(30 Marks) Watson Limited is a retailer listed on the NSE
Securities Exchange’s AltX Listing. The trial balance of the company at 29 February 2020 is shown below: Watson Limited Trial Balance at 29 February 2020 N$ N$ Debit Credit Ordinary share capital 4,000,000 Revaluation surplus 160,000 Retained earnings 1,250,000 Dividends 100,000 Land 140,000 Buildings: Cost 8,000,000 Buildings: Accumulated depreciation 1,280,000 Equipment: Cost 500,000 Equipment: Accumulated depreciation 200,000 Long term borrowings 1,100,000 Accounts receivable 262,000 Inventory 258,000 Bank 131,000 Accounts payable 141,000 Sales 10,500,000 Cost of sales 7,500,000 Depreciation: Buildings 160,000 Depreciation: Equipment 100,000 Salaries and wages 1,212,000 Postage of marketing pamphlets 20,000 Packaging for purpose of safe transport 30,000 Telephone 27,000 Electricity 51,000 Interest expense 140,000 18,631,000 18,631,000 The following information is relevant: The authorised share capital comprises 10 000 000 ordinary shares of no par value. 1 000 000 shares were issued at N$1 on 30 November 2019. The land and buildings are used for the supply of goods and for administration purposes. The buildings were revalued on 29 February 2020 to fair value of N$6 720 000. This represented an increase of N$ 160 000 over the previous carrying amount. This has already been processed. All property, plant and equipment are depreciated using the straight-line method. The building is 320 square metres in area, of which 180 square metres are used for the warehouse and the remaining 140 square metres is used as the company headoffice. The equipment consists of items used in the despatch area and office equipment. The office equipment accounts for 40% of the depreciation of equipment and the balance relates to depreciation of the equipment used in the despatch area. N$570 000 of the salaries and wages relates to the employees hired in the despatch area and N$642 000 relates to employees employed in the head office. Financial Accounting 1B (AFE3692) Individual Assignment Due date: 12 October 2020 6 Postage and packaging for purpose of safe transport relates purely to the despatch area. Telephone expenses of N$27 000 were incurred during the year. Of this, N$15 000 was incurred in the despatch department and N$12 000 was incurred in the headoffice. Electricity of N$ 51 000 was incurred during the year. Of this, N$35 000 was incurred in the despatch department and N$16 000 was incurred in the head – office. Dividends of N$100 000 were declared on 18 March 2019 in respect of the year ended 28 February 2019. Dividends of N$150 000 were declared on 15 March 2020 in respect of the year ended 29 February 2020. The tax expense for the year has been correctly calculated at N$353 220. REQUIRED: 1) Prepare the statement of comprehensive income of Watson Limited for the year ended 29 February 2020 in conformity with International Financial Reporting Standards. (13 marks) 2) Prepare the statement of financial position of Watson Limited for the year ended 29 February 2020 in conformity with International Financial Reporting Standards. (10 marks) 3) In so far as information is available, prepare the following notes to the financial statements for the year ended 29 February 2020 in conformity with International Financial Reporting Standards. (7 marks) a) Statement of compliance b) Accounting policies c) Property, plant and equipment. d) Share capital
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