Question

ASC had ordinary as well as preference shares. However, the preference shares are considered “callable”. The par value for the preference shares is $30 and the dividends is 3.25%. It is important to note that according to IFRS, callable preference shares (also known as mandatory redeemable preference shares) are treated as debt and not equity. This will have to be reflected in the statements that ASC has to produce for the listing on the ASX.

Requirement :

Provide the income statement and statement of financial position for ASC on December 31, 2018 as per the GAAP requirements. Please make sure you round to the fourth decimal place.
Provide the income statement and statement of financial position for ASC on December 31, 2018 as per the IFRS requirements (provide the number in US Dollars and round to the nearest Dollar. Please round all numbers to the nearest dollar)

given Trial balance

Account name	Debit	Credit
Cash	950,200
Account receivable	1,000,000
Inventory	2,400,000
Equipment	1,500,000
Accumulated depreciation- Equipment		600,000
Leased machines
Accumulate depreciation- leased machine
Accounts payable		570,000
Lease payable
Bonds payable		1,500,000
Discount on bonds payable
preference share		234,000
ordinary share capital		200,000
additional issued capital-preference share		468,000
additional issued capital- ordinary		1,200,000
retained earnings- beginning balance		8,601,044
Revenue from long term contract		214,943
cost of construction	62,500
general and administrative expenses	450,000
depreciation - equipment	150,000
depreciation- leased machine
interest expense

Answer 1

ASC
Income Statement for the year ended 31st December 2018
	31-Dec-18
A. Income
Revenue from operations	$   214,943
Total revenue from operations	$   214,943
B. Expenses
Cost of construction	$     62,500
Depreciation	$   150,000
General and admin expenses	$   450,000
Total expenses	$   662,500
Loss before tax	$ -447,557

ASC
Statement of affairs as at 31 December 2018
Liabilities and Stockholder's Equity	31-Dec-18
Non-Current Financial liability
(i) Bonds payable	$   1,500,000
(ii) Preference shares	$      702,000
Total non-current liabilities	$   2,202,000
Financial liability
(i) Accounts payable	$      570,000
Total current liabilities	$      570,000
Stockholder's equity:
Common stock $1 par value, 200000 authorised,issued and outstanding shares at December 31, 2018	$   1,400,000
Retained earnings	$   1,078,200
Stockholder's Equity	$   2,478,200
Total Liabilities and Stockholder's Equity	$   5,250,200
Assets
Equipment (net)	$      900,000
Total non-current assets	$      900,000
Inventory	$   2,400,000
Financial Assets
(i) Cash and cash equivalents	$      950,200
(ii) Accounts receivable	$   1,000,000
Total current assets	$   4,350,200
Total assets	$   5,250,200

Statement of Retained Earnings
Opening balance	$1,525,757
Less-: Loss for the year	$ -447,557
Closing balance	$1,078,200

Notes-:

(I) Equipment is net of accumulated depreciation of $ 600,000.

(ii) Additional preference shares and ordinary aggregating to $468,000 and $1,200,000 clubbed with initial issue of preference shares and ordinary shares respectively.