
12% Preference shares, non-cumulative
500 000
Revaluation surplus
100 000
Retained income
9 500 000
11 900 000
2021
2020
Profit for the year
1 100 000
930 000
OCI
Revaluation surplus- net of tax
50 000
0
Total comprehensive income
1 150 000
930 000
Discussions with the company secretary reveal the following:
Ordinary share capital
The ordinary share capital issued at 1 August 2019 consisted of 1 800 000 shares of no par value. The authorised share capital has remained unchanged at 5 000 000 since incorporation. Directors have no restrictions to issue unissued authorised share capital
On 1 November 2019, 400 000 additional shares were issued at R1.80. The share issue costs for this issue amounted to R20 000, these expenses are not deductible for tax purposes.
On 1 April 2020, the directors authorise a capitalisation issue of 1 for every 4 held at the current share market price of R1.60. Directors wish to maintain maximum possible distributable earnings on the retained earnings account.
An ordinary dividend of R0.05 per share was declared on 30 June 2021. No ordinary dividend was declared in respect of the financial year ending July 31, 2020.
Preference share capital:
Preference shares are not redeemable
Preference share capital at 1 August 2019 consisted of 200 000 shares of no par value. All the authorised preference share capital has been issued
Preference share dividends were paid on 10 January in both years.
You are required to:
Prepare the statement of changes in equity for year ended 31 July 2021 in accordance with the international financial reporting standards.
Prepare the share capital note for the year ended 31 July 2021 in accordance with IFRS
Expert Answer:
statement showing the share capital as on 300621 010419 1800000 of shares at the 1 each 1800000 01... View the full answer
