Condensed statements of financial position of Leni and Kiko as of December 2021 are as follows: Leni Current Assets 43,750 Noncurrent Assets 181,250 Liabilities 16.250 Common Stock, P20 par 137,500 APIC 8,750 Retained Earnings 62,500 Kiko Current Assets 16,250 Noncurrent Assets 106,250 Liabilities 8,750 Common Stock, P20 par 75,000 APIC 6,250 Retained Earnings 32,500 On January 1, 2022 Leni Corp issued 8,750 shares with a market value of P25/share for the assets and liabilities of Kiko Corp. The book values reflects the fair value of the assets and liabilities, except that non current assets of Kiko have a temporary appraisal value of 157,500 and the noncurrent assets of Leni Corp is overstated by 7,500. Contingent consideration, which is determinable, is equal to 3,750. Leni also paid for the share issuance cost of 8,500 and other acquisition related cost of 4,750. On March 1, the contingent consideration has a determinable amount of 5,000 and on the same date the provisional fair value of the noncurrent assets of Kiko increased by 2,250. What is the amount of combined total assets at the end of 20222 Select the correct response O 444,250 442,000 O 435,500 O 443,000
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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