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Chapter 13: 7IFRS (page 658)
Indicate how unrealised holding gains and losses should be reported for investments classified as trading and held-for-collection.
Unrealised holding gains or loss is not included in held-for-collection securities.
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How is present value related to the concept of a liability?
Question: On February 1, 2018, one of the huge storage tanks of Viking Manufacturing Company exploded. Windows in houses and other buildings within a one-mile radius of the explosion were severely damaged, and a number of people were injured. As of February 15, 2018 (When the December 31, 2017, financial statements were completed and sent to the publisher for printing and public distribution), no suits had been filed or claims asserted against the company as a consequence of the explosion. The company fully anticipates that suits will be filed and claims asserted for injuries and damages. Because the casualty was uninsured and the company is considered at fault, Viking Manufacturing will have to cover the damages from its own resources.InstructionsDiscuss fully the accounting treatment and disclosures that should be accorded the casualty and related contingent losses in the financial statements dated December 31, 2017.
Consider the bond investment by Lady Gaga in IFRS17-5. Discuss the accounting for this investment if Lady Gaga鈥檚
Business model is to hold the investment to collect interest while outstanding and to receive the principal at maturity.
(Multiple-Step and Single-Step Statements) Two accountants for the firm of Elwes and Wright are arguing about the merits of presenting an income statement in a multiple-step versus a single-step format. The discussion involves the following 2017 information related to P. Bride Company (\(000 omitted).
Administrative expense
Officers鈥� salaries \)4,900
Depreciation of office furniture and equipment \(3,960
Cost of goods sold \)60,570
Rent revenue \(17,230
Selling expense
Delivery expense \)2,690
Sales commissions \(7,980
Depreciation of sales equipment \)6,480
Sales revenue \(96,500
Income tax \)9,070
Interest expense $1,860
Instructions
(Equity Securities Entries) McElroy Company has the following portfolio of investment securities at September
30, 2017, its most recent reporting date.
Investment Securities Cost Fair Value
Horton, Inc. common (5,000 shares) \(215,000 \)200,000
Monty, Inc. preferred (3,500 shares) 133,000 140,000
Oakwood Corp. common (1,000 shares) 180,000 179,000
On October 10, 2017, the Horton shares were sold at a price of \(54 per share. In addition, 3,000 shares of Patriot common stock
were acquired at \)54.50 per share on November 2, 2017. December 31, 2017, fair values were Monty \(106,000, Patriot
\)132,000, and Oakwood $193,000.
Instructions
Prepare the journal entries to record the sale, purchase, and adjusting entries related to the equity securities in the last quarter of 2017
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