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206 views4 pagesChapter 3 Pfa 1 Valix 2018
DGD
Uploaded by
Rosemarie VillanuevaCopyright
© © All Rights Reserved
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CHAPTER 3
NOTES TO FINANCIALSTATEMENTS
Events after reporting period
Problem 3-1 (AICPA Adapted)
Dean Comaany acquired 100% of Morey Company in the prior
year, During oe the individual entities included in their
financial statements the following:
Deon Morey
Key officers" salaries TSO.000 500.000
Officers’ expenses 200,000 100,000
Loans to officers 1,250,000 500,900
Intercompany sales 1,500,000
What total amount should be reported as related party disclosures in
the notes to Dean Company's consolidated financial statements for
the current 5 car’®
a. 1,300,000
b. 1,550,000
c. 1,750,000
d. 3,000,000
Solution 3-1 Answer d
Loans to officers:
pean 1,250,000
rey 500,000
Key officers’ salaries:
Dean 750,000
Morey 500,000
noma 3,000,000
Intereompany sales are no longer disclosed when consolidated
financial statements are prepared.
43 ‘Sales to affiliated entities 3,000 0
‘What total amount should beiincluded asrelated party disc...
Statements for the curr; ,,
PAS 24, 16, requires disclosure of key man
Seael een
The sales toaffiliated entities shall be disclosed in Jane Corp...
separate financial statements but eliminated in consol):
financial statements.
2,000,000
Share options and other share-based payments 1,000,000
Contributions to retirement benefit 500,000
Reimbursement of travel expenses for business trips [200
Problem 3-4 (IFRS)
The audit of Anne Company for the year ended December 31, 2018
was completed on March |, 2019.
The financial statements were signed by the managing director
on March 15, 2019 and approved by the sharcholders on March
31, 2019.
* On January 15, 2019, a customer owing P900,000 to Anne
Company filed for bankruptcy.
The financial statements included an allowance for doubtful
accounts pertaining to this customer of 100,000.
* Anne Company'sissued share capital comprised 100,000 ordinary
shares with P00 par value.
‘The entity issued additional 25,000 shares on March 1, 2019 at
par value.
* Equipment with carrying amount of P525,000 was destroyed
by fire on December 15, 2018.
Anne Company has booked a receivable of P400,000 from the
insurance entity on December 31, 2018.
After the insurance entity completed an investigation on February
1, 2019, it was discovered that the fire took place due to
negligence of the machine operator. As a result, the insurer's
liability was zero on this claim.
‘What ean be reported as “adjusting events” on
a. 1,300,000
b. 1,200,000
¢. 3,800,000
d. 3,700,000
Solution 3-4 Answer b
‘Sccounts (900,000 minusallowance 100,000) 800,000
400,000
1,200,000 ‘Company is Decembe: .
18 are authorized for iss,
Seana eae
ability on Deceminer
‘Company wa:
Problem 3-6 (IFRS)
Gingér Company iscompleting the preparation of the financial sustcricnts
for the year ended December 31, 2018. The financial statements are
authorized for issue on March 31, 2019.
* Qn Mareh 14, 2019, a dividend of P1,750,000 was declared and
acontractual profit share payment of P350,000 was made, both
based on the profit for the year ended December 31, 2018.
* OnFebruary f,2019, a customer went into liquidation having owed
the entity P340,000 for the past § months.
No allowan-c had been made against this debt in the financial
Statements.
* On March 20, 2019, a manufacturing plant was destroyed by fire
resulting in a financial loss of P2,600,000.
‘What total amount should be recognized in profit or loss for the year
ended December 31, 2018 to reflect adjusting events after the end of
reporting period?
350,000
340,000
90,000
The dividend declaration is mot recognized in profit or loss but a
deduction from retained earnings on March 15. 2019.
‘The manufacturing plant destroyed by fire on March 20, 2019 isa
mnadjusting event requiring disclosure only.
a Problem 3-7 (IFRS)
.