1) Identify whether each of the items above is part of the operating or non-operating expense (income).
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Following is a list of items relating to the financial statements of YKN Bhd for the year ended 31
December 2020
• Amortisation of intangible assets of RM346,339
• Corporate tax rate is at 24%.
• Finance costs of RM831,138
• Finance income of RM173,421
• Gain due to exchange differences from translating functional currencies into presentation
currency of RM120,000
• Gain on disposals of major subsidiaries amounted to RM1,500
• Gain on sales of manufacturing operating segment of RM100,000
• Gains on re-measuring available-for-sale investment of RM80,000
• Loss on litigation settlements of RM2,125,000
• Loss amounted to RM450,000 due to disposal of its cotton mills, which constitute a
major line of business
• Loss arising from translating the financial statements of a foreign operation of RM33,000
• Loss from disposal of financial assets of RM50,000
• Loss on disposals of items of property, plant and equipment of RM34,000
• Loss on impairment of
• Loss on re-measuring financial assets of RM33,000
• Loss on write-downs of inventories to net realisable value of RM250,000
• Marketing expenses of RM7,471,792
• Other operating costs of RM7,649,816
• Revenue of RM19,883,460
• Share of profit of joint ventures amounted to RM38,587
• Staff costs of RM1,319,383.
Required:
1) Identify whether each of the items above is part of the operating or non-operating
expense (income).
2) Identify whether each of the items above is realized or unrealized.
3) Prepare a statement of comprehensive income for the year 2020 in accordance with the
requirements under MFRS 101 Presentation of Financial Statements.
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