Illustrations of Accounting Policies
A Ltd., has decided to change its policy of writing off borrowing costs to capitalizing the same. As at 31st December, 2003, the company had written off borrowing costs amounting to £200,000. During the year ended 31/12/04. The company reported profit for the period of £450,000 but after charging borrowing costs of £50,000. As at 31/12/03 the retained profits were £1,500,000. Other transactions were:-
• Transfer from revaluation reserve on sale of PPE - £40,000
• Transfer from retained profits to general reserve - £50,000
• Interim dividends paid - £200,000
Required: Prepare the statement of changes in equity extract for the year-ended 81/12/04
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Retained profits
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£
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Balance as at 1.1.2004
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1,500,000
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Change in accounting policy
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200,000
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Balance as restated
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1,700,000
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Transfer from revaluation reserve on sale of PPE
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40,000
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Profit for the period (450,000 + 50,000)
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500,00
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Transfer to general reserve
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(50,000)
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Interim dividends paid
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(200,000)
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Balance as at 31/12/2004
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1,990,000
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