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Case Study 1: LQU Company SAOG (the "Company") is an Omani joint stock company registered under...

Question:

Case Study 1: LQU Company SAOG (the Company) is an Omani joint stock company registered under the Commercial Companies Law
• The annual sales revenue amounted to RO 18,623,000. Apart from that the company had other income consisting of insurance cl
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 Cost RO Accumulated Depreciation RO Buildings 2.507,427 1.895,037 Plant and Machinery 11.891.000 8.507.355 Extrusion Equipment 4,998.000 4.992 377 Office and other equipment 469,000 449.755 Furniture and fittings 162.000 157,727 Motor vehicles 68,000 65.652 Computer installations 346,368 315.969 The depreciation was charged for the year as follows: RO Depreciation on Plant and Buildings 49.987 Machinery, Buildings to be Plant and Machinery 846,681 included in cost of sales and the Extrusion Equipment Nil remaining depreciation is Office and other equipment 26.691 allocated as general and Fumiture and fittings 14,660 administrative cost Motor vehicles 4.324 Computer installations 11322
• 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)

Answers

  • 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
.

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