DEF Company reports profit before tax of P500,000 in its 3rd quarter interim financial statements before consideration for the following: • Inventory with a carrying amount P10,000 has a net realizable value of P12,000. It is expected that the change in value will reverse in the 4th quarter. There have been no write-downs of inventory recognized in previous periods. • Loss on sale of a used equipment on August 2, 20x1 was $60,000. • An investment in FVPL measured at acquisition cost of P20,000 has a fair value of P38,000 as at the end of 3rd the quarter. However, the increase in fair value is expected to be only temporary. • DEF Company incurred P24,000 on unanticipated repairs on its factory equipment on March 16, 20x1. • No depreciation is recognized during the 3rd quarter. The annual straight-line depreciation of items of PPE

DEF Company reports profit before tax of P500,000 in its 3rd quarter interim financial statements before consideration for the following: • Inventory with a carrying amount P10,000 has a net realizable value of P12,000. It is expected that the change in value will reverse in the 4th quarter. There have been no write-downs of inventory recognized in previous periods. • Loss on sale of a used equipment on August 2, 20x1 was $60,000. • An investment in FVPL measured at acquisition cost of P20,000 has a fair value of P38,000 as at the end of 3rd the quarter. However, the increase in fair value is expected to be only temporary. • DEF Company incurred P24,000 on unanticipated repairs on its factory equipment on March 16, 20x1. • No depreciation is recognized during the 3rd quarter. The annual straight-line depreciation of items of PPE

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following is information for Novak Corp. for the year ended December 31, 2020: Sales revenue $1,420,000 Loss on inventory due to decline in net realizable value $70,000 Unrealized gain on FV-OCI equity investments 46,000 Loss on disposal of equipment 45,000 Interest income 9,000 Depreciation expense related to buildings omitted by mistake in 2019 56,000 Cost of goods sold 852,000 Retained earnings at December 31, 2019 950,000 Selling expenses 71,000 Loss from expropriation of land 57,000 Administrative expenses 52,000 Dividends declared 46,000 Dividend revenue 15,000 The effective tax rate is 25% on all items. Novak prepares financial statements in accordance with IFRS. The FV-OCI equity investments trade on the stock exchange. Gains/losses on FV-OCI investments are not recycled through net income. a)Prepare the retained earnings section of the statement of changes in equity for 2020. (List…
Problem: Recognition and Measurement in Interim Periods Athena Corp. reports profit before tax of P 1,000,000 I its 2nd quarter interim financial statements before consideration for the following: Inventory with a carrying amount of P 100,000 has a net realizable value of P 80,000. It is expected that the decline in value will reverse in the 3rd An investment property measured under the cost model has a carrying amount of P 250,000 but its recoverable amount is P 210,000. An investment in FVPL measured at acquisition cost of P 20,000 has a fair value of P 25,000 as at the end of the 2nd However, the increase in fair value is expected to be only temporary. No depreciation is recognized during the 2nd The annual depreciation under the straight-line method of items of PPEs is P 360,000. Athena Corp. has a policy of providing 12 days paid vacation leaves for its employees. The vacation leaves are vesting and accumulating. Total paid vacation leaves eligibility of employees for the full…
Esquire Incorporated uses the LIFO method to report its inventory. Inventory at the beginning of the year was $552,000 (23,000 units at $24 each). During the year, 86,000 units were purchased, all at the same price of $28 per unit. 88,000 units were sold during the year. Assuming an income tax rate of 25%, what is LIFO liquidation profit or loss that the company would report in a disclosure note accompanying its financial statements? LIFO liquidation profit (loss)
Tulip Company decided to change from LIFO to FIFO inventory costing, effective January 1, 2020. The following data were available: Year Pretax Operating Excess of FIFO Ending Inventory Income using LIFO over LIFO Ending Inventory 2020 $40,000 $8,000 2019 20,000 7,000 2018 30,000 4,000 The income tax rate is 35%. The company began operations on January 1, 2018, and has paid no dividends since inception. Required: Answer the following questions relating to the 2019-2020 comparative financial statements. a. What is net income for 2020? b. What is restated net income for 2019? c. Prepare the 2019 statement of retained earnings as it would appear in the comparative 2019-2020 financial statements.
On December 31, 20x2, Grayson Inc. changed its inventory valuation method to FIFO from weighted-average. The change will result in an $800,000 increase in the beginning inventory at January 1, 20x2. Assume a 30% income tax rate. The cumulative effect of this accounting change on prior periods that will be reported as an adjustment to the beginning balance of retained earnings is O $560,000 O $800,000 0$-0- O $40,000
Chouchou Company's statements for 2024 and 2025 included the following errors: December 31, 2024 inventory understated 2,000,000 December 31, 2025 inventory overstated 1,000,000 Depreciation for 2024 understated 400,000 |Depreciation for 2025 overstated 800,000 How much should retained earnings be retroactively adjusted on January 1, 2026? 1,400,000 A. increase 1,400,000 B. decrease 600,000 C. increase 600,000 D. decrease
Tulip Company decided to change from LIFO to FIFO inventory costing, effective January 1, 2020. The following data were available: Year Pretax Operating Excess of FIFO Ending Inventory Income using LIFO over LIFO Ending Inventory 2020 $40,000 $8,000 2019 20,000 7,000 2018 30,000 4,000 The income tax rate is 35%. The company began operations on January 1, 2018, and has paid no dividends since inception. Required: Answer the following questions relating to the 2019-2020 comparative financial statements. a. What is net income for 2020? b. What is restated net income for 2019? c. Prepare the 2019 statement of retained earnings as it would appear in the comparative 2019-2020 financial statements.
Swifty Enterprises reported cost of goods sold for 2025 of $1,453, 700 and retained earnings of $5,392, 600 at December 31, 2025. Swifty later discovered that its ending inventories at December 31, 2024 and 2025, were overstated by $102, 820 and $37,880, respectively. Determine the corrected amounts for 2025 cost of goods sold and December 31, 2025, retained earnings. Corrected cost of goods sold $enter a dollar amount Corrected 12/31/25 retained earnings $enter a dollar amount
The Quartz Company has been taking a physical inventory every quarter in order to prepare its quarterly financial statement. The management is interested to know if they have some alternative to find an efficient way of determining the cost of ending inventory for its quarterly reports. You have been given the following information abased on which you are supposed to suggest the management something that will fulfil the requirements. The Quartz Company Partial Income Statement For the year ended Dec 31, 2020 Net Sales $655,000 CGS: Beginning Inventory 80000 Purchases, Net 575000 COGAS…
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