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ACCA Applied Knowledge · Financial Accounting · The main elements of financial statements

Zeta Co has the following results for the year ended 31 December: revenue $500,000; cost of sales $300,000; distribution costs $40,000; administrative expenses $60,000; finance costs $10,000; investment income $5,000; gain on revaluation of land (net of tax) $20,000; income tax expense $25,000. What is Zeta Co's total comprehensive income for the year?

Total comprehensive income is $90,000. Profit for the year is $70,000 after operating costs, investment income, finance costs and tax, and the $20,000 revaluation gain is other comprehensive income, so it is added to give total comprehensive income.

  1. A$70,000
  2. B$90,000Correct
  3. C$65,000
  4. D$110,000

Explanation

Profit from operations = 500,000 - 300,000 - 40,000 - 60,000 = 100,000. Add investment income 5,000 and deduct finance costs 10,000 = 95,000 profit before tax. Deduct tax 25,000 = 70,000 profit for the year. Add other comprehensive income of 20,000 = 90,000. The $70,000 option omits the revaluation gain, which is wrongly excluded from total comprehensive income.

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