Question 2 Preparation and Presentation of the Income Statem

Question 2: Preparation and Presentation of the Income Statement In your new position as chief financial officer for Gulf Barges Limited, the first task you have been assigned to complete is to prepare the income statement for the 12-month period ended June 30, 2022 On your desk on your first day, the officer has left you valuable information to complete the task. 1 -Total revenue recorded by Gulf Barges Limited during the accounting period was $185,852,000. Included in the total revenue figure is Other Revenue totalling $2050,000 and Interest Income totalling $2,453,000 Following is a list of expenses incurred by the company Expense Account Advertising and Marketing Costs Assigned Overhead Direct Labour Direct Material previous chief financial Total Incurred $2,512,000.00 $15.483.000.00 $47,894,000.00 S12,560,000.00 S561,000.00 $1,690,000.00 $590,000.00 $1,457,000.00 S6,801,000.00 $21,036,000.00 S1,260,000.00 Insurance and Utilities Office Supplies Repairs and Maintenance Salaries to Administrative Staff Sales Commissions Travel Costs 2-On January 1, 2022, the company sold a block of land held for investment and recognized a gain on the sale of $12,861,000. 3-On April, 2022, the company sold equipment that resulted in a loss of $4,891,000 4 -The company incurred finance interest charges during the accounting period of S14,890,000. 5 -The company is involved in joint venture operations. As a result of poor financial conditions, the company recorded a net loss of $15,069,000 from its share of the joint venture operations. 6 -From the operations recorded a net gain of $4,287,000 for the financial period ended June 30, 2022. 7 -If the company reports a profit during the year, the effective corporate tax rate is 25%. If a loss is reported the effective tax rate is zero. Required Using the information supplied, prepare an income statement for Gulf Barges Limited for the accounting period that conforms with IFRS IAS I requirements and recommendation. Hint: Expenses should be classified by function (e.g., cost of of its associate firms, the company

Solution

Income Statement for Gulf Barges Limited for 12 Month period ended June 30, 2022 Revenue from Operations 162349000 Other Revenue 21050000 Other Income Gain on sale of Land 12861000 Net gain on operations of associate firms 4287000 17148000 Interest Income 2453000 Total Income 203000000 Expenses Cost of goods sold Direct Materials 12560000 Direct Labor 47894000 60454000 Assigned Overhead 15483000 Selling Expneses Advertising & Marketing Costs 2512000 Sales Commissions 21036000 23548000 Administrative Expenses Entertainment 561000 Insurance & Utilities 1690000 Office Supplies 590000 Repairs & Maintenance 1457000 Salaries to Administrative staff 6801000 Travel costs 1260000 12359000 Finance charges 14890000 Loss on sale of Equipment 4891000 Net Loss on its share of Joint venture operations 15069000 Total Expenses 146694000 Net Income before Taxes 56306000 Tax expense @25% 14076500 Net Income 42229500