Q6: Partway is in the process of preparing its financial statements for the year ended 31 October2006. The company's main activity is in the travel industry mainly selling package holidays (flights andaccommodation) to the general public through the Internet and retail travel agencies. During thecurrent year the number of holidays sold by travel agencies declined dramatically and the directorsdecided at a board meeting on 15 October 2006 to cease marketing holidays through its chain of travelagents and sell off the related high-street premises. Immediately after the meeting the travel agencies'staff and suppliers were notified of the situation and an announcement was made in the press. Thedirectors wish to show the travel agencies' results as a discontinued operation in the financialstatements to 31 October 2006. Due to the declining business of the travel agents, on 11 August 2006(three months before the year-end) Partway expanded its Internet operations to offer car hire facilitiesto purchasers of its Internet holidaysThe following are Partway's summarized income statement results - years ended: ------------31 October 2006--31 Oct 2005InternetTravel agenciesCar hireTotalTotalRevenue230001400020003900040000Cost of sales(18000)(16500)(1500)(36000)(32000)Gross Profit/(loss)(2500)(1500)(4000)500050030008000Operating ExpensesProfit/(Loss) Before(1000)(100)(2600)(2000)40004004006000taxThe results for the travel agencies for the year ended 31 October 2005 were: revenue $18 million, costof sales $15 million and operating expenses of $1.5 million.Required:79(a) Discuss whether the directors' wish to show the travel agencies' results as a discontinued operationis justifiable.(b) Assuming the closure of the travel agencies is a discontinued operation, prepare the (summarized)income statement of Partway for the year ended 31 October 2006 together with its comparatives.

Discontinued operations are those operations on for which company has shut or close down the…

(a) Discuss whether the directors' wish to show the travel agencies' results as a discontinued operation is justifiable. (b) Assuming the closure of the travel agencies is a discontinued operation, prepare the (summarized) income statement of Partway for the year ended 31 October 2006 together with its comparatives.

(a) Discuss whether the directors' wish to show the travel agencies' results as a discontinued operation is justifiable. (b) Assuming the closure of the travel agencies is a discontinued operation, prepare the (summarized) income statement of Partway for the year ended 31 October 2006 together with its comparatives.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

For each of the tollowing transactions or adjustments, indicate the effect of the transaction or adjustment on assets, liabilities, and net income by entering for each account affected the account name and amount and indicating whether it is an nddition () or a subtraction ( Transaction a has been done as an illustration. Net income is not affected by every transaction. In some cases, only one column may be affected because all of the specific accounts affected by the transaction are included in that category. a. Recorded $200 of depreciation expense. b. Sold land that had originally cost $9,000 for $14,000 in cash. c. Acquired a new machine under a financing lease. The present value of future lease payments, discounted at 10%, was $10,000. d. Recorded the first annuai payment of $2.200 for the leased machine (in part c). e. Recorded a $5,100 payment for the cost of developing and registering a trademark. f. Recognized periodic amortization for the trademark (in part e) using a 34-year…
Accrued salaries owed to employees for October 30 and 31 are not considered in preparing the financial statements for the year ended October 31. Indicate which items will be erroneously stated, because of the error, on (A) the income statement for the year and (B) the balance sheet as of October 31. Also indicate whether the items in error will be overstated or understated.
Iriga Company issued its 2011 financial statements on March 1, 2012. The following data are provided by the entity for the year ended December 31, 2011. What amount should be recognized as provision on December 31, 2011? a. 1,200,000 b. 1,300,000 c. 1,600,000 d. 1,750,000
Accounts Receivable $160,250 Accumulated Depreciation-Building 783,500 Administrative Expenses 524,850 Building 2,563,700 Cash 184,450 Common Stock 306,600 Cost of Goods Sold 3,721,950 Dividends 185,600 Interest Expense 9,550 Inventory 1,005,950 Notes Payable 254,900 Office Supplies 20,800 Retained Earnings 1,324,350 Salaries Payable 8,100 Sales 6,255,450 Selling Expenses 692,550 Store Supplies 89,550
In the preparation of the final accounts of Ringway Chemists Ltd, the Audit Manager realized from a discussion with the Business Owner, that her salary for the year has not been taken and hence not recorded.i. What accounting treatment would you recommend as the Schedule Officer on reconciling the above in relation to the final accounts preparation?ii. What would be the impact of this information on the Income on the Income Statement and the Statement of Financial Position?
Can you help me with the match terms, please? Thank u :) Modified retrospective approach Prospective approach and retrospective approach are the options
Please help with the following question, need accurate and full answer. What is the effect on liabilities, stockholder’s equity, revenues and net income if a company does not make an unearned revenue adjusting entry? Explain with suitable examples
What of the following is an incorrect statement? a) The final step in the accounting cycle is to close the temporary accounts. TESTER D Ob) A primary goal of accrual accounting is to appropriately match expenses with revenues. d) All of the statements are correct. c) Conservatism guides accountants to select the alternative that produces the highest amount of net income.
According to IAS 8, how should prior period errors that are discovered in a subsequent reporting period be recognized in the financial statements? a. As an adjustment to beginning retained earnings for the reporting period in which the error was discovered. b. As a note in the financial statements that the error was previously made but has since been corrected. c. In the statement of comprehensive income. d. Retroactively for all periods presented.
Please answer the following question(s): Sometimes a business entity will change its method of accounting for certain items. The change may be classified as a change in accounting principle, a change in accounting estimate, or a change in reporting entity. Listed below are three independent, unrelated sets of facts relating to accounting changes. Situation I: A company determined that the depreciable lives of its fixed assets are presently too long to fairly match the cost of the fixed assets with the revenue produced. The company decided at the beginning of the current year to reduce the depreciable lives of all of its existing fixed assets by five years. Situation II: On December 31, 2020, Gary Company owned 51% of Allen Company, at which time Gary reported its investment on a nonconsolidated basis due to political uncertainties in the country in which Allen was located. On January 2, 2021, the management of Gary Company was satisfied that the political uncertainties were resolved…
Match the terms with the definitions. Question 39 options: The concept that nonbusiness assets and liabilities are not included in the business' accounting records. A formal written promise to pay a supplier or lender a specified sum of money at a definite future time. The excess of total revenues over total expenses for the period. An unwritten promise to pay a supplier for assets purchased or services rendered. A separate record used to summarize changes in each asset, liability, and owner's equity of a business. Items a business owns that will provide future benefits. Reports assets, liabilities, and owner's equity on a specific date. An economic event that has a direct impact on the business. Reports beginning capital, plus net income, less withdrawals to compute ending capital. Withdrawals that reduce owner's equity as a result of the owner taking cash or other assets out of…