Question

Case Study 1:

LQU Company SAOG (the "Company") is an Omani joint stock company registered under the Commercial Companies Law of the Sultanate of Oman. The registered address, principal office and the manufacturing facility is located at Muscat, Sultanate of Oman. The Company's shares are listed in the Muscat Securities Market. The principal activities of the company are the manufacture and sale of shipping equipment including associated works.

The given below are the details of the balances as at the end of the year 2019.

The company had a balance of RO 325,000 in their Investments account. Along with that the company had cash and cash equivalents which included cash in hand RO 2,065, Bank balance in current accounts RO 1,065,582.

The inventories at the end period included Raw material of RO 2,647,538, Finished stock RO 946,811, Work in progress RO 163,273 and other consumables of RO 423,554.

• The Trade and other receivables were calculated to be RO 58,000 for advances and deposits, Prepayments of RO 43,688 and Accounts receivables of RO 5.235.403.

• The Trade and other payables included accrued expenses of RO 1,048,781, Trade payables of RO 1,627,724 and Other payables of RO 140,892

• The provision for tax for the year was calculated to be RO 224,597

The company also had short term borrowings which comprised of Short-term loans of RO 500,000 and Loans against trust receipts of RO 3,049.783

• Property plant and equipment includes the following assets as given below with their respective amounts

of cost and accumulated depreciation as at the year-end:

 

• The annual sales revenue amounted to RO 18,623,000. Apart from that the company had other income consisting of insurance claims received RO 5,300 and gain from disposal of asset RO 332,747.

• The share capital of the company consisted of 10,000,000 ordinary shares of 500 baiza each of which the company had 6,714,290 issued and paid up shares.

• The deferred tax liability at the year-end amounted to RO 82,800 and the Employee end of service benefits were RO 296,784.

• The company had a policy of transferring amounts to legal reserve each year and it had RO 1,119,000 at the end of the year.

• Retained earnings before adjusting the net profit balance amounted to RO 2,394,325

• The cost of sales included the following: Raw material consumed RO 13,091,758, labour cost RO 982,357 and other production cost RO 289,243

• Finance cost amounted to RO 157,186

• Salaries and staff related cost amounted to RO 854,431

• Administrative and general expenses include Directors' remuneration of RO 30,157, other administrative overheads of RO 316,835 and directors sitting fees of RO 20,308

• Selling and distribution expenses included Ro 492,901 for outward freight charges, travelling and sales commission RO 95,396 and other distribution cost of RO 358,845

• The tax expense for the year amounted to RO 190,959

• Unrealized loss on Fair value changes on available for sale investments RO 12,290

Basic earnings per share is calculated by dividing the net profit for the year by the number of shares outstanding during the year.

• Net assets per share is calculated by dividing the net assets at the end of the reporting period by the number of shares outstanding.

• You are required to prepare Statement of Comprehensive Income and Statement of Financial position for the year ended 2019 in accordance with IFRS and other governing laws and practices followed in Oman. (15 marks)

 

Answer 1

Statement of Financial	Position
Equity & Liabilities	Amount	Asset	Amount
Equity Share Capital	3,357,145	Cash in Hand	2,065
Legal Reserve	1,119,000	Bank Balance in Current Account	1,065,582
Retained earnings	3,509,041	Investment Account	325,000
		Less: Unrelised Loss	(12,290)
		Net Investment	312,710
		Inventory
		Raw Material	2,647,538
Borrowings		Finished Stock	946,811
Short Term Borrowings	500,000	WIP	163,273
Loan againts Trust receipts	3,049,783	Other Consumables	423,554
Current Liabilities		Current Assets
Accrued Exp	1,048,781	Advances & Deposits	58,000
Trade Payables	1,627,724	Prepayment	43,688
Other payables	140,892	Accounts Receivable	5,235,403
Deferred Tax Liability	82,800	Propert, Plant & Equipment
Employee end of service benefits	296,784	Buildings	612,390
		P&M	3,383,645
Provision for tax	224,597	Extrusion Equiments	5,623
		Office & other equipment	19,245
		Furniture and Fittings	4,273
		Motor Vehicles	2,348
		Computer installation	30,399
Total Equity & Capital	14,956,547	Total Assets	14,956,547

Income Statement
Sales	18,623,000
Less: Cost of Goods Sold
Raw Materials	13,091,758
Labour Cost	982,357
Other Production Cost	289,243
Depreciation on Building	49,987
Depreciation on P&M	846,681
Gross Profit	3,362,974
Other Income
Insurance Claims	5,300
Gain from disposal of asset	332,747
Total Income	3,701,021
Less: Admin Cost
Salaries and staff related cost	854,431
Directors Remuneration	30,157
Other Admin Overheads	316,835
Directors sittig fees	20,308
Depreciation on PPE other than Building & P&M	56,997
Less: SellingCost
Outward Freight Charges	492,901
Travelling and Sales Commission	95,396
Other Distribution Cost	358,845
Profit before tax and interest	1,475,151
Finance Cost	157,186
Profit before Tax	1,317,965
Tax Expenses	190,959
Profit after Tax	1,127,006
Other Comprehensive Income adjustment for available for sale investments	(12,290)
Comprehensive Income	1,114,716
Basic EPS	0.17
Net Assets Per Share	1.19