IPFMPSFR - Solutions 4 2023 Final - AA

4: Preparation of financial statements part 3
PUBLIC SECTOR FINANCIAL REPORTING
PREPARATION OF FINANCIAL
STATEMENTS PART 3
SOLUTIONS 4
Updated December 2022
Valid for exams from June 2023 to March 2024
1
Public Sector Financial Reporting
First published 2016
CIPFA
77 Mansell Street
London E1 8AN
+ 44 (0)20 75435600
Email: studentsupport@cipfa.org
Website: www.cipfa.org
Copyright © 2020 Chartered Institute of Public Finance and Accountancy

All rights reserved. No part of this publication may be reproduced, stored in
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Every possible care has been taken in the preparation of this publication but no
responsibility can be accepted for loss occasioned to any person acting or
refraining from action as a result of any material contained herein.
2
Table of contents
Exercise Solution 4.1 ................................................................. 4
Exercise Solution 4.6 ............................................................... 10
Exercise Solution 4.10 ............................................................. 14
3
Exercise Solution 4.1

Cash and non-cash generating assets
You will have probably thought of many different examples but here
are some possible ideas:
Cash-generating assets (IPSAS 26):
 Hospital building with fee-paying patients (operates

independently of other hospital buildings)
 Deeds office earning land registry fees.

Non-cash-generating assets (IPSAS 21):
 School
 Hospital
 Transport depot
 Administrative offices.
It should be noted that some assets may be both cash-generating
and non-cash-generating.
4

Impairment indicators
You will have probably thought of many different examples but here
are some possible ideas:
External sources of information
 Significant changes in the technological, market, economic or

legal or government policy environment in which the entity
operates. This could be as simple as a change in customer
tastes:
− medical diagnostic equipment that is rarely or never used
because a newer machine embodying more advanced
technology provides more accurate results
− a drinking water plant that cannot be used because it does
not meet new environmental standards.
 Cessation, or near cessation, of the demand or need for services

provided by the asset:
− a school closed because of a lack of demand for school
services, rising from a population shift to other areas. It is
not anticipated that this demographic trend affecting the
demand for the school services will reverse in the
foreseeable future
− a stadium whose principal occupant does not renew its
occupancy agreement, with the result that the facility is
expected to close.
Internal sources of information
 Obsolescence or physical damage to the asset:

− a building damaged by fire or flood
− a bridge that is weight-restricted due to identification of
structural deficiencies
− a navy destroyer damaged in a collision.
 Significant changes in how an asset is used or is expected to be
used, including the asset becoming idle and plans to discontinue
or restructure the division in which an asset is used:
− a mainframe computer that is underutilized because many
applications have been converted or developed to operate
on servers or PC platforms. A significant long-term decline
in the demand for an asset's services may translate itself
5
into a significant long-term change in the extent to which

the asset is used
− a school building that is being used for storage rather than
for educational purposes.
 Performance of the asset being below that planned, for example

actual net cash flows generated by the asset being below that
budgeted or, the service performance of an asset being
significantly worse than expected:
− an internal health department report on operations of a
rural clinic may indicate that an x-ray machine used by the
clinic is impaired because the cost of maintaining the
machine has significantly exceeded that originally
budgeted.
 A decision to halt the construction of the asset before it is

complete or in a useable condition:
− construction was stopped due to identification of an
archaeological discovery or environmental condition, such
as a nesting ground for a threatened or endangered species
− construction was stopped due to a decline in the economy.
6
Identifying cash generating units

The correct answer is option (b); the five routes combined are a
single cash-generating unit.
All five routes are part of one contract therefore the bus company
does not have the ability to withdraw from individual routes. The five
routes are contracted for as a group. The five routes should
therefore be grouped together as one cash-generating unit.
7

City of Diffcar
The indication of impairment is technological change, brought about
by the loss of mainframe computer capacity.
Acquisition cost £350 000
Accumulated depreciation (£350 000 * 4 ÷ 7) £200 000
Carrying amount £150 000
Replacement cost £70 000

Accumulated depreciation (£70 000 * 4 ÷ 7) £40 000
Recoverable Service Amount £30 000
Impairment loss £150 000 – £30 000 = £120 000
DR Statement of financial performance £120 000
CR Software license non-current asset £120 000
Carrying amount of asset after impairment loss £30 000
8

