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Financial Statements Year Ended December 31, 20X5: ABC Company
Financial Statements Year Ended December 31, 20X5: ABC Company
Financial Statements Year Ended December 31, 20X5: ABC Company
Financial Statements
Page
NOTICE TO READER 1
FINANCIAL STATEMENTS
Balance Sheet 2
Income Statement 3
NOTICE TO READER
We have compiled the balance sheet of Field Fences Inc. as at December 31, 20X5 and the
statement of income and retained earnings for the year then ended from information provided by
management. We have not audited, reviewed or otherwise attempted to verify the accuracy or
completeness of such information. Readers are cautioned that these statements may not be
appropriate for their purposes.
Page 1
ABC COMPANY
Balance Sheet
December 31, 20X5
(Unaudited - See Notice to Reader)
20X5 20X4
ASSETS
CURRENT
Cash $ 1,280 $ 1,287
Marketable securities (Market value $61,960; 20X4 - $70,000) 40,525 55,525
Accounts receivable 79,747 208,947
Inventory 96,373 70,872
Goods and services tax recoverable 1,469 -
Prepaid expenses 9,730 7,002
NON-CURRENT
Property, plant and equipment (Note 1) 52,516 5,295
Investment (Note 8) 15,000 -
Goodwill 15,000 15,000
Incorporation costs 1,800 1,900
NON-CURRENT
Long term debt (Note 3) 20,000 -
Due to shareholders 99,382 59,204
SHAREHOLDERS’ EQUITY
Share capital (Note 2) 1,100 100
Contributed surplus 14,000 -
Retained earnings 39,384 45,329
Page 2
ABC COMPANY
Income Statement
20X5 20X4
EXPENSES
Advertising and promotion $ 3,884 $ 3,534
Depreciation and amortization 9,579 1,324
Employee benefits 363 2,720
Insurance 5,576 4,348
Bank charges and interest 4,020 6,285
Office 5,158 6,906
Professional fees 1,845 2,620
Rental 10,500 10,500
Repairs and maintenance 4,691 1,171
Salaries and wages 108,424 65,199
Sub-contracts 10,015 3,705
Supplies 1,337 475
Telephone 3,392 3,680
Travel 3,456 2,205
Vehicle 22,641 20,837
Share based payments (note 2) 14,000 -
$ 208,881 $ 135,509
Page 3
ABC COMPANY
Statement of Cash Flows
Year Ended December 31, 20X5
(Unaudited - See Notice to Reader)
20X5 20X4
OPERATING ACTIVITIES
Net Income ($ 5,945) $ 15,794
Items not involving cash
Amortization 9,579 1,324
Share based payments 14,000 -
$ 10,515 ($ 522)
INVESTING ACTIVITIES
Expenditures on property, plant and equipment ($ 56,700) ($ 1,850)
Investment ( 15,000)
($ 71,700) ($ 1,850)
FINANCING ACTIVITIES
Long term debt $ 20,000 -
Shares issued for cash $ 1,000
Due to shareholders 40,178 -
$ 61,178 -
Page 4
ABC COMPANY
Statement of Changes in Equity
Year Ended December 31, 20X5
(Unaudited - See Notice to Reader)
Common Shares
Share
Number Option Retained Total
of Shares Amount Reserve Earnings Equity
Page 5
ABC COMPANY
2. SHARE CAPITAL
Authorized
Unlimited Class “A” Common voting shares
Unlimited Class “B” Common non-voting shares
Unlimited Class “A” Preferred non-voting shares
20X5 20X4
Issued
200 Class “A” Common voting shares $ 1,100 $ 100
Stock Options
The following summarizes activity related to stock options:
Options Exercise
Price
December 31, 20X4 - -
Issued 40,000 0.20
Cancelled - -
The fair value of stock options granted in 20X5 was $14,000 and
was estimated on the grant date using the Black-Scholes option
pricing model.
Page 6
ABC COMPANY
Interest Rate Due By Currency Dec 31, 20X5 Dec 31, 20X4
Secured long-term-debt $ - $ -
Finance leases $ - $ -
Long-term debt $ 20 $ -
As of December 31, 20X5, all of the long-term debt had fixed interest rates. The weighted-
average interest rate on the outstanding balances of the Company's long-term debt was
6.81 percent the year ended December 31, 20X5.
4. EXTRAORDINARY ITEMS
On December 14, 2015, a dam broke upstream of ABC Company’s primary production facility
causing a massive flood in the area. The damage was extensive and cost the Company
$20,000 to repair and replace damaged portions of the plant. As this amount is material to the
net profits of the Company, it was reported as an extraordinary item on the Company’s income
statement. The amount, net of applicable income taxes, was $16,000.
Page 7
ABC COMPANY
During the year ended December 31, 20X5, the Company incurred $40,000 (20X4 -
nil) for management services provided by XYZ Consulting which is controlled by an
officer and director of the Company.
At December 31, 20X5, $40,000 related to management fees remained unpaid by the
Company and is included as management fee payable on the balance sheet.
6. COMMITMENTS
The Company entered into an agreement in 20X4 for the rental of equipment from a non-related
party. The payments on the rental are $10,500 annually. The agreement continues until
December 31, 20X7.
7. DEFERRED TAXES
Resulting from differences in tax vs accounting treatment of items listed below, the Company
has a deferred tax asset which it has not recognized on the balance sheet.
Unrecognized deferred tax asset is comprised of the following tax affected temporary
differences:
December 31, December 31,
20X5 20X4
Property, plant and equipment $ 1,260 $ 1,100
Goodwill and incorporation costs 250 250
Page 8
ABC COMPANY
8. INVESTMENT
On September 30, 20X5, the Company purchased 150,000 shares in Enigma Manufacturing Corp.
for $15,000 representing a 2% interested in the company. No indicators of impairment of its
investment were identified by the Company at December 31, 20X5.
Page 9