QUESTION 1Francis Limited is finalizing its accounts for the yearended December 31, 2017 before the finalization ofaccount the following events came to the knowledge ofthe finance director.1. The company owns a subsidiary in a foreign country.The government of that has communicated to thecompany on December 28, 2017 that it will expropriateassets of the subsidiary. The book value of theinvestment in the subsidiary at the year-end was GHS50 million and fair market value GHS 75 million. Theforeign government has indicated that they willcompensate the company only to the extent of 25% ofthe fair value of the investment in the subsidiary.2. A damages claim of GHS 2 million has been filledagainst the company for the breach of contract. Thecompany's lawyer is of the viewpoint that it is probablethat the damages will be awarded to the plaintiff. It isnot possible to reasonably estimate the amount ofdamages, at the year end. However, before theauthorization of financialconfirmed the claim at GHS. 500,000.3. There was a fire at one of the warehouse of thestatementsthecourtcompany in January 5, 2018 stocks worth GHS 12million were completely destroyed. The companystocks were under insurance to the extent of 25% ofvalue.4. The company has discontinued one of his businesslocations on November 30, 2017 and has been planningto shift affected employees to other business locations.The relocation cost estimated at the year end is GHS.1.5 million.5. One of the customer of the company has burnthimself during use of a product manufactured by SaraLimited just after the year end. The company hasdecided to resolve the matter out of court by payingdamages of GHS 1 million. The company has nevercreated any provision regarding such damages as thisevent has never occurred in the past.REQUIRED: Show how each of the above events willbe dealt in the financial statement of the company fortheyear ended December 31, 2017.

Financial statements refers to those statements of a company which depicts the business activities…

Francis Limited is finalizing its accounts for the year ended December 31, 2017 before the finalization of account the following events came to the knowledge of the finance director. 1. The company owns a subsidiary in a foreign country. The government of that has communicated to the company on December 28, 2017 that it will expropriate assets of the subsidiary. The book value of the investment in the subsidiary at the year-end was GHS 50 million and fair market value GHS 75 million. The

Francis Limited is finalizing its accounts for the year ended December 31, 2017 before the finalization of account the following events came to the knowledge of the finance director. 1. The company owns a subsidiary in a foreign country. The government of that has communicated to the company on December 28, 2017 that it will expropriate assets of the subsidiary. The book value of the investment in the subsidiary at the year-end was GHS 50 million and fair market value GHS 75 million. The