City of Moorland
Impairment is indicated because the office building has sustained
physical damage due to the fire.
Impairment loss using a restoration cost approach would be
determined as follows:
Carrying amount £26 000 000
Replacement cost (of a new building) £100 000 000

Accumulated depreciation (£100 000 000 * 19 ÷ £47 500 000
40)
Depreciated replacement cost (undamaged) £52 500 000
Less: restoration cost £35 500 000
Recoverable Service Amount £17 000 000
Impairment loss £26 000 000 – £17 000 000 = £9 000 000
DR Revaluation reserve £9 000 000
CR Building non-current asset £9 250 000
Carrying amount of asset after impairment loss £17 000 000
9

Department of Education
Impairment is indicated by evidence from internal reporting that the
service performance of the printing machine is worse than expected.
Circumstances suggest that the decline in the service potential of the
asset is significant and of a long-term nature. The asset is held at
revalued amount therefore any impairment will first be charged
against the revaluation surplus with any excess being charged to the
statement of financial performance.
Impairment loss using a service units approach is determined as
follows:
Carrying amount £20 000 000
Replacement cost £45 000 000

Accumulated depreciation (£45 000 000 * 5 ÷ 10) £22 500 000
Depreciated replacement cost before adjustment
for remaining service units £22 500 000
Recoverable Service Amount (£22 500 000 * 75%) £16 875 000
Impairment loss £20 000 000 - £16 875 000 = £3 125 000
DR Revaluation surplus £2 000 000

DR Statement of financial performance £1 125 000
CR Machine non-current asset £3 125 000
Carrying amount of asset after impairment loss £16 875 000
10

Reversal of impairment loss
 The asset's market value has increased significantly during the

period (IPSAS 26)
 Market interest rates have decreased during the period

(IPSAS 26)
 Resurgence of the demand or need for services provided by the

asset (IPSAS 21)
 Significant long-term changes with a favourable effect on the

entity have taken place during the period, or will take place in
the near future, in the technological, legal, or government
policy environment in which the entity operates. (IPSAS 21 and
IPSAS 26)
 Significant long-term changes with a favourable effect on the

entity have taken place during the period, or are expected to
take place in the near future, in the extent to which, or manner
in which, the incurred during the period to improve or enhance
an asset's performance or restructure the operation to which
the asset belongs. (IPSAS 21 and IPSAS 26)
 A decision to resume construction of the asset that was

previously halted before it was completed or in a usable
condition. (IPSAS 21 and IPSAS 26)
 Evidence is available from internal reporting that indicates that

the service performance or economic performance of the asset
is, or will be, significantly better than expected. (IPSAS 21 and
IPSAS 26)
11

IPSAS 11 (1)
(a)
Expected profit on the contract £000 £000
Total contract value 9 000
Costs incurred to date (2 700)
Estimated costs to completion (4 100)
Total costs (6 800)
Expected profit 2 200
(b)
Statement of financial performance for year 1 £000
Revenue (work certified) 3 000
Cost of sales (corresponding costs) (2 400)
Attributable profit 600
(c)
Gross amount due from contract customers £000
Costs incurred to date 2 700
Add: Recognised profit 600
Less: Progress billings (2 500)
Gross amount due from contract customer 800
12

IPSAS 11 (2)
Expected profit £ £
Total contract value 1 200 000
Estimated costs to completion (200 000)
Total costs (800 000)
Expected profit on contract 400 000
SFPer Invoiced SFP balances

(£) (£) (£)
Revenue (work 750 000 700 000 50 000
certified) (receivable)
Cost of sales (575 000) (600 000) 25 000 (WIP)
Attributable profit 175 000 75 000
IPSAS 11 disclosure note £

Add /(Less): Profit /(Loss) recognised to date 175 000
Gross amount due from/(to) contract customers 75 000
Statement of financial position (SFP) will show the following entries:

SFP extract £
Current assets:
Gross amount due from contract customer 75 000
Statement of Financial Performance will show the following entries:
Statement of Financial Performance extract £

Revenue 750 000
Cost of sales 575 000
Attributable profit 175 000
13

IPSAS 11 (3)
Summary
SFPer for y/e Sheltered Residential
31 Dec X7 Homes Home Total
(£) (£) (£)
Revenue 6 800 000 400 000 7 200 000
Cost of sales (7 000 000) (400 000) (7 400 000)
Attributable profit (200 000) 0 (200 000)
SFPos as at Sheltered Residential

