Regulatory Framework Accounting (RFA) 26/11/2015 Lecture 5 notes
Regulatory Framework Accounting (RFA) 26/11/2015 Lecture 5 notes ACC (Accountancy)
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This 0 page Class Notes was uploaded by Lin Jingwen on Saturday November 28, 2015. The Class Notes belongs to ACC (Accountancy) at Ngee Ann Polytechnic taught by Quah Wei-Wei, Karen ; Yeow Kinn Leong in Fall 2015. Since its upload, it has received 57 views. For similar materials see Regulatory Framework Accounting in Accounting at Ngee Ann Polytechnic.
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Date Created: 11/28/15
Regulatory Framework of Accounting RFA Lecture 5 study notes key wordphrase Published Final Statements Part 3 Notes to Financial statements the second part of the notes that required to be disclosed NOTE 8 CAPITAL AND RESERVES In the notes to the financial statements present the various types of reserves eg Revaluation Reserve Unappropriated profits General Reserve and Dividend Reserve and their account balances 1 Share Capital ssued and paidup share capital of shares issued and paid up for each class of shares Details of different of shares eg ordinary cumulative nonredeemable preference shares of the no of shares outstanding at the beginning and end of the year explaining any differences Example Additional information states that 1 were issued for cash at y r nar under a rpro vide additional working capital This has Been C nAugust2UX3 1 rights issue on the b reflected in the accounts Disclosure in Notes 8 Share Capital issued and fiuliiiiy paid ordinary shares Nio of shares 3 l issue of rights shares 200 000 250 000 As at 31 December 20x3 400000 450000 DUTan the year an additional 200000 ordinary shares were lSSLJlEid at a price W 5125 per share under a rights lS SllJE on the basis 0f 1 Willi 1 t0 lDFOVlGE additional working capital K sHeeE E lF ll39l39AL Issued and fully paid 0 nonredeemable rdiinalrv shares cumulative preference Total slhares No of Me of shares shares le at 1 Januang 10500 40001 4000 23500 lead of shares 2000 31 DEEEWEEF same 22am 40001 4am sacs 2 Reserves disclosed capital reserves before revenue reserves Not available for distribution due to statutory reasons Example revaluation reserve investment reserve Retention of distributable profits available for general use in the business Exampes accumulated profits general reserve dividend reserve Eample Extracted from the prepared Statement of Change in Equity 1P F5 Me Ltd Statement Of Changes WI EQUity for the year Ehd d 31 December 2 0X3 Share Revaluation Accumulated Dividend Total Capital Reserve Pro ts Reserve Balance at 1 January 20X3 200000 74000 274000 39l39otal comprehensive income for 600000 450040 1 058040 the period Dividends Note 14 6000 6000 Transfer to dividend reserve 24000 24000 lssue of share capital Note 0 250000 250000 Balance at St December 20x3 450000 600000 502940 24000 1570940 The annexed notes form an integral part of the financial statements Disclosure in the Notes 9 Reserves Revaluation resewe 600000 Accumulated profits 502940 Dividend reserve 24 000 1126940 NOTE 9 BORROWINGS Details of security given to be disclosed 0 Example Given in the additional information G The lengten39n anlt llean ebtained frent CD Bank bears interest at 4 per El lll39lLll39l i Thie lean is secured by a charge an the aampanyle freeneId land and la repayable by equal annual installments at 50000 entn39ienaing t Dc39teber EliaX4 Extracted from the prepared Statement of Financial Position NonaCutTent Liabilities Deferred taxation 12000 Lengeterrn bank loan i 0 100000 I l 12000 Current Liabilities Trade payables 08080 Other payablee and accruals Longtenn hank loa n i 0 50000 Disclosure in Notes 111 lLengTerm Bank Leerii Mensuinth pertiein 100000 F39erliin due in 12iri1eriithe 50000 150000 The leng term berth leeri beers interest at 4 leer ennium enl is seeureel by e reherge en the eempehyts freeheld Isl1e islets 33a The Ieen is repeyshle e y39 sequel annual installments ref EED eemrneneingi 1 Dietelier 2mm NOTE 10 BANK OVERDRAFT For an interestbearing liability to disclose the interest rate and the details of any security given NOTE 11 REVENUE This note is required ii there are FRS 18 35b Example Sale of goods Service revenue Notes to the Financial Statements extract These notes form an integral part of the financial statements X Revenue Revenue from sale of goods XXX Revenue from services rendered XXX XXXX Example Extracted from the prepared Statement of Comprehensive Income Statement of Comprehensive Income for the year ended 31 December 20x3 Note Revenue 11 1480240 Cost of sales 816000 Disclosure in Notes 11 Revenue Revenue f rem eele ref geede Revenue freim eerfrieee renderee NOTE 12 PROFIT BEFORE TAX Profit before Tax is determined recognising all operating income and expenses except for income tax expense Disclosure is required by the Financial Reporting Standards of the following statement of comprehensive income items such as Reference Disclosure for selected operating items in the Statement of Comprehensive Income FRS 18 35bv Dividend income FRS 18 35biii Interest income FRS 107 20b FRS 1 98C Gains or losses on disposal of fixed assets FRS 1 98a FRS 2 36ef Write downs of assets eg write down to NRVrecoverable amount for inventories inventory obsolescence expense fixed assets and reversals of such writedowns FRS 4O 75fi Rental income FRS 1 104 Depreciation expense FRS 107 20a Gains or losses from changes in fair value of heldfortrading investments FRS 4O 76d Gains or losses from fair value adjustments of investment properties FRS 36 126ab FRS 107 20e Impairment losses eg doubtful