ACTY6201: Financial Accounting - School of Applied Business Bachelor of Business - Accounting Assignment Help

Assignment Task:

Information: 
Paskal Ltd Paskal Ltd is a New Zealand owned company reporting under full IFRS. The company manufactures and supplies high-quality Garden tools and gardening equipment. It sells its own products and also sells on commission for other companies. You are presented with the trial balance for Paskal Ltd as at 31 March 2019, together with opening balances at 1 April 2018 and are asked to prepare the annual financial statements for presentation to the stakeholders. 

• Paskal Ltd recorded amounts are rounded to the nearest thousand dollars. 
1. Depreciation has not been accounted for. Depreciation rates are: 
a. 
Buildings – 2% p.a. (straight line) on cost or valuation 
b. Fixture and equipment - 20% p.a. (straight line) on cost 
c. Machinery - 30% diminishing value d. Motor vehicles – 30% diminishing value 
2. Lease expenses are for computers and motor vehicles. $30,000 of the computer lease expenses related to computers for the sales staff. 
3. Depreciation expense for Fixtures and Equipment in the year ended 31 March 2018 is overstated by $50,000. 
4. The buildings comprise a production area, an office space, and a separate packaging area. There is also a small shop next to the office for direct sales and customer pickups. Traditionally the company charges 10% of both its building and fixtures and equipment depreciation to distribution expenses. 
5. One of the motor vehicles is a delivery truck which is recorded at the cost of $50,000 with accumulated depreciation to the beginning of the current year of $10,000. 
6. There were no disposals or additions of fixtures and equipment during the year. 
7. New machinery was purchased on 1 January 2019. 
8. A machine was sold for $200,000 cash on 31 March 2019. The machine had an original cost of $400,000 and a carrying amount of $150,000. No record has been made of the sale. 
9. On 31 March 2019, the land was revalued by New Lynn Registered Valuers, a firm of independent registered valuers who considered the land to have increased in value to $4,350,000. This revaluation has yet to be recorded. 
10. On 31 March 2019, Paskal Ltd adopted the revaluation model to account for the class of Buildings. The fair value of Buildings was determined to be $3,320,000 by New Lynn Registered Valuers. This has not been recorded. 
11. Intangible assets are brand names and trademarks. Intangible assets originally cost $780,000. Impairment testing of the intangible assets indicates $20,000 impairment for the current year which has not been included in expenses. 
12. Wages and Salaries include $100,000 related to sales staff and $300,000 for the director’s remuneration. 
13. An invoice for some repair work done on the machinery prior to the year-end has been received but not processed. The invoice total was $5,000. 
14. Other income includes interest income of $25,000 
15. As at 1 April 2018 there were 5,280,000 shares on issue at $1 each. On 10 March 2019, another 600,000 shares were issued at $1.50 each. The money has been received from the trust company handling the share issue on 31 March 2019. This issue and the proceeds from the issue have not been recorded in the information supplied. 
16. The mortgage is secured over land and buildings and carries a flat interest rate of 10% per annum. A lump sum capital repayment was made on 31 March and has been recorded. This amount is the annual repayment required under the mortgage agreement. 
17. On 31 March 2019, it is estimated that the position of allowance for doubtful debts was $165,000 based on analysis of previous debt collection history. Paskal Ltd uses the Allowance method to account for doubtful debts. 
18. Expenses – Administration, include: 
Audit fees paid to ABC Audits $22,000 Accounting fees paid to AACT & Co $51,000 Donations to approved charities $21,000 
19. Expenses – Financial, include: 
Interest paid – mortgage $50,000 Interest paid – loans $47,400 
20. Inventory is carried at the lower of cost (Weighted Average Cost) and net realizable value. 25% of inventories are raw materials, 20% are work in progress, and the balance comprises finished goods held for sale. The net realizable value of inventory was $5,500,000. 
21. Outstanding director’s fees for the March 2019 meeting of $30,000 have not been recorded. 
22. Included in the prepayments, there is a property insurance bill of $60,000 paid on 1 January 2019 and covering the period from 1 January 2019 to 31 December 2019. This has not been adjusted on the Balance Date. 
23. Investments are shares of Tauranga Ltd purchased in February 2018. The fair value was $938,000 at the year-end. This revaluation has not been accounted for. Investments are classified as available-for-sale financial assets by the company. 
24. A contract has been entered into to extend the building. This work will be carried out during the next financial year and will cost $1,700,000. 
25. Commission Income, earned but not yet recognized, was $120,000 for this year. 
26. Apart from the change in the measurement of buildings, there are no changes in the accounting policies from those applied last year. 
27. On 10 April 2019, the directors have authorized a final dividend of 20 cents per share. 
28. On 23 May 2019, a production plant was destroyed by a fire resulting in damages of $800,000. Insurance will cover $600,000 of the damages, but payment of the insurance claim has been delayed by a police investigation. (Assume the date when financial statements are authorized for the issue is 31 May 2019) 
29. A major debtor Northwing Ltd owing $150,000 to Paskal Ltd went into liquidation. This information became available to Paskal Ltd on 7 May 2019. No adjustment to the allowance for doubtful debts has been made to reflect this fact. Correspondence has been received from the liquidator indicating that Paskal Ltd cannot collect anything from the liquidation. 
30. Paskal Ltd has been involved in a dispute with a government environment agency relating to the release of noxious wastewater from its manufacturing plant in early February 2019. An expert investigation was conducted to determine if the company was at fault. The draft financial report already discloses contingent liability in the notes detailing the investigation and estimating the potential damages at $800,000. The investigator’s report, released on 1 April 2019, found Paskal Ltd to be responsible for the release and damages amounting to $650,000 were payable by the company. 
31. A purchase invoice amounted to $3,000 dated on 28th March 2019 was omitted from the books of accounts. The customer has delivered goods to the company on the same date. 
32. Cash and bank balance given in the trial balance includes $100,000 of bank overdraft which is fully secured by land and building. 
33. On 1 April 2018 Paskal Ltd commenced the construction of a warehouse building for the company. The warehouse was completed and ready for occupation on 31 March 2019. Paskal Ltd did not need to borrow funds directly for the construction of the factory because it had existing long-term financing available of $483,750 at 8% per annum and $186,250 at 10% per annum which were used for the construction project. Payments for the materials, labour, and services relating to the construction of the factory were as follows: 
Above amounts spent during the period was charged to administrative expense. The capitalized cost of the construction for the year ended 31 March 2019 has not been accounted for. $ 1 April 2018 160,000 30 June 2018 160,000 31 December 2018 160,000 1 March 2019 190,000 670,000 
 

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