The following ledger balance of Nissan Company Limited as on 31 Ashadh 2082.
| Particulars | Debit Rs. | Credit Rs. |
|---|---|---|
| Revenue from operation | | 2,000,000 |
| Shareholders' equity | | 1,500,000 |
| Other revenue | | 150,000 |
| Plant, property and equipment | 1,800,000 | |
| Investment property | 600,000 | |
| Loan and borrowings | | 800,000 |
| Finance cost | 100,000 | |
| Distribution expenses | 200,000 | |
| Administrative expenses | 150,000 | |
| Cost of sales | 800,000 | |
| Trade receivable | 200,000 | |
| Inventories | 150,000 | |
| Cash and equivalent | 800,000 | |
| Trade and other payable | | 350,000 |
| Total | 4,800,000 | 4,800,000 |
Additional information:
i. Non-controlling interest 30%.
ii. Income tax rate 25%.
Required:
(a) Statement of profit or loss for the year 2082/83.
(b) Statement of financial position as on 31 Ashadh 2082.
Answer (2)
To tackle this question, we'll be preparing two financial statements for Nissan Company Limited based on the provided ledger balances as of 31 Ashadh 2082. We will create a Statement of Profit or Loss for the year 2082/83 and a Statement of Financial Position as of 31 Ashadh 2082.
(a) Statement of Profit or Loss for the Year 2082/83
The Statement of Profit or Loss shows the company's revenues and expenses over a specific period, leading to the profit or loss for that period.
Revenues
Revenue from Operations: Rs. 2,000,000
Other Revenue: Rs. 150,000
Total Revenue = Rs. 2,000,000 + Rs. 150,000 = Rs. 2,150,000
Expenses
Cost of Sales: Rs. 800,000
Finance Cost: Rs. 100,000
Distribution Expenses: Rs. 200,000
Administrative Expenses: Rs. 150,000
Total Expenses = Rs. 800,000 + Rs. 100,000 + Rs. 200,000 + Rs. 150,000 = Rs. 1,250,000
Profit Before Tax
Profit Before Tax = Total Revenue - Total Expenses = Rs. 2,150,000 - Rs. 1,250,000 = Rs. 900,000
Income Tax Expense
(25% of Profit Before Tax)
Income Tax = 25% of Rs. 900,000 = Rs. 225,000
Net Profit
Net Profit = Profit Before Tax - Income Tax = Rs. 900,000 - Rs. 225,000 = Rs. 675,000
(b) Statement of Financial Position as on 31 Ashadh 2082
The Statement of Financial Position, also known as the Balance Sheet, shows the company's assets, liabilities, and equity at a specific point in time.
Assets
Plant, Property and Equipment: Rs. 1,800,000
Investment Property: Rs. 600,000
Trade Receivable: Rs. 200,000
Inventories: Rs. 150,000
Cash and Cash Equivalent: Rs. 800,000
Total Assets = Rs. 1,800,000 + Rs. 600,000 + Rs. 200,000 + Rs. 150,000 + Rs. 800,000 = Rs. 3,550,000
Liabilities
Loan and Borrowings: Rs. 800,000
Trade and Other Payable: Rs. 350,000
Total Liabilities = Rs. 800,000 + Rs. 350,000 = Rs. 1,150,000
Equity
Shareholders' Equity: Rs. 1,500,000
Non-Controlling Interest
Non-Controlling Interest (30%): 30% of Rs. 1,500,000 = Rs. 450,000
Total Equity
Total Equity = Shareholders' Equity + Non-Controlling Interest = Rs. 1,500,000 + Rs. 450,000
Total Equity = Rs. 1,950,000
The balance of Assets = Liabilities + Equity , ensuring the accounting equation holds true:
Assets: Rs. 3,550,000 = Liabilities (Rs. 1,150,000) + Equity (Rs. 1,950,000)
Therefore, both the Statement of Profit or Loss and Statement of Financial Position are prepared as required.
In this response, we prepared a Statement of Profit or Loss for Nissan Company Limited that shows a net profit of Rs. 675,000. We also created a Statement of Financial Position, validating that assets equal liabilities plus equity, confirming the accounting equation is balanced. Both financial statements provide a clear picture of the company's financial health as of 31 Ashadh 2082.
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