31 Dec X7 Homes Home Total
(£) (£) (£)
Current assets: 1 800 000 0 1 800 000
Gross amount
due from
customer
Current liabilities: 0 600 000 600 000
Gross amount
due to contract
customer
Loss Provision 1 800 000 0 1 800 000
Workings – Sheltered Homes
Costs incurred to date (5 200 000)
Estimated costs to completion (3 500 000)
Total costs (8 700 000)
Expected profit on contract (200 000)
SFPer Invoiced SFPos balances

(£) (£) (£)
Revenue (work 6 800 000 5 000 000 1 800 000
certified) (receivable)
Cost of sales (4 900 000) (5 200 000) 300 000 (WIP)
Attributable profit 1 900 000 2 100 000
Provision for loss (2 100 000) (2 100 000)
(balancing figure)
Expected loss (200 000) 0
14
Statement of Financial Position balances (£):

Receivable (amount recoverable on contract) = 1 800 000
Loss Provisions = 2 100 000 – 300 000 (WIP) =

(1 800 000)
0
Costs incurred to date 5 200 000
Add /(Less): Profit /(Loss) recognised to date (200 000)
Less: Progress billings (5 000 000)
Gross amount due from/(to) contract customers 0
Workings – Residential Home

Estimated costs to completion ?
Total costs ?
Expected profit on contract ?
The contract appears to be in its early stages, and we do not have

information about total costs. Therefore, IPSAS 11 requires that no
profit is recognised as profit cannot yet be seen with reasonable
certainty.
No work has been certified, presumably because little has yet been
completed. Therefore, the actual costs incurred in the year will be
used to determine the balances in the accounts. As no profit can be
recognised, revenue must therefore be equal to the actual costs
incurred.
(£) (£) (£)
Revenue (work 400 000 1 000 000 (600 000)
certified) (payment in
advance)
Cost of sales (400 000) (400 000) 0
Attributable profit 0 (600 000)

Add /(Less): Profit /(Loss) recognised to date 0
Less: Progress billings (1 000 000)
Gross amount due from/(to) contract customers (600 000)
15

IPSAS 11 (4)
Summary
Statement of Financial Year 1 Year 2 Year 3 Cumulative
Performance £ £ £ £
Revenue 15 000 22 500 12 500 50 000
Cost of sales (15 000) (15 000) (10 000) (40 000)
Attributable profit 0 7 500 2 500 10 000
Statement of Financial Year 1 Year 2 Year 3

Position £ £ £
Current liabilities: (5 000) (2 500) 0
Gross amount due to
contract customer
Workings
Expected profit £
Year 1:
Exactly match cost and revenue (take no profit)
(£) (£) (£)
Revenue (work 15 000 20 000 (5 000)
certified) (payment in advance)
Cost of sales (15 000) (15 000) 0
Attributable profit 0 (5 000)

Add /(Less): Profit /(Loss) recognised to date 0
Statement of Financial Position will show the following entries:

Year 1 £
Current liabilities: –
Gross amount due to contract customer (5 000)
16

Year 1 £
Revenue 15 000
Cost of sales 15 000
Year 2:
Contract is 75% complete (30 000 / 40 000). Thus we can take 75%
of expected profit to Statement of Financial Performance.
Cumulative Yr 1 Yr 2 (£)
(£) (£) (difference)
Revenue (50 000 × 75%) 37 500 15 000 22 500
Cost of sales (40 000 × 75%) (30 000) (15 000) (15 000)
Attributable profit 7 500 0 7 500

(£) (£) (£)
Revenue 22 500 20 000 2 500
Cost of sales (15 000) (15 000) 0


Year 2 £
Gross amount due to contract customer (2 500)

Year 2 £
Revenue 22 500
Cost of sales (15 000)
17
Year 3:
Contract is 100% complete.
Cumulative Cum. Yr 2 Yr 3
(£) (£) (£)
Revenue 50 000 37 500 12 500
Cost of sales (40 000) (30 000) (10 000)
(£) (£) (£)
Revenue 12 500 10 000 2 500
Cost of sales (10 000) (10 000) 0

