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Chapter 3: Q4ISTQ (page 150)

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

Short Answer

Expert verified

The correct option is 鈥渁鈥�.

Step by step solution

01

Explanation to correct option

In the process of conversion from GAAP to IFRS, companies are required to present the statements issued in past , as per the IFRS. Company opting conversion is required to prepare minimum one year comparative financial statements.

02

Explanation to incorrect options

Option b) In the reporting period IFRS is used to prepare the financial statements, and also it is subsequently.

Option c) In the process of conversion, company is required to prepare comparative financial statementsfor at least one year.

Option d) IFRS is used to prepared financial statements in transition year and also in in reporting year.

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Most popular questions from this chapter

Listed below are the transactions of Yasunari Kawabata, D.D.S., for the month of September.

Sep. 1

Kawabata begins practice as a dentist and invests \(20,000 cash

2

Purchases dental equipment on account from Green Jacket Co. for \)17,280

4

Pays rent for office space, \(680 for the month.

4

Employs a receptionist, Michael Bradley

5

Purchases dental supplies for cash, \)942

8

Receives cash of \(1,690 from patients for services performed

10

Pays miscellaneous office expenses, \)430.

14

Bills patients \(5,820 for services performed.

18

Pays Green Jacket Co. on account, \)3,600.

19

Withdraws \(3,000 cash from the business for personal use.

20

Receives \)980 from patients on account

25

Bills patients \(2,110 for services performed

30

Pays the following expenses in cash: salaries and wages \)1,800; miscellaneous office expenses \(85.

30

Dental supplies used during September, \)330.

Instructions

  1. Enter the transactions shown above in appropriate general ledger accounts (use T-accounts). Use the following ledger accounts: Cash, Accounts Receivable, Supplies, Equipment, Accumulated Depreciation鈥擡quipment, Accounts Payable, Owner鈥檚 Capital, Service Revenue, Rent Expense, Office Expense, Salaries and Wages Expense, Supplies Expense, Depreciation Expense, and Income Summary. Allow 10 lines for the Cash and Income Summary accounts, and 5 lines for each of the other accounts needed. Record depreciation using a 5-year life on the equipment, the straight-line method, and no salvage value. Do not use a drawing account.
  2. Prepare a trial balance
  3. Prepare an income statement, a statement of owner鈥檚 equity, and an unclassified balance sheet.
  4. Close the ledger
  5. Prepare a post-closing trial balance.

Information in a company鈥檚 first IFRS statements must:

(a) have a cost that does not exceed the benefits.

(b) be transparent.

(c) provide a suitable starting point.

(d) All the above.

Selected accounts of Urdu Company are shown below.

Supplies

Beg. Bal

800

10 鈦� 31

470

Salaries and Wages Expense

10 鈦� 15

800

10 鈦� 31

600

Unearned Service Revenue

10 鈦� 31

400

10 鈦� 20

650

Service Revenue

10 鈦� 17

2,400

10 鈦� 31

1,650

10 鈦� 31

400

Accounts Receivable

10 鈦� 17

2,400

10 鈦� 31

1,650

Salaries and Wages Payable

10 鈦� 31

600

Supplies Expense

10 鈦� 31

470

Instructions

From an analysis of the T-accounts, reconstruct

(a) the October transaction entries, and

(b) the adjusting journal entries that were made on October 31, 2017. Prepare explanations for each journal entry

Rolling Hills Golf Inc. was organized on July 1, 2017. Quarterly financial statements are prepared. The unadjusted trial balance and adjusted trial balance on September 30 are shown below.

ROLLING HILLS GOLF INC.TRIAL BALANCESEPTEMBER 30, 2017


Unadjusted
Adjusted

Dr.

Cr.

Dr.

Cr.

Cash

\( 6,700

\) 6,700

Accounts Receivable

400

1,000

Prepaid Rent

1,800

900

Supplies

1,200

180

Equipment

15,000

15,000

Accumulated Depreciation鈥擡quipment

\( 350

Notes Payable

\) 5,000

5,000

Accounts Payable

1,070

1,070

Salaries and Wages Payable

600

Interest Payable

50

Unearned Rent Revenue

1,000

800

Common Stock

14,000

14,000

Retained Earnings

0

0

Dividends

600

600

Service Revenue

14,100

14,700

Rent Revenue

700

900

Salaries and Wages Expense

8,800

9,400

Salaries and Wages Expense

900

1,800

Rent Expense

350

Depreciation Expense

1,020

Supplies Expense

470

Utilities Expenses

50

Interest Expense

\(35,870

\)35,870

\(37,470

\)37,470

Instructions

  1. Journalize the adjusting entries that were made.
  2. Prepare an income statement and a retained earnings statement for the 3 months ending September 30 and a classified balance sheet at September 30.
  3. Identify which accounts should be closed on September 30.
  4. If the note bears interest at 12%, how many months has it been outstanding?

Included in Gonzalez Company鈥檚 December 31 trial balance is a note receivable of \(12,000. The note is a 4-month, 10% note dated October 1. Prepare Gonzalez鈥檚 December 31 adjusting entry to record \)300 of accrued interest, and the February 1 journal entry to record receipt of $12,400 from the borrower.
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