All questions within this problem relate to GoodFellas Inc a construction company.Extract from the trial balance of GoodFellas at 31. December 2019 (EUR)DebitCreditCosts of services provided320,000Contracts in progress700,000Interest expense21,000Sales and administrative expenses120,000Impairment losses13,000Sales revenue680,000Interest income6,000Required:i.Define revenue and expenses in accordanwith IAS 1 Presentation of financial statenments |Explain how the recognition of revenue at a construction company is different from that of a manufacturingcompany (according to the IFRS).On 15 January 2020 the accounting department at GoodFellas learned that by 31 December the company hadcompleted 80% of a construction contract. The expenses associated with the contract had been accounted for, butnot the revenue. The client had made no payments under the contract. Explain how this event should be treatedii.iii.under IAS 10 Events after the balance sheet date.GoodFellas entered a lease contract for a digger machine on the 2nd of January 2019. The machine could havebeen bought outright for €60,000. Under the lease contract GoodFellas paid €10,000 on the 2nd of January 2019,and then will need to pay €20,000 on the 2nd of January 2020, 2013 and 2014. The effective rate implicit in thelease is 9.7%. The lease was at first treated as an operating lease and the first payment was included in expenses(under cost of services provided), but it became clear later that the lease is in fact a finance lease: Explain howiv.this transaction should be treated in the financial statements for the year ended 31. December 2019 withoutproviding the amounts. Calculate the total amount that should be recognised as a liability on the 2nd of January2019.Refer to the transaction described in (iv) above. (A). Calculate the finance charge for the year ended31. December 2019 (B). Explain the treatment of the transaction (including the amounts) for the followingyear, that is year ended 31. December 2020.On the 1st of Februrary 2019 GoodFellas entered a 3-year construction contract to build an ice cream factory. Thebudgeted revenue is €i,200,000 with costs budgeted at €800,000. By 31. December 2019 €700,000 of the totalcontract costs had been incurred and recorded as "contract in progress". No revenue has so far been recorded invi.the accounts. Explain the accounting treatment and calculate the amounts related to the contract thatneed to be included in the statement of financial position for the year ended 31. December 2019. The client hasso far transferred progress payments to the total amount of €500,000.vii. GoodFellas pays corporate income tax at a flat rate of 21% of income before tax. However, income on constructioncontracts (questions 1g and 1h) is taxed when cash is received from the client. The client has so far paid €500,000since the start of the contract in February 2019. Explain the treatment of the tax on construction contractrevenue. Calculate current tax, the amount of tax liability and deferred tax. .Refer to all the questions above and make appropriate adjustments to the trial balance (excepts i, ii, i & iv).Prepare the statement of income for the year ended 31. December 2019 on the basis of the trial balance andthe questions above. At a minimum write the form of the statement of income with corresponding amounts fromviii.the trial balance.

Name: All questions within this problem relate to GoodFellas Inc a construc
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Description: All questions within this problem relate to GoodFellas Inc a construction company.Extract from the trial balance of GoodFellas at 31. December 2019 (EUR)DebitCreditCosts of services provided320,000Contracts in progress700,000Interest expense21,000Sa

Revenue refers to the money or profit earned by an entity or a company through its business…

Business

Accounting

tract from the trial balance of GoodFellas at 31. December 2019 (EUR) Debit Credit Costs of services provided 320,000 Conracts in progress 700,000 Interest expense 21,000 Sales and administrative expenses 120,000 Impairment losses 13,000 Sales revenue 680,000 Interest income 6,000 quired: i. Define revenue and expenses in accordance with IAS 1 Presentation of financial statements

tract from the trial balance of GoodFellas at 31. December 2019 (EUR) Debit Credit Costs of services provided 320,000 Conracts in progress 700,000 Interest expense 21,000 Sales and administrative expenses 120,000 Impairment losses 13,000 Sales revenue 680,000 Interest income 6,000 quired: i. Define revenue and expenses in accordance with IAS 1 Presentation of financial statements

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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