Problem 3-15 (IFRS) The end of reporting period of Norway Company is December 31, 2021 and the financial statements for 2021 are authorized for issue on March 15, 2022. On December 31, 2021, Norway Company had a receivable of P400,000 from a customer that is due 60 days after the end of reporting period. On January 15, 2022, a receiver was appointed for the said customer. The receiver informed Norway that the P400,000 would be paid in full by December 31, 2022. Norway Company had equity investments held for trading.. On December 31, 2021, these investments were recorded at the fair value of P5,000,000. During the period up to Fébruary 15, 2022, there was a steady decline in the fair value of all the shares in the portfolio, and on February 15, 2022, the fair value had fallen to P2,000,000. Norway Company had reported a contingent liability on December 31, 2021 related to a court case in which Norway Company was the defendant. The case was not heard until the first week of February 2022. On February 15, 2022, the judge handed down a decision against Norway Company. The judge determined that Norway Company was liable to pay damages totaling P3,000,000. On December 31, 2021, Norway Company had a receivable from a large customer in the amount of P3,500,000. On January 31, 2022, Norway Company was advised in writing by the liquidator of the said customer that the customer was insolvent and that only 10% of the receivable will be paid on April 30, 2022. What total amount should be reported as adjusting events on December 31, 2021? a. 6,150,000 b. 9,150,000 c. 9,550,000 d. 6,500,000 111
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Step by step
Solved in 2 steps
