Illustrations of accounting policies-financial statement, Financial Accounting

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Illustrations of Accounting Policies

A Ltd., has decided to change its policy of writing off borrowing costs to capitalizing the same. As at 31st December, 2003, the company had written off borrowing costs amounting to £200,000. During the year ended 31/12/04. The company reported profit for the period of £450,000 but after charging borrowing costs of £50,000. As at 31/12/03 the retained profits were £1,500,000. Other transactions were:-

•    Transfer from revaluation reserve on sale of PPE - £40,000
•    Transfer from retained profits to general reserve - £50,000
•    Interim dividends paid - £200,000

Required: Prepare the statement of changes in equity extract for the year-ended 81/12/04

	Retained profits
	£
Balance as at 1.1.2004	1,500,000
Change in accounting policy	200,000
Balance as restated	1,700,000
Transfer from revaluation reserve on sale of PPE	40,000
Profit for the period (450,000 + 50,000)	500,00
Transfer to general reserve	(50,000)
Interim dividends paid	(200,000)
Balance as at 31/12/2004	1,990,000

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