debts bad debts financial assets and reversals of such losses FRS 1 1 O4 Amortisation charge of intangible assets FRS 1 104 Staff Cost including salaries CPF medical expenses FRS 37 84b Additional amounts made to a cost provision ie increase in provision eg provision for warranty FRS 1 98g Reversal of cost provisions FRS 21 52 Exchange gain loss FRS 17 35C Operating lease payments recognised as an expense Companies Act 201 8 Directors39 remuneration such as salary bonus commission fees pension transport etc summed up FRS 107 20b Interest expense A breakdown of the different types is generally required Note In general the nature and amount of material income and expense items are to be disclosed if they are relevant to explain performance FRS 1 97 However for RFA purposes disclosure of profit before tax items is based upon and Onlv the above items are to be included Refer to PFS Template in the FPS manual and extract Relevant items for input Additional Info Know which items to or extract directlyignore Eg Aggregation Directors remuneration Staff cost Depreciation Eg Extract directly Impairment of fixed assets From Trial Balance know which items to extract and put in Fair value gain in IPHFT DividendInterestRental income etc Fair value loss Impairment loss on trade debtors Inventory obsolescence Example Given in the additional information A An extract of operating and finance expenses alneaed yr reflected in the accaunts included Disclosure in the Notes the fallawing s Auditersquot remuneratien 1000 epreciatian at buildings 150 Depreciation ef plant and machinew 2400 eipreciatcn 0f arti ce equipment 2000 i rectors salaries 24000 Directors travelling allowances 5500 Exchange less T20 Less an dispcsa at xed assets 2000 Insurance Interest an Iang ten39n bank loan 6000 Legal fees 300 Impainnent lass attracts receivables 3500 Staff salaries excluding directarsi 42300 Staff casts contributicns ta CPF 6040 Stzaff casts v ethers 1 Repairs 050 Water and electricity 1 Advertising 5000 Customers delivery casts 8000 12 Profit Before Tax Profit before tax is determined after charging crediting the following items Inventory obsolescence expense 9000 Depreciation Note 3 27500 Directors remuneration 30600 Exchangeloss 720 Loss on disposal of fixed assets 2000 Staff costs 51 148 Impairment loss on trade receivables 3500 Interest on longterm bank loan 6000 Dividend income 3000 Interest income 2800 Gain in value of trading securities 1000 Gain in value of investment property 27200 NOTE 13 INCOME TAX EXPENSE FRS 12 79 and 80 state that of tax expense should be These may include For purposes of RFA the components of income tax expense would be disclosed in the notes to the financial statements Example Extracted from the prepared Statement of Comprehensive Income e PFE Pte Ltd Statement et empreheneiue lneerne terthe year ended 31 December EDIE Hete 1 Revenue 1 1 eet e t tenet Giteee pettt eeeeee tttem meme eeee tuttatttttt eete 7151 il eeete meme eeete t t F39llllfm hetrite 12 5 e meme expemtee 13 e lt il Net pitettt tet the pette nitia z l Disclosure in Notes ta lneeme Tet Exipenee Eurrent ineeme tee erl preftt fer the year 4400 Current evertturteer rleeieien ef prier year 2200 Deferrelj M 45800 NOTE 14 DIVIDENDS Interim Dividends Disclosure is required of the amount of dividends per share either declared or proposed should be shown in the Notes to the Financial Statements FRS 1 137a Final Dividends Disclosure is required of the amount of dividends per share either declared or proposed should be shown in the Notes to the Financial Statements denda titan an 25 data attain dead Disclosure in Notes 11d tnidienate interim aid er ahare 6000 letter the ataten39lerlt at ltn an dial paeitidh ate the direanre ptl39 ilelEE the fdilldnrttg dividenda Final prepaeeti a genie per ahare 2 4 000 The araaaaea aiaiaetraa have net an ineldaeti aa a Iiatgiilittt in the financial atatementa Other notes 0 Future CommitmentsFuture Capital Expenditure 0 Events after balance sheet dateSubsequent Event NOTE 15 CAPITAL COMMITMENTS These are future contractual obligations for the acquisition of property plant and equipment which are significant in relation to the company39s future operations FRS 16 74c Example Given in the additional information Ll e t EH ecerrieer the cilirectere hecl cehtrectecl fr cepitel eepenlcliture ef 2 i fer the curcheee f pleht ertcl machinery Disclosure in Notes 3915 Illicitel r emmitmehte Eeettel ecpen ituree cemmittecl fer ee at the end f the reprtiing pence but met preeitlecl fer IHJ the fineinctel eteternehte lie lee flllwe Purcheee f cleht end mlecltirrehr EDD NOTE 16 EVENTS OCCURING AFTER THE REPORTING PERIOD FRS 10 3 Events both favourable or unfavourable resulting in gain or loss that occur between the date subsequent to the financial year end and the date on which the financial statements are authorised for issue ie up to the date of the directors39 report or auditor39s report Examples 0 major acquisition of another enterprise after year end disposal of a major segment of business after year end Disclosure requirements of subsequent events FRS 10 21 generally done in the notes to the financial statements 0 nature of the event an estimate of the financial effect or a statement that such an estimate cannot be made Example Given in the additional information m in llanuarzlr am the mean aeqluiredl the hueineee t Gilll Empany tr a eaah naitleraiin t 1 3quotl2ltltl Disclosure in Notes l Event Deeurring After the Reporting F39eriecl Girl 3 January 2mm the eeir39neanr acquired the hueineee at EH Cempany fer a cash eeneitleratien ef 139 D
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