Gross amount due from/(to) contract customers 0
Year 3 £
Gross amount due to contract customer –
Year 3 £
Revenue 12 500
18
IPSAS 11 (5)
Summary
Statement of Financial Performance
Yr 1 Yr 2 (£) Cumulative
(£) (difference) (£)
Revenue 30 000 82 000 48 000 160 000

Cost of sales (30 000) (40 000) (30 000) (100 000)
Attributable 0 42 000 18 000
profit
Workings
Expected profit £
Year 1:
Exactly match revenue and costs (no profit).
Statement of Financial Performance Year 1 £
Revenue 30 000
Year 2:
Contract is 70% complete (70 000 / 100 000). Thus we can take
70% of expected profit to Statement of Financial Performance.
Cumulative Yr 1 Yr 2 (£)
(£) (£) (difference)
Revenue (160 000 × 70%) 112 000 30 000 82 000
Cost of sales (100 000 × (70 000) (30 000) (40 000)
70%)
Attributable profit 42 000 0 42 000

Revenue 82 000
19
Year 3:
Contract is 100% complete.
Cumulative Cumulative Year 3 (£)
(£) Year 2 (£) (difference)
Revenue 160 000 112 000 48 000
Cost of sales (100 000) (70 000) (30 000)

Revenue 48 000
20

IPSAS 11 (6)
Contract 1 Contract 2
(£000) (£000)
Contract price 1 190 1 750
Costs recognised as expense to (858) (1 260)
date
Expected further costs to (242) (500)
completion
Expected profit/(loss) 90 (10)
Contract 1 degree of completion = 858/1 100 = 78%
Recognised profit = 78% × 90 000 = £70 200
Contract 1 Contract 2
(£000) (£000)
Recognised profit at end of year 2 70.2 (10)
Profits recognised in year 1 20.0 5
Recognised profit in year 2 50.2 (15)
21

Freedom Fields Hospital
Part (a): Impairment of machine
As the asset used to generate income from private patients, it is a
cash generating asset and hence the impairment needs to be
accounted for in accordance with IPSAS 26 Impairment of
cash-generating assets.
The asset needs to be written down to the lower of its net carrying
amount and its recoverable amount in order to ensure that the
amount shown in the hospital's financial statements does not
overstate the value of the asset. The asset's recoverable amount is
the higher of its value in use and its fair value less costs to sell.
The recoverable amount is calculated as follows:
Value in use £000
Fair value less costs to sell (180 – 3%) 250
Therefore, recoverable amount is the higher of these, i.e. 175
250
We must then compare this to the asset's net carrying value to
determine how much, if any, impairment has occurred.
The net carrying value as at the beginning of the year is as follows:
£000
Cost 1 500
Accumulated depreciation:
2 years × ((1 500-200)/6) (434)
Carrying value at start of year £1 066
The impairment is therefore 1 066 – 250 = £816 000. The
accounting entry will be as follows:
Dr Operating expenses (statement of
financial performance) £816 000
Cr Equipment non-current asset
(statement of financial position) £816 000
Following the recognition of an impairment loss, any depreciation
charged in respect of the asset in future periods will be based on the
revised carrying amount, less any residual value expected, over the
remaining useful life of the asset as per IPSAS 17 (and per the
hospital's depreciation policy).
The depreciation charge for the year will therefore be £250 000 / 4
remaining years (no residual value) = £62 500.
22
Part (b)
Freedom Fields Hospital statement of financial performance
for the year-ended 31 December 20X8
Working £000
Operating revenue:
Private patient income 1 260
Grants 3 250
Other revenue 520
Total operating revenue 5 030
Operating expenses:
Wages salaries and employee benefits (2 925)
Depreciation 626 + 264 (W1) (890)
Impairment expense (a) (816)
Other operating expenses 1 420 + 22 (W3) (1 442)
Total operating expenses (6 073)
Surplus/(deficit) from operating activities (1 043)
Financing transactions W2 (24)
Surplus (deficit) for the year (1 067)
23
Freedom Fields Hospital statement of financial position as at

