Question

The Atlantic Refinery Corp. (ARC) is a public company headquartered in St. John’s, Newfoundland. On 31 December 20X5, the post-closing trial balance included the following accounts (in thousands of Canadian dollars):

	Debit			Credit
Investment in Mongolian subsidiary	$	72,600
Provision for future site restoration				$	34,400
Common shares					176,000
Translation differential from Mongolian subsidiary					12,200
Convertible bonds					86,900
Equity portion of convertible bonds					2,000
Contributed surplus—premium on common shares issued					35,000
Goodwill (from purchase of Mongolian subsidiary)		18,400
Investment in shares of upstream affiliate		36,600
Retained earnings					533,000
Trademarks		6,700

The following transactions and events occurred during 20X6:

1. Net income amounted to $37 million.
2. The value of trademarks was written off after ARC lost a patent protection lawsuit.
3. An additional $1.5 million of convertible bonds was transferred from the debt portion to the equity portion.
4. An accounting policy was changed due to a new IFRS taking effect in 20X6; the effect of retrospective restatement was to reduce prior years’ earnings by an aggregate amount of $43 million.
5. The future liability for site restoration was increased by $2 million.
6. Common shares with a stated value of $15 million were repurchased on the open market for $20 million and cancelled. The original issue price of the shares amounted to $17, of which $2 million had been credited to contributed surplus.
7. A new class of preferred shares was issued to a major public sector pension plan for $88 million to finance future development.
8. Dividends totalling $26 million were issued during the year. Of that amount, $2 million were declared on 24 December 20X6, payable to shareholders of record on January 15, 20X7.
1. The translated amount of ARC’s investment in Mongolian subsidiary declined by $4 million due to a rise in the value of the Canadian dollar.

Required:
On the following page, prepare a statement of changes in equity for Atlantic Refinery Corp. for the year ended 31 December 20X6. (Enter answer in thousands, not in million or whole Canadian dollars. Negative amounts should be indicated by a minus sign.)

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Answer 1

Statement of changes in equity for Atlantic Refinery Corp. for the year ended 31 December 20X6

Net Income    $ 37000

Less: Loss in value/loss

(i) TradeMark Written off -$ 67000

(ii) Accounting Policy Change effect -$ 43000

(iii) Currency Translation Loss - $ 4000

Less: Increase in site liability Provision -$ 2000

Less : Reduction in Share Capital Reserves -$ 3000

(20 M - 17 M = 3 M)

Less: Dividend Paid (26 - 2) -$ 24000

Less : Shares Redeemed -$ 15000

Add : New Share Capital Issued

(i) Additional Bonds Converted to equity $ 1500

(ii) Preference Shares issued $88000

Opening Balance Share Capital & Reserves $709000

176000 + 533000

Stockholders Equity (Restated Amount) $677500