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Chapter 3: Q1IFRS (page 150)

How is the date of transition and the date of reporting determined in first-time adoption of IFRS?

Short Answer

Expert verified

IFRS requires an organisation acquiring IFRS standards initially to arrange a definite collection of accounting statements enclosing its initial IFRS listing period and the prior year.

Step by step solution

01

Meaning of Date of Transition

The date of transition is the start of the prior period for which an organisation states to complete illustrative information under IFRS.

02

Date of transition and the date of reporting determined in first-time adoption of IFRS

The first time IFRS adoption of, IFRS needed an organisation to remake its prior two financial statements according to the transition requirement lay down under IFRS 1.

In case an organisation wants to adopt IFRS from April 1, 2015 (presuming that the accounting year commences from April 1 and ends on March 31). It has to recognise April 1, 2014, as the transition date, and the listing date will be March 31, 2015, March 31, 2016, And March 31 2017.

Thus, an organisation's initial IFRS assembled financial statement should have a financial position for the preceding three periods.

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Most popular questions from this chapter

The following are the trial balance and the other information related to Yorkis Perez, a consulting engineer.

YORKIS PEREZ, CONSULTING ENGINEER .
TRIAL BALANCE
DECEMBER 31, 2017

Debit

Credit

Cash

\( 29,500

Accounts Receivable

49,600

Allowance for Doubtful Accounts

\) 750

Supplies

1,960

Prepaid Insurance

1,100

Equipment

25,000

Accumulated Depreciation鈥擡quipment

6,250

Notes Payable

7,200

Owner鈥檚 Capital

35,010

Service Revenue

100,000

Rent Expense

9,750

Salaries and Wages Expense

30,500

Utilities Expenses

1,080

Office Expense

720

\(149,210

\)149,210

  1. Fees received in advance from clients \(6,000, which were recorded as revenue.
  2. Services performed for clients that were not recorded by December 31, \)4,900.
  3. Bad debt expense for the year is \(1,430.
  4. Insurance expired during the year \)480.
  5. Equipment is being depreciated at 10% per year.
  6. Yorkis Perez gave the bank a 90-day, 10% note for \(7,200 on December 1, 2017.
  7. Rent of the building is \)750 per month. The rent for 2017 has been paid, as has that for January 2018, and recorded as Rent Expense.
  8. Office salaries and wages earned but unpaid December 31, 2017, \(2,510.

Instructions

  1. From the trial balance and other information given, prepare annual adjusting entries as of December 31, 2017. (Omit explanations.)
  2. Prepare an income statement for 2017, a statement of owner鈥檚 equity, and a classified balance sheet. Yorkis Perez withdrew \)17,000 cash for personal use during the year.

The purpose of presenting comparative information in the

transition to IFRS is:

(a) to ensure that the information is a faithful representation.

(b) to be in accordance with the Sarbanes-Oxley Act.

(c) to provide users of the financial statements with information on GAAP in one period and IFRS in the other period.

(d) to provide users of the financial statements with information on IFRS for at least two periods.

BE3-13 (L08) Assume that Best Buy made a December 31 adjusting entry to debit Salaries and Wages Expense and credit Salaries and Wages Payable for \(4,200 for one of its departments. On January 2, Best Buy paid the weekly payroll of \)7,000. Prepare Best Buy鈥檚 (a) January 1 reversing entry; (b) January 2 entry (assuming the reversing entry was prepared); and (c) January 2 entry (assuming the reversing entry was not prepared).

Vedula Advertising was founded by MuraliVedula in January 2015. On the next page are both the adjusted and unadjusted trial balances as of December 31, 2017.

VEDULA ADVERTISING

TRIAL BALANCE

DECEMBER 31, 2017


Unadjusted
Adjusted

Dr.

Cr.

Dr.

Cr.

Cash

\( 11,000

\) 11,000

Accounts Receivable

16,000

19,500

Prepaid Insurance

9,400

6,500

Supplies

3,350

1,790

Equipment

60,000

60,000

Accumulated Depreciation鈥擡quipment

\( 25,000

\) 30,000

Notes Payable

8,000

8,000

Accounts Payable

2,000

2,000

Interest Payable

0

560

Unearned Service Revenue

5,000

3,100

Salaries and Wages Payable

0

820

Common Stock

20,000

20,000

Retained Earnings

5,500

5,500

Dividends

10,000

10,000

Service Revenue

57,600

63,000

Salaries and Wages Expense

9,000

9,820

Insurance Expense

1,560

Interest Expense

560

Depreciation Expense

5,000

Supplies Expense

2,900

Rent Expense

4,350

4,350

\(123,100

\)123,100

\(132,980

\)132,980

Instructions

  1. Journalize the annual adjusting entries that were made.
  2. Prepare an income statement and a retained earnings statement for the year ended December 31, and a classified balance sheet at December 31.
  3. Identify which accounts should be closed on December 31.
  4. If the note has been outstanding 10 months, what is the annual interest rate on that note?
  5. If the company paid $10,500 in salaries and wages in 2017, what was the balance in Salaries and Wages Payable on December 31, 2016?

When converting to IFRS, a company must:

(a) recast previously issued financial statements inaccordance with IFRS.

(b) use GAAP in the reporting period but subsequentlyuse IFRS.

(c) prepare at least three years of comparative statements.

(d) use GAAP in the transition year but IFRS in thereporting year
See all solutions

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