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Chapter 3: Q4IFRS (page 150)

Becker Ltd. is planning to adopt IFRS and prepare its first IFRS financial statements at December 31, 2018. What is the date of Becker鈥檚 opening balance sheet, assuming one year of comparative information? What periods will be covered in Becker鈥檚first IFRS financial statements?

Short Answer

Expert verified

Opening balance sheet will be prepared January 1,2017. First IFRS financial statement will be covered between January 1,2018 to December 31,2018.

Step by step solution

01

Explanation on First-Time Adoption of IFRS

In case company wants to use IFRS for preparing its financial statements, then first IFRS financial statement should include the high quality information. As per the IFRS 1, information furnished in first statement should be transparent, must include suitable starting point, and should have cost which should not be greater than its benefits.

02

Explanation on reporting financial statements

In case of conversion from GAAP to IFRS, company is required to choose the transition date, which is the beginning of earliest period for which the comparative IFRS statement is prepared. Company is required to prepare comparative IFRS financial statements for two years. The reporting date is the date of ending balance sheet for first IFRS financial statement.

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Most popular questions from this chapter

When converting to IFRS, a company must:

(a) recast previously issued financial statements in accordance with IFRS.

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

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

(d) use GAAP in the transition year but IFRS in the reporting year.

What are closing entries and why are they necessary?

鈥淎 worksheet is a permanent accounting record, and its use is required in the accounting cycle. 鈥淒o you agree? Explain.

When the accounts of Daniel Barenboim Inc. are examined, the adjusting data listed below are uncovered on December 31, the end of an annual fiscal period.

  1. The prepaid insurance account shows a debit of \(5,280, representing the cost of a 2-year fire insurance policy dated August 1 of the current year.
  2. On November 1, Rent Revenue was credited for \)1,800, representing revenue from a subrental for a 3-month period beginning on that date.
  3. Purchase of advertising materials for \(800 during the year was recorded in the Advertising Expense account. On December 31, advertising materials of \)290 are on hand.
  4. Interest of $770 has accrued on notes payable.

Instructions

Prepare the following in general journal form.

  1. The adjusting entry for each item.
  2. The reversing entry for each item where appropriate.

E3-7 (L03) (Analyze Adjusted Data) A partial adjusted trial balance of Piper Company at January 31, 2017, shows the following.

PIPER COMPANY

ADJUSTED TRIAL BALANCEJANUARY 31, 2017

Debit (\() Credit(\))Supplies \( 700Prepaid Insurance 2,400Salaries and Wages Payable \) 800UnearnedService Revenue 750Supplies Expense 950Insurance Expense 400Salaries and Wages Expense 1,800Service Revenue 2,000

InstructionsAnswer the following questions, assuming the year begins January 1.(a) If the amount in Supplies Expense is the January 31 adjusting entry, and \(850 of supplies was purchased in January,what was the balance in Supplies on January 1?(b) If the amount in Insurance Expense is the January 31 adjusting entry, and the original insurance premium was for oneyear, what was the total premium and when was the policy purchased?(c) If \)2,500 of salaries was paid in January, what was the balance in Salaries and Wages Payable at December 31, 2016?(d) If $1,600 was received in January for services performed in January, what was the balance in Unearned Service Revenueat December 31, 2016?
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