Reference no: EM131177369

Question 1 - The regulatory environment for financial reporting

You are a member of a large accounting firm which is responsible for preparing financial reports, including statements and notes to the accounts, and for advising staff in client firms who are responsible for preparing financial reports. The firm only deals with large Australian companies listed on the Australian Stock Exchange (ASX). One of your key tasks is to summarise the changes and developments in the financial reporting environment in a newsletter published quarterly.

Required: Prepare a 2 page newsletter that identifies and summarises developments and changes in the financial reporting environment for the quarter from 1 May to 31 July 2016.

Question 2 - Preparation of a statement of financial position and statement of profit or loss and other comprehensive income

The summarised trial balance of Swish Ltd, a clothing retailer, includes the following accounts at 30 June 2016:

	DR ($)	CR ($)
Sales revenue		3,245,000
Interest revenue		9,000
Rental revenue		73,000
Changes in clothing inventories	25,000
Purchases of clothing inventories	1,020,000
Administrative salaries	168,000
Advertising expense	38,000
Amortisation expense - patent	5,000
Annual leave expense - administrative staff	2,000
Annual leave expense- sales staff	4,000
Depreciation - administration office equipment	8,000
Depreciation - shop fittings	42,000
Depreciation - vehicles	6,000
Delivery costs - freight out	21,000
Doubtful debts expense	63,000
Electricity expense - administration office	4,000
Electricity expense - retail store	17,000
Goodwill impairment loss	20,000
Interest expense	19,000
Long service leave expense - administrative staff	2,000
Long service leave expense - sales staff	10,000
Promotion expenses	26,000
Rent expense - administration office	18,000
Rent expense - retail store	189,000
Sales staff salaries	285,000
Shipping supplies	12,000
Sundry expenses	4,000
Income tax expense	450,000
Gain on revaluation of delivery vehicles ($10,000 less $3,000 tax)		7,000
Cash on hand	17,000
Accounts receivable	545,000
Allowance for doubtful debts		83,000
Inventories	98,000
Prepaid rent - retail store	20,000
Investment property	954,000
Deferred tax assets	23,000
Patent	50,000
Accumulated amortisation - patent		10,000
Trademark - at cost	35,000
Goodwill	50,000
Accumulated impairment losses - goodwill		20,000
Administration office equipment - at cost	46,000
Accumulated depreciation - office equipment		22,000
Shop fittings - at cost	614,000
Accumulated depreciation - sales equipment		96,000
Vehicles - delivery vehicles - at fair value	70,000
Accumulated depreciation - delivery vehicles		3,000
Accounts payable		63,000
Current tax liability		312,000
Bank loan		200,000
Provision for annual leave		37,000
Provision for long service leave		18,000
Deferred tax liabilities		3,000
Share capital - ordinary fully paid shares		500,000
Retained earnings at 1 July 2015		272,000
Asset revaluation surplus		7,000
	4,980,000	4,980,000

Additional information:

• All assets other than accounts receivable, cash, prepayments and inventories are non-current. All liabilities other than accounts payable, provision balances listed below and current tax liability are non-current.
• Provision for annual leave includes $9,000 payable within 1 year.
• Provision for long service leave includes $5,000 payable within 1 year.
• On 1 January 2016, the vehicles were revalued from $60,000 to $70,000. The gain, which has been included in the trial balance above, is to be recognised in other comprehensive income in accordance with AASB 116 paragraph 39.
• Swish Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and presents an analysis of expenses by nature on the statement.
• In relation to the statement of financial position, where AASB 101 requires entities to disclose further sub-classifications of the minimum line items on the face of the statement or in the notes, the directors of Swish Ltd want to report only the minimum line items on the face of the statement, and leave the sub-classifications to be disclosed in the notes.

Required: Prepare the statement of financial position and statement of profit or loss and other comprehensive income of Swish Ltd for the year ended 30 June 2016 in accordance with AASB 101, using the line items that a listed company is likely to use. Show all workings. Notes and comparative figures are not required.