Chapter 3, Problem 3.14BYP

(1)

To determine

Balance Sheet:

This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the components of balance sheet are assets, liabilities and shareholders’ equity.

Financial statement:

Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making. The financial statements reports, and shows the financial status of the business. The financial statements consist of the balance sheet, income statement, statement of retained earnings, and the cash flow statement.

Financial Disclosures:

Financial disclosure refer to all material, significant and relevant information concerning the reporting organization that are essential to understand the financial statements of the organization in its entirety and help evaluating the performance and the financial health of the said organization. They are either provided on the face of the financial statement or as notes to the financial statements as supporting schedules.

To identify: The classification category of assets and liabilities used by the Company P.

(2)

To determine

To describe: the reason for the investments is shown as current assets in the balance sheet of Company P.

(3)

To determine

To explain: The current liability “Accrued and other current liabilities”.

(4)

To determine

To describe: The purpose of the disclosure notes.

(5)

To determine

To identify: The method of depreciation used by Company P to depreciate its property and equipment.

(6)

To determine

To identify: The events or related party transactions that Company P reports in its disclosure notes.