7.     Depreciation, insurance, wages and salaries should be classified as administrative expenses.

Required

> Prepare the Statement profit or loss and Other Comprehensive Income and Statement of Financial  Position  for the year  ended  September  30,  2023  based  on  the  format specified in HKAS 1 (Revised)          (30 marks)

Question 2

GHI Limited which has an accounting year end of 30 September was summarized as follows:

Statement of profit or loss and other comprehensive income for the year ended 30 September 2023                      2022

$000 $000

Cost of sales (2,280) (2,160)

Gross profit                                                                                          620                         340

Other income                                                                                          83                          90

Distribution costs                                                                                 (45)                        (38)

Administrative expenses                                                                     (138)                      (52)

Finance costs (100) (80)

Profit before tax                                                                                   420                        260

Income tax expenses (120) (90)

Profit for the year 300 170

Dividend paid                                                                                      200                         50

Statement of financial position as at 30 September

2023                      2022

Assets $000                      $000

Non-current assets

Property, plant and equipment (at carrying amount)                            900                        470

Current assets

Inventories                                                                                             140                        200

Trade receivables                                                                                  240                         180

Cash and cash equivalents 10 -

390 380

Total assets 1,290 850

Equity and liabilities

Ordinary share capital ($1 stated value each)                                       370                         190

Revaluation reserve                                                                             220                           -

Retained earnings 240 140

Total equity 830 330

Non- current liabilities

8% debenture 160                          180

Current liabilities

Bank overdraft                                                                                        -                            20

Trade payables                                                                                     212                         260

Tax payable 88 60

Total liabilities 460 520

Total equity and liabilities 1,290 850

Additional information

1.      During the year, a machine costing $120,000 was sold for $40,000.  The accumulated depreciation up to the date of disposal for this machine amounted to $108,000.  The profit on disposal of this machine was

already included in operating profit for the year 2020.  Depreciation charge for the year was $248,000.

2.      The revaluation reserve arose from the revaluation of non-current assets.

3.      During the year, $15,000 debenture was settled by way of issuing  15,000 new ordinary shares.   Other debentures were repaid in cash.

4.      All accounts payable relate to inventory purchases.

5.      It is the company policy to pay dividend when declared in financial statement.

Required

> Prepare the Statement of cash flow of GHI Limited for the year ended 30 September 2023 using indirect method, in accordance with HKAS 7` Statement of Cash Flows’.     (25 marks)

Question 3

Pioneer A Group has the following beginning inventory, purchase, sales and ending inventory information for the year ended 31 December 2022:

Date	Particulars	No. of units	Unit cost ($)
1 Jan	Beginning inventory	2,000	120
5 Feb	Purchases	400	125
15 Feb	Sales	2, 100
6 May	Purchases	1,000	130
8 Aug	Purchases	500	135
19 Sep	Sales	1,000
10 Nov	Purchases	800	140
31 Dec	Ending inventory	1,600	?

Required

Determine the cost of ending inventory as at 31 December 2022, and the cost of goods sold for

the year ended December 2022 under the Weighted Average Cost Method when Pioneer A Group adopts:

a.     A perpetual inventory system (10 marks)

b.     A periodic inventory system (10 marks)

(Total: 20 marks)

Question 4

On January 1, 2021, Bronze Limited purchased a piece of machinery for production of goods. The purchase price of the machinery was $335,000.  Bronze Limited paid cash on the date of purchase.  Bronze Limited estimated that the machinery has an expected useful life of 4 years with a residual value of $15,000 on December 31, 2024. On February 15, 2023, Bronze Limited disposed of machinery for cash amount of $179,000.

Bronze Limited adopts revaluation model for measuring machinery.  For items with revaluation, it  is  Bronze  Limited’s  policy  to  eliminate  accumulated  depreciation  against  gross  carrying amount of asset in arevaluation.

Bronze Limited usually depreciates machinery of similar type on a straight line basis.  Full year of depreciation is to be charged in the year of purchase and none to be charged in the year of disposal.

Bronze Limited revalued the machinery twice on December 31, 2021 and December 31, 2022 and the revalued amounts were $264,000 and $185,000 respectively.

Required

In accordance with the requirement of HKAS 16 (IAS 16) `Property, Plant and Equipment ‘, prepare all journal entries that Bronze Limited should make relating to the machinery: