ASSIGNMENT 3: ACCOUNTING CYCLE PART I – The following are the account balances from the Adjusted Trial Balance of SGA Incorporated as of January 31, 2013. Cash 208,000 Rent Expense 5,000 Equipment 25,000 Supplies Expense 9,000 Accumulated Depreciation: equip. 6,000 Salaries Expense 4,000 Unearned Fees 16,000 Utilities Expense 5,000 Interest Receivable 11,000 Fees Earned 180,000 Supplies 13,000 Depreciation expense 2, 000 Accounts Receivable 15,000 Dividends […]

1. Entity A was sued in 01. On Dec 31, 01, it is not clear whether the probability of conviction in the ongoing trial is more than 50%. Shortly after Dec 31, 01, A is convicted. 2. Entity B holds a receivable which is measured at amortized cost according to IFRS 9. Shortly after the reporting period, the debtor files for bankruptcy. 3. In 01 […]

The Du Pont Company, one of the world’s largest chemical companies, provides the following information about a business combination that occurred during 1997 (edited; dollars in millions): Protein Technologies International was purchased on December 1, 1997. PTI is a global supplier of soy proteins and applied technology to the food and paper processing industries. Du Pont common stock shares totaling 22,500,000, with a fair value […]

Expected loss on a contract with progress billings On Jan 01, 01, entity E concludes a fixed price contract. Total contract revenue is CU 180. When E prepares its financial statements as at Dec 31, 01, the estimate of total contract costs is CU 160 which are estimated to be incurred in fourths in each of the years 01–04. However, in 02 contract costs of […]

Cost-to-cost method: specific topics Entity E constructs both standard and customized solar panels. The latter are constructed specifically for a particular contract. The solar panels are used as part of the façade of buildings and are installed at the building site of the customer, ready-to-use. In 01, E receives orders A and B (among others). Contract A requires customized solar panels, whereas standard solar panels […]

Output measures (a) In 01, entity E agrees on a fixed price contract to program customized software. The contract defines 100 features of the software. By the end of 01, 80% of these features have been programmed. Thus, E intends to recognize 80% of the contract revenue in its separate income statement and only recognize the costs (primarily salaries for the year 01) actually incurred. […]

Current tax Entity E has to pay income tax of CU 5 for the year 01. This amount only relates to transactions recognized in profit or loss according to IFRS. In E”s jurisdiction, entities have to make prepayments during the year (e.g. during 01) on their payable income tax for the year (e.g. for 01). These prepayments are based on taxable profit for the previous […]

Statement of comprehensive income and statement of changes in equity – equity instruments measured at fair value through other comprehensive income according to IFRS 9 On Jan 01, 01, entity E acquires shares for CU 10 and elects irrevocably to present changes in their fair value in other comprehensive income (IFRS 9.5.7.1b and 9.5.7.5). On Dec 31, 01, fair value of these shares is CU […]

Statement of comprehensive income and statement of changes in equity – revaluation of property, plant, and equipment On Jan 01, 01, entity E acquires land for CU 10 which is held as property, plant, and equipment. On Dec 31, 01, the fair value of the land is CU 14. E sells the land on Aug 10, 02 for CU 14. Required Complete the same exercises […]

Costs of purchase – financing element Entity E purchases merchandise on Nov 01, 01. Delivery takes place on the same day. In the case of (normal) deferred settlement terms of one month, the purchase price would be CU 200. However, E and its supplier stipulate that payment has to be made on Nov 30, 02, but at an amount of CU 212 (CU 200 plus […]