Bike Universe Pty Ltd 2012 Annual special purpose report.docx

Bike Universe Pty Ltd 2012 Annual ReportStatement of comprehensive IncomeFor the year ended 30 June 2012Notes$IncomeRevenue3600,081 Other revenue41,450 Other Income22,965 Total Revenue 624,496Cost of Goods Sales(262,255)Gross Profit 362,241 Expenses Depreciation and amortization expenses5 (13,425) Employee benefits expense6 (220,971) Financial expenses7 (13,957) Other expenses8(99,688) Total Expenses(348,041)Profit before tax 14,200 Income tax expense9 6,288Profit after income tax for this year7,912Other Comprehensive income 0Net of income tax0Total comprehensive income for the year7,912Statement of Financial Position at 30 June 2012 Notes$ASSETSCurrent Assets Cash and cash equivalents10 170,864 Trade and other receivables11 36,548 Inventories 154,820 Other current assets12 9,500 Total Current Assets 371,732Non Current Assets Property, Plant and Equipment13215,194 Intangible assets14 6,006 Shares in Listed Companies1565,200 Deferred Tax Asset16 7,542 Total Non -Current Assets293,942 Total assets665,674 LIABILITIESCurrent Liabilities Trade and other payables1712,780 Coaching fees received in advance 12,870 Borrowings18 22,438 MV Lease Liability19 4,785 Tax Payable207,813 Other current liabilities21 15,038 Total Current Liabilities 75,724 Non-Current Liabilities Borrowings18 123,388 MV Lease Liability19 38,613 Provisions for annual leave2211,420Deferred Tax Liabilities166,017 Total Non-Current Liabilities 179,438 Total liabilities 255,162Net Asset410,512Equity Share Capital 23 400,000 Reserve 245,600 Retained Profits 25(3,000) Current Year Profit 7,912Total Equity 410,512 Statement of Changes in Equity for year ended 30 June 2012NotesShare capitalRetained EarningsTotalBalance at 1 July 2011-Total comprehensive income for the year-7,9127,912Issue ordinary shares on 1 Sept.23400,000-400,000Revaluation Reserve24-5,6005,600Dividend paid25-(3,000)(3,000)Balance at 30 June 2012410,512NOTES:Note 1: General InformationBike Universe Pty Ltd is a cycle coaching and retail cycle business domiciled in Australia. The address of the companys office is 14 Dorrington Drive Paddington, QLD. The company is mainly involved in cycle coaching and retail cycle business. Considered as a non-reporting entity because there are no users dependent on a general purpose financial report, Bike Universe Pty Ltd is required to prepare special purpose financial statements in order to meet the requirements of the Corporations Act 2001.Note 2: Significant Accounting Policies2.1Basis of PreparationThe financial statements have been prepared on an accruals basis and are based on historical cost. Some selected non-current assets are revalued on the basis of fair value.The financial statements are presented in Australian Dollars, unless otherwise noted2.2 Statement of ComplianceThe financial statements and notes to accounts are prepared in accordance with the recognition, measurement and disclosure requirements of all the AASB Accounting Standards with the exception of the flowing four:- AASB 107 Statement of Cash Flows;- AASB 8 Operating Segments;- AASB 133 Earnings Per Share;- AASB 124 Related Parties.2.3 Use of Estimates and JudgmentsThe preparation of financial statements in conformity with AASBs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimations. Estimate and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. 2.4 RevenueRevenue is measured at the fair value of the consideration received or receivable. It is reduced for estimated customer returns, rebates and other similar allowances.Sale of goods Revenue from the sale of goods is recognized when all of the following conditions are satisfied: the company transferred to the buyer the significant risks and rewards of ownership of the goods; the company retains neither continuing managerial involvement to the degree usually associated with ownership nor the effective control over the goods sold; the amount of revenue can be measured reliably; It is probable that the economic benefits associated with the transaction can be measured reliably.Rendering of serviceRevenue from providing services is recognized by reference to the stage of the completion of the contract. The stage of completion of the contract is determined as follows: installing fees are recognized by reference to the stage of the completion of the installation, determined as the proportion of the total time expected to install that has elapsed at the end of the reporting period; servicing fees included in the price of products sold are recognized by reference to the proportion of the total cost of providing the servicing for the product sold; revenue from time and material contracts is recognized at the contractual rates as labor hours are delivered and direct expenses are incurred.Dividend and Interest RevenueDividend revenue from investments is recognized when the shareholders right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of revenue can be measured reliably).Interest revenue is recognized when it is probable that the economic benefits will flow to the company and the amount of revenue can be measured reliably. Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assets net carrying amount on initial recognition.2.5 InventoriesInventories are stated at the lower of cost and net realizable value. Costs which include an appropriate portion of fixed and variable overhead expenses, are assigned to inventories by the method most appropriate to the particular class of inventory, with the majority being valued on a first-in-first-out basis. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.2.6 Income TaxThe companys tax expense for the year comproises current year income tax expense and deferred tax expense. Current and deferred income tax expense is charged or credited directly to other comprehensive income instead of the profit or loss when the tax relates to items that are credited or charged directly to other comprehensive income.Current TaxThe tax currently payable is based on the taxable profit for the year, Taxable profit differs from profit as reported in the statement of comprehensive income or income statement because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Companys liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.Deferred TaxDeferred tax is recognized on temporary differences between the carrying amount of assets and liabilities in the financial statements. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such deferred tax assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.2.7 LeasingLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.Financial leases are capitalized by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.Lease payments for operating leases are charged as expenses in the period in which they are incurred. Lease incentives under operating leases are recognized as a liability and amortized on a straight-line basis over the life of the lease term.2.8 Borrowing CostBorrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognized in profit or loss in the period in which they are incurred.2.9 Employee BenefitsWagesLiabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months after the end of the period in which the employees render the related services are recognized in respect of employees services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. Long service leaveEach full-time employee is entitled to four weeks paid annual leave. Part-time staff are entitled to pro-rata annual leave.The liability for long service leave and annual leave which is not expected to be settled within 12 months after the end of the period, the provision for employee benefits and measurement are recognized as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period. Consideration is given to expect future wage and salary level, experience of employee departures and periods of services. Expected future payments are discounted using market yield at the end of the reporting period on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.Defined contribution superannuation expense Contributions to defined contribution superannuation plans are expensed when employees have rendered services entitling them to contributions.2.10 Property, Plant and EquipmentProperty, plant and equipment are carried at cost or fair value less all accumulated depreciation and accumulated impairment loss. DepreciationThe depreciation amount of all fixed assets is depreciated on a straight line basis over their useful lives to the company commencing from the time the asset is held ready for use. Leases assets are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the assets.The effective lives of the depreciable assets are as follows:AssetsEffective life (in years)Fit-out40Cash register10Desktop computer4Photocopying machine5Television sets10Fluorescent lighting system20racks10Carpets for the retail store8Leased motor vehicle8The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.2.11 Intangible AssetsIntangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of acquisition. Intangible assets acquired separately are initially recognised at cost. Intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from de-recognition of an intangible asset is measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangibles are reviewed annually. Changes in expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.Computer SoftwareThe computer software purchased by the company is measured at the cost less accumulated amortisation. Amortisation is charged to the Income Statement on a straight line basis over the estimated useful life which is four years.Impairment of Intangible AssetsAt the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash generating units for which a reasonable and consistent allocation basis can be identified.Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the asset may be impaired.Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a re-valued amount, in which case the impairment loss is treated as a revaluation decrease.Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a re-valued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.2.12 Cash and Cash EquivalentsCash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of