Reference no: EM131613709

Preparation of a statement of financial position

You are the chief accountant of Wisdom, a big accounting firm in town. You requested one of your trainee accountants, Matthew to prepare the balance sheet for one of your clients, DL Vision Ltd which is a manufacturing company. Matthew later presented you with the following balance sheet of DL Vision Ltd for the year ended 30 June 2016, which you are not very happy with.

Additional information related to DL Vision Ltd:

• Current tax payable is $7,500 and deferred tax liability amounted to $25,000.
• Provision for warranty is in respect of a 6-month warranty on certain goods sold.
• $6,250 of bank loans is repayable within 1 year.
• $100,000 of other loans is repayable within 1 year.
• Loan to employee includes $12,500 receivable within 1 year.
• Provision for employee benefits includes $27,500 payable within 1 year.
• The planned restructuring is intended to be fully implemented within 1 year.

Required: Write a memo to Matthew outlining the key problems with the statement of financial position prepared, with references made clearly to requirements of AASB101 where appropriate. Show the corrected version of the statement of financial position of DL Vision Ltd for the year ended 30 June 2016 and attach it at the end of the memo. Your corrected statement of financial position should be prepared in accordance with AASB101, using the captions that a listed company is likely to use. At this stage, you would not worry about the notes to the accounts.