The trial balance of Alfa shows the following balances at 31 December 2021: Dr Cr $000...

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The trial balance of Alfa shows the following balances at 31 December 2021: Dr Cr $000 Ordinary share capital (500,000 shares) General reserve Investment property Retained earnings 1 January 2021 Inventory (raw materials) at 1 January 20211 Sales Purchases i Purchases returns: Sales returns: Carriage outwards Work-in-progress at 11 January 2021 Intangible assets Administrative wages Machine - cost Accumulated depreciation (machine) - 1 January 2021 Delivery vehicle hire Distribution expenses. Administrative expenses Directors' salaries Sales allowances Accounts payable Bank overdraft Accounts receivable Cash at bank Land (1) 120 (2) 20 349 4 9 35 342 28 124 35 22 34 92 381 1140 303 3038 1297 $000 1001 26 269 5 40 3 394 3 Additional information: Depreciation charges of tangible and intangible assets for the year should be calculated at 10% on cost at 1 January. 3038 A fire at the factory on 31 December 2021 damaged the machine, leaving it with a lower operating capacity. T accountant considers that Alpha will need to recognise an impairment loss in relation to this damage. An equivalent new machine would cost $70,000. The machine could be sold in its current condition for a gross amount of (3) (4) (5) (6) (8) (9) (10) $45,000. Dismantling costs would amount to $2,000. In its current condition, the machine could operate for three more years which gives it a value in use figure of $38,685. Inventories (raw materials) at 31 December 2021 were valued at $2,000, work-in- progress at 31 December 2021 was valued at $5,000 The income tax for the year is evaluated as $2,000 Alpha works as an agent for a number of smaller contractors, earning commission of 10%. Alpha's revenue includes $6,000 received from clients under these agreements with $5,400 in cost of sales representing the amount paid to the contractors. Receivables totalling $14,000 are to be written off Intangible assets are to be amortized at 10% on cost Allowance for receivables should be created as 0,1% of net sales On 7 November 2021 there was a fire in the warehouse, in which inventory valued at $12,000 was destroyed. Under the terms of the insurance contract, the insurance company has stated that it will only pay out the first $3,000 of the claim. No entries have yet been made to record this. Alpha's directors made the following decisions during the year ended 31 December 2021: It disposed of all of its outlets in country A. A decision was also made to close down a regional office, which was communicated to the employees before the year-end. 50 employees would be retrained and kept within Alpha at a cost of $10,000, the others took redundancy and will be paid $30,000. Required: Prepare a) a statement of profit or loss and other comprehensive income for the year ended 31 December 2021, b) a statement of changes in equity for the year ended 31 December 2021, c) a statement of financial position at that date, d) notes, in accordance with IAS 1 "Presentation of Financial Statements". Your answer should be as complete and informative as possible within the limits of the information given to you. An accounting policy note is also required. The trial balance of Alfa shows the following balances at 31 December 2021: Dr Cr $000 Ordinary share capital (500,000 shares) General reserve Investment property Retained earnings 1 January 2021 Inventory (raw materials) at 1 January 20211 Sales Purchases i Purchases returns: Sales returns: Carriage outwards Work-in-progress at 11 January 2021 Intangible assets Administrative wages Machine - cost Accumulated depreciation (machine) - 1 January 2021 Delivery vehicle hire Distribution expenses. Administrative expenses Directors' salaries Sales allowances Accounts payable Bank overdraft Accounts receivable Cash at bank Land (1) 120 (2) 20 349 4 9 35 342 28 124 35 22 34 92 381 1140 303 3038 1297 $000 1001 26 269 5 40 3 394 3 Additional information: Depreciation charges of tangible and intangible assets for the year should be calculated at 10% on cost at 1 January. 3038 A fire at the factory on 31 December 2021 damaged the machine, leaving it with a lower operating capacity. T accountant considers that Alpha will need to recognise an impairment loss in relation to this damage. An equivalent new machine would cost $70,000. The machine could be sold in its current condition for a gross amount of (3) (4) (5) (6) (8) (9) (10) $45,000. Dismantling costs would amount to $2,000. In its current condition, the machine could operate for three more years which gives it a value in use figure of $38,685. Inventories (raw materials) at 31 December 2021 were valued at $2,000, work-in- progress at 31 December 2021 was valued at $5,000 The income tax for the year is evaluated as $2,000 Alpha works as an agent for a number of smaller contractors, earning commission of 10%. Alpha's revenue includes $6,000 received from clients under these agreements with $5,400 in cost of sales representing the amount paid to the contractors. Receivables totalling $14,000 are to be written off Intangible assets are to be amortized at 10% on cost Allowance for receivables should be created as 0,1% of net sales On 7 November 2021 there was a fire in the warehouse, in which inventory valued at $12,000 was destroyed. Under the terms of the insurance contract, the insurance company has stated that it will only pay out the first $3,000 of the claim. No entries have yet been made to record this. Alpha's directors made the following decisions during the year ended 31 December 2021: It disposed of all of its outlets in country A. A decision was also made to close down a regional office, which was communicated to the employees before the year-end. 50 employees would be retrained and kept within Alpha at a cost of $10,000, the others took redundancy and will be paid $30,000. Required: Prepare a) a statement of profit or loss and other comprehensive income for the year ended 31 December 2021, b) a statement of changes in equity for the year ended 31 December 2021, c) a statement of financial position at that date, d) notes, in accordance with IAS 1 "Presentation of Financial Statements". Your answer should be as complete and informative as possible within the limits of the information given to you. An accounting policy note is also required.

Answer rating: 100% (QA)

A Statement of Profit or Loss and Other Comprehensive Income for the Year Ended 31 December 2021 Revenue Sales 1297000 Commission income 6000 Total Re... View the full answer