Question

Statement of profit or loss and comprehensive income and statement of changes in equity.

Determine whether the following transactions would appear in the statement of profit or loss and other comprehensive income. If so explain how they would be disclosed.

1. A gain on foreign currency translation of $83 000.
2. As a result of a fall in share prices in a recession, directors decided to write down the value of the company’s investment, Shares in Pluto Ltd, by $80 000.
3. Loss from discontinued business operations.
4. dividend paid of $1 500 000 in total.
5. inventory costing $120 000 is sold for $160 000.
6. A transfer of $500 000 is made to general reserve from retained earnings.

Answer 1

a) gain on forein currency transaction would be shown under heading income in the state ment of profit and loss.

income -> other income -> foreign currency transaction gain

b) the value of reduction will be charged to profit and loss a/c . it will discloused under the head expenses.

c) it will be discloused in statement of profit and loss after the caluculation of current year profit or loss.

.

d) it will be shown under the expenses and sub head finance cost.

e) total amount of 160000 will be treated as revenue from operations.

f) it will be come after adusting all income and expenses inluding extrodinary items.