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

Chico Company entered into a troubled debt restructuring agreement with Social Bank. The bank agreed to accept the land with a carrying amount of P800,000 and a fair value of P1,000,000 in exchange for a note payable with a carrying amount of P1,500,000. What is the gain on extinguishment of debt?
None
How could the acquisition of a Moldovan company by a US company for 5 million dollars in 2018 and annual profits from the US investment in Moldova at 145.000 $ in 2019 be recorded in the balance payments in Moldova and the USA in 2018 and 2019 ?
Do not give image format
Assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes. Izmir A.S. issued convertible bonds at their face value of 100,000 lira on December 31, 2020. The bonds have a 10-year life with interest of 10 percent payable annually. At the date of issue, the prevailing interest rate for similar debt without a conversion option was 12 percent. Required: a. Prepare journal entries for this compound financial instrument for the year ending December 31, 2020, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020, conversion worksheet to convert IFRS balances to U.S. GAAP.
You were engaged to audit the financial statements of the Philippines Refining Company for the year ended December 31, 2021 with comparative figures for the year ended December 31, 2020. One of your concern regarding material risk is on their long-term liabilities related to the acquisition of machinery. Your examination of their books revealed that on December 31, 2019, Philippines Refining Companypurchased machinery having a cash selling price of P85,933.75. The company paid P10,000 down and agreed to finance the remainder by making four equal payments each December 31 at the implicit interest rate of 12%. The accountant prepared a table of payment below for their long-term financing for you to test for the accuracy of their presentation and payment. Date Total Payment Interest Payment Principal Payment Carrying Value 12/31/19 10,000.00 75,933.75 12/31/20 28,095.49 9,112.05 18,983.44 56,950.31 12/31/21 25,817.48…
Assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes. Izmir A.S. issued convertible bonds at their face value of 133,000 lira on December 31, 2020. The bonds have a 8-year life with interest of 13 percent payable annually. At the date of issue, the prevailing interest rate for similar debt without a conversion option was 15 percent. Required: a. Prepare journal entries for this compound financial instrument for the year ending December 31, 2020, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020, conversion worksheet to convert IFRS balances to U.S. GAAP.
The statement of financial position of a company presents following financial assets at December 31,2021:· Bank cheque account = P58,400.· Bank savings account (collectible immediately) = P23,440.· Cash = P10,000.· Common stocks of Entity Z, one of the most traded assets in Country A’s stock exchange, purchased by the airline to speculate = P2,715.· Oil Price derivative entered into by the entity to hedge the commodity price risk of the anticipated future purchase of oil for use in the entity’s operating business = P6,720.· A gold price derivative entered into by the entity to speculate = P9,880· Treasury bonds issued by the government of Country A – P8,500. The entity acquired the bonds from the government one week before entity’s reporting date. The bonds mature 2 months after the date of acquisition (ie they are two-month bonds from the date of issue).· Treasury bonds issued by the government of Country A = P6,300. The entity acquired…
4
Icebreaker Company (a U.S.-based company) sells parts to a foreign customer on December 1, 2020, with payment of 16,000 dinars to be received on March 1, 2021. Icebreaker enters into a forward contract on December 1, 2020, to sell 16,000 dinars on March 1, 2021. The forward points on the forward contract are excluded in assessing hedge effectiveness and are amortized to net income using a straight-line method on a monthly basis. Relevant exchange rates for the dinar on various dates are as follows: Date Spot Rate Forward Rate(to March 1, 2021) December 1, 2020 $ 3.40 $ 3.475 December 31, 2020 3.50 3.600 March 1, 2021 3.65 N/A Icebreaker must close its books and prepare financial statements at December 31. a-1. Assuming that Icebreaker designates the forward contract as a cash flow hedge of a foreign currency receivable, prepare journal entries for the sale and foreign currency forward contract in U.S. dollars. a-2. What is the impact on…
On January 1, 2024, Trenten Systems, a U.S.-based company, purchased a controlling interest in Grant Management Consultants located in Zurich, Switzerland. The acquisition was treated as a purchase transaction. The 2024 financial statements stated in Swiss francs are given below. GRANT MANAGEMENT CONSULTANTS Comparative Balance Sheets January 1 and December 31, 2024 Direct exchange rates for Swiss franc are: Required: A. Translate the year-end balance sheet and income statement of foreign subsidiary using the current rate method of translation. B. Prepare a schedule to verify the translation adjustment. Cash and Receivables Net Property, Plant, and Equipment 40,000 37,000 60,000 92,000 30,000 32,000 20,000 20,000 10,000 40,000 60,000 92,000 Totals Accounts and Notes Payable Common Stock Retained Earnings Totals GRANT MANAGEMENT CONSULTANTS Consolidated Income and Retained Earnings Statement for the Year Ended December 31, 2024 Jan. 1 Dec. 31 20,000 55,000 Revenues 75,000 Operating…
Zugar Company is domiciled in a country whose currency is the dinar. Zugar begins 2020 with three assets: cash of 24,600 dinars, accounts receivable of 81,300 dinars, and land that cost 213,000 dinars when acquired on April 1, 2019. On January 1, 2020, Zugar has a 163,000 dinar note payable, and no other liabilities. On May 1, 2020, Zugar renders services to a customer for 133,000 dinars, which was immediately paid in cash. On June 1, 2020, Zugar incurred a 113,000 dinar operating expense, which was immediately paid in cash. No other transactions occurred during the year. Currency exchange rates for 1 dinar follow: April 1, 2019 January 1, 2020 May 1, 2020 June 1, 2020 December 31, 2020 Positive 1 dinar $0.46 = 0.49 1 0.50 1 0.52 = 1 0.54 1 a. b. Remeasurement gain C. Translated value of land Remeasured value of land || || || a. Assume that Zugar is a foreign subsidiary of a U.S. multinational company that uses the U.S. dollar as its reporting currency. Assume also that the dinar is…