Chapter 11, Problem 3SSC

Surfing the Standards Case 3: Involuntary Conversion, IFRS

Ed’s Market Company (EMC) grows and sells fresh fruits and vegetables EMC is an IFRS reporter EMC experienced three different unfortunate events in the current year

1. 1. 1 In February, the government acquired 20 acres from EMC m an eminent domain case EMC was carrying the land on its balance sheet at $6,000. The government paid EMC $10,000 EMC purchased an additional 20 acres of land on the other side of its farm for $25,000 in June to compensate for this loss
2. 2. 2 In July, a fire destroyed one of EMC’s barns. The barn had an original cost of $200,000 and accumulated depreciation of $120,000. EMC expected to receive $50,000 in insurance money. EMC received insurance proceeds of $50,000 in November.
3. 3. 3 In December one of EMC’s tractors was stolen The original cost of the tractor was $45,000 and the accumulated depreciation was $42,500. The tractor was insured but as of December 31, it was not determined exactly how much the insurance company would pay EMC, although it is likely to be around $5,000.

Prepare a memo to the file using the international standards for support. Include any necessary journal entries in the conclusion section of the memo.