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Chapter 5: 3 (page 239)

Included in Outkast Company鈥檚 December 31, 2017, trial balance are the following accounts: Prepaid Rent \(5,200, Debt Investments (to be held to maturity until 2020) \)56,000, Unearned Fees \(17,000, Land (held for investment) \)39,000, and Notes Receivable (long-term) $42,000. Prepare the long-term investments section of the balance sheet.

Short Answer

Expert verified

The long-term investment of the business entity totals$95,000.

Step by step solution

01

Long-Term Investment

The investment held by the individual or the business entity for a period exceeding one year is known as a long-term investment. Such assets are held for generating capital gains in the future period.

02

Total Long-Term investment

Particular

Amount $

Investment

$56,000

Land

$39,000

Total long-term investment

$95,000

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Most popular questions from this chapter

How does information from the balance sheet help users of the financial statements?

Grant Wood Corporation鈥檚 balance sheet at the end of 2016 included the following items.

Current assets (\(Cash 82,000)

\)235,000

Current liabilities

\(150,000

Land

30,000

Bond payable

100,000

Building

120,000

Common stock

180,000

Equipment

90,000

Retained earnings

44,000

Accumulated depreciation 鈥� Building

(30,000)

Accumulated depreciation 鈥� Equipment

(11,000)

Patents

40,000

Total

\)474,000

Total

\(474,000

The following information is available for 2017.

1. Net income was \)55,000.

2. Equipment (cost \(20,000 and accumulated depreciation \)8,000) was sold for \(10,000.

3. Depreciation expense was \)4,000 on the building and \(9,000 on equipment.

4. Patent amortization was \)2,500.

5. Current assets other than cash increased by \(29,000. Current liabilities increased by \)13,000.

6. An addition to the building was completed at a cost of \(27,000.

7. A long-term investment in stock was purchased for \)16,000.

8. Bonds payable of \(50,000 were issued.

9. Cash dividends of \)30,000 were declared and paid.

10. Treasury stock was purchased at a cost of $11,000.

Instructions

(Show only totals for current assets and current liabilities.)

(a) Prepare a statement of cash flows for 2017.

(b) Prepare a balance sheet at December 31, 2017.

IFRS5-1 Where can authoritative IFRS guidance be found related to the statement of financial position (balance sheet) and the statement of cash flows?

3. Companies that use IFRS:

(a) may report all their assets on the statement of financial position at fair value.

(b) are not allowed to net assets (assets 鈭� liabilities) on their statement of financial positions.

(c) may report non-current assets before current assets on the statement of financial position.

(d) do not have any guidelines as to what should be reported on the statement of financial position.

What types of contractual obligations must be disclosed in great detail in the notes to the balance sheet? Why do you think these detailed provisions should be disclosed?
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