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Chapter 13: 3ISTQ (page 658)

The transition date is the date:

(a) when a company no longer reports under its national standards.

(b) when the company issues its most recent financial statement under IFRS.

(c) three years prior to the reporting date.

(d) None of the above.

Short Answer

Expert verified

The correct option is 鈥渄鈥�.

Step by step solution

01

Explanation to correct option

The transition date is the starting of the earliest accounting period for which comparative IFRS information is introduced. In other words, it is the date at which beginning IFRS financial statements are presented.

It is the date prior to two years from reporting date, and one year prior to the beginning of the First IFRS reporting period.

02

Explanation of  incorrect options

Option a) Not reporting the financial statements as per the applicable national standard, has no effect on the transition date.

Option b) The most recent financial statements as per IFRS is the report date, not the transition date.

Option c) Date of transition is two years earlier than the reporting date, not two years.

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Most popular questions from this chapter

Pacific Airlines Co. awards members of its Frequent Fliers Club one free round-trip ticket, anywhere on its flight system, for every 50,000 miles flown on its planes. How would you account for the free ticket award?

(a) Assuming no Fair Value Adjustment account balance at the beginning of the year, prepare the adjusting entry at the end of the year if Laura Company鈥檚 available-for-sale debt securities have a fair value of \(60,000 below cost.

(b) Assume the same information as part (a), except that Laura Company has a debit balance in its Fair Value Adjustment account of \)10,000 at the beginning of the year. Prepare the adjusting entry at year-end.

Leppard Corporation Sells DVD players. The corporation also offers its customers a 4-year warranty contract. During 2017, Leppard sold 20,000 warranty contracts at \(99 each. The corporation spent \)180,000 servicing warranties during 2017. Prepare Leppard鈥檚 journal entries for (a) the sale of contracts, (b) the cost of servicing the warranties, and (c) the recognition of warranty revenue. Assume the service costs are inventory costs.

On December 21, 2017, Zurich Company provided you with the following information regarding its trading investments.

December 31, 2017

Investments (Trading) Cost Fair Value Unrealized Gain (Loss)

Stargate Corp. shares \(20,000 \)19,000 \((1,000)

Carolina Co. shares 10,000 9,000 1000

Vectorman Co. shares 20,000 20,600 600

Total of portfolio \)50,000 \(48,600 \)(1,400)

Previous fair value adjustment balance-0-

Fair value adjustment-Cr. \((1,400)

During 2018, Carolina Co. shares were sold for \)9,500. The fair value of the shares on December 31, 2018, was Stargate Corp.

shares-\(19,300: Vectorman Co. shares-\)20,500

Instructions

(a) Prepare the adjusting journal entry needed on December 31, 2017.

(b) Prepare the journal entry to record the sale of the Carolina Co. shares during 2018.

(c) Prepare the adjusting journal entry needed on December 31, 2018.

Distinguish between a determinable current liability and a contingent liability. Give two examples of each type.
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