31 December 20X8
Working £000
Non-current assets:
Land W1 2 000
Buildings W1 6 686
Equipment W1 4 958
13 644
Current assets:
Inventories 85
Receivables 125
Prepayments W3 8
Short term investments 80
Cash 201
499
Total assets 14 143
Capital and liabilities
Capital:
Capital contributed by government 4 800
Revaluation reserve 2 452
General reserves 1 420
Accumulated surpluses 5 072 – 1 067 4 005
12 677
Non-current liabilities:
Finance lease W2 720
Current liabilities:
Payables 644
Finance lease W2 102
746
Total capital and liabilities 14 143
24
Workings:
Working 1: Property, plant and equipment
Land Buildings Equipment
£000 £000 £000
Cost or valuation
As at 1 January 20X8 2 000 10 550 5 800
Impairment (a) (816)
Additions 900
As at 31 December 20X8 2 000 10 550 5 884
Accumulated depreciation
As at 1 January 20X8 3 600 300
Charge for the year (below) 264 626
As at 31 December 20X8 3 864 926
Carrying value
As at 1 January 20X8 2 000 6 686 4 958
Depreciation: £000
Buildings: 10 550 / 40 264
Equipment: 10 year life for assets excluding impaired
asset:
(5 884 – 250) / 10 563
Plus depreciation on impaired asset (a) 63
626
Total – to statement of financial position 890
Working 2: Finance lease

£000
Fair value 900
Payments (10 × 102) 1 020
Total finance cost 120
Sum of digits:
Don't forget that with leases with payments in advance, you need to
deduct 1 from sum of digits, i.e. calculate for 9 years as year 10 is
interest free.
A useful formula can save you time when you have a long lease with
a lot of years to add up:
n(n+1)/2 where n = number of years. So here 9(9 + 1)/2 = 45

Year 1 interest = 9/45 × 120 = 24
Year 2 interest = 8/45 × 120 = 21
25
c/f after
Paymen paymen Interes
Lease table: b/f t t t c/f
£000 £000 £000 £000 £000
Year 1 900 (102) 798 24 822
Year 2 822 (102) 720 21 741
Working 3: Operating lease
Matching principle: recognise straight line over period of lease; only
6 months use in 20X8 (1 July – 31 December)
£000
Total cost of lease (30+50+50) 130
6 months / 3 years cost on straight line basis
(130/3=43*6/12) 22
20X8 paid 30
Difference – prepayment 8
26

Red Tile Housing Association
(a) Suggested answers include:
 Private sector housing provider in local area providing

affordable house for sale or rent and thus the association's
tenants leave the association's homes.
 Increases in market interest rates which are likely to affect

discount rates.
 Physical damage to homes (e.g. due to riots or war)

 Performance of the asset being below that planned, for
example actual net cash flows generated by the asset being
below that budgeted, or the service performance of an
asset being significantly worse than expected. This could
arise if tenants do not pay rent, or if homes are vacant for
long periods of time.
27
(b) Red Tile Housing Association: Statement of financial

performance for the year-ended 31 December 20X3
Working £
Operating revenue:
Rental income 1 194 000
Government funding 499 700 + 25 000 524 700
Total operating revenue 1 718 700
Operating expenses:
Wages salaries and
employee benefits (226 750)
Depreciation 17 105 + 3 500 W1 (20 605)
Impairment of NCA W2 (82 500)
640 000+24 500 –
Repairs and maintenance 35 700 (628 800)
Other operating expenses (775 000)
Total operating expenses (1 733 655)
Surplus/(deficit) from
operating activities (14 955)
Gain on sale of NCA 3 000
Financing transactions
(Loan interest) (1 000)
Surplus (deficit) for the year (12 955)
Red Tile Housing Association: Statement of changes in

equity for the year-ended 31 December 20X3
Capital
contributed General Accum.
by govt. reserves surpluses Total
£ £ £ £
Balance at
31 December
20X3 700 300 500 000 46 490 1 246 790
Capital
contribution
from
government 120 000 120 000
Net deficit for
year (12 955) (12 955)
Balance at
31 December
20X3 820 300 500 000 33 535 1 353 835
28
Red Tile Housing Association: Statement of financial

position as at 31 December 20X3
Working £
Non-current assets:
Land W1 480 000
Buildings W1 632 895
Equipment W1 14 000
1 126 895
Current assets:
Inventories 35 700
31 450 + 6 750
Receivables (W4) + 25 000 63 200
Current asset investments 15 000
Cash 48 500 + 120 000 168 500
282 400
Total assets 1 409 295
Capital and liabilities
Capital:
Capital contributed by
government 700 300 + 120 000 820 300
General reserves 500 000
Accumulated surpluses 46 490 – 12 955 33 535
1 353 835
Non-current liabilities:
Loan 40 000
Current liabilities:
Payables 15 460
Total capital and liabilities 1 409 295
29
Working 1: Property, plant and equipment

Land Buildings Equipment
£ £ £
Cost or valuation
As at 1 January 20X3 550 000 1 720 000 25 000
Impairment (70 000) (12 500)
Disposals (5 000)
As at 31 December 20X3 480 000 1 707 500 20 000
Accumulated depreciation
As at 1 January 20X3 1 057 500 3 750
Disposals (1 250)
2 500
Charge for the year (W3) 17 105 3 500
As at 31 December 20X3 1 074 605 6 000
Carrying value
As at 31 December 20X3 480 000 632 895 14 000
Working 2: Impairments Land Buildings

£ £
Carrying amount:
(Buildings = 1 720 000 – 1 057 500) 550 000 662 500
Recoverable amount:
Value in use 480 000 650 000
Fair value less costs to sell 460 000 630 000
Higher = recoverable amount 480 000 650 000
Therefore impairment 70 000 12 500
Total to statement of financial performance 82 500
Working 3: Depreciation £
Buildings: Spread new net carrying value over
remaining UEL so:
(1 707 500 – 1 057 500) / 38 years = 17 105
Equipment: Change in life so spread net carrying
value over remaining UEL:
(25 000 – 5 000 – 2 500 (W1)) / 5 years = 3 500
20 605
Working 4: Disposal proceeds £

Net book value at disposal: 5 000 – 1 250 3 750
Profit on disposal 3 000
Therefore total disposal proceeds (receivables) 6 750
30
77 Mansell Street
London E1 8AN
+ 44 (0)20 75435600
Email: studentsupport@cipfa.org
Website: www.cipfa.org
31

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4: Preparation of financial statements part 3

PUBLIC SECTOR FINANCIAL REPORTING

Updated December 2022

Valid for exams from June 2023 to March 2024

First published 2016

Copyright © 2020 Chartered Institute of Public Finance and Accountancy

Exercise Solution 4.1

 Hospital building with fee-paying patients (operates

 Deeds office earning land registry fees.

Exercise Solution 4.2

 Significant changes in the technological, market, economic or

 Cessation, or near cessation, of the demand or need for services

 Obsolescence or physical damage to the asset:

into a significant long-term change in the extent to which

 Performance of the asset being below that planned, for example

 A decision to halt the construction of the asset before it is

Exercise Solution 4.3

Identifying cash generating units

Exercise Solution 4.4

Replacement cost £70 000

Exercise Solution 4.5

Carrying amount £26 000 000

Replacement cost (of a new building) £100 000 000

Exercise Solution 4.6

Carrying amount £20 000 000

Replacement cost £45 000 000

DR Revaluation surplus £2 000 000

Exercise Solution 4.7

 The asset's market value has increased significantly during the

 Market interest rates have decreased during the period

 Resurgence of the demand or need for services provided by the

 Significant long-term changes with a favourable effect on the

 Significant long-term changes with a favourable effect on the

 A decision to resume construction of the asset that was

 Evidence is available from internal reporting that indicates that

Exercise Solution 4.8

Exercise Solution 4.9

SFPer Invoiced SFP balances

IPSAS 11 disclosure note £

Statement of financial position (SFP) will show the following entries:

Statement of Financial Performance will show the following entries:

Statement of Financial Performance extract £

Exercise Solution 4.10

SFPos as at Sheltered Residential

SFPer Invoiced SFPos balances

Statement of Financial Position balances (£):

Loss Provisions = 2 100 000 – 300 000 (WIP) =

Workings – Residential Home

The contract appears to be in its early stages, and we do not have

IPSAS 11 disclosure note £

Exercise Solution 4.11

Statement of Financial Year 1 Year 2 Year 3

IPSAS 11 disclosure note £

Statement of Financial Position will show the following entries:

Statement of Financial Performance will show the following entries:

SFPer Invoiced SFPos balances

IPSAS 11 disclosure note £

Statement of Financial Position will show the following entries:

Statement of Financial Performance will show the following entries:

IPSAS 11 disclosure note £

Statement of Financial Position will show the following entries:

Statement of Financial Performance will show the following entries: