Realized holding gain ? Problem 2: ABC Company was formed on January 1, 2020. The entity reported thefollowing financial statements pertaining to the first year of operations:Income StatementSalesCost of goods soldInventory - January 1PurchasesGoods available for saleInventory - December 31Gross profitOperating expensesExpenses excluding depreciationDepreciationIncome before income taxLess: Income tax expenseNet IncomeP5,000,000P1,000,0003.100.000P4.100.000( 900.000)3,200.000P1,800,000P 700,000100.000800.000P1,000,000350.000P 650.000Statement of Financial PositionAssetsCashAccounts receivableInventoryLandEquipment (Life - 10 years)Accumulated depreciationTotal assetsP 500,000600,000900,000800,000P1,000,000100.000900.000P3.700.000Liabilities and Shareholders' EquityAccounts payableNotes payableIncome tax payableP 500,000400,000350,000 P1,250,000Share capitalRetained EarningsNet IncomeDividendsP2,000,000P 650,000( 200.000)450.000 2.450.000Total liabilities and shareholders' equityP3,700,000Current cost information on December 31, 2020:Cost of goods sold at average current costInventoryLandEquipmentP3,500,0001,000,0001,500,0001,600,000Required: In a restated set of financial statements prepared in accordance with thecurrent cost accounting, how much would appear as1. Realized holding gain2. Unrealized holding gain3. Net income4. Total noncurrent assets5. Total liabilities and shareholders' equity

Realized holding gain: A realized gain is once an investment is sold for a better price than…

Problem 2: ABC Company was formed on January 1, ollowing financial statements pertaining to the first yea ncome Statement Sales Cost of goods sold Inventory - January 1 Purchases Goods available for sale Inventory-December 31 Gross profit Operating expenses Expenses excluding depreciation Depreciation ncome before income tax Less: Income tax expense Net Income Statement of Financial Position Assets Cash Accounts receivable nventory Land Equipment (Life- 10 years) Accumulated depreciation Total assets Liabilities and Shareholders' Equity Accounts payable Notes payable ncome tax payable Share capital Retained Earnings Net Income Dividends P 650 ( 200 Total liabilities and shareholders' equity Current cost information on December 31, 2020: Cost of goods sold at average current cost nventory Land Equipment

Problem 2: ABC Company was formed on January 1, ollowing financial statements pertaining to the first yea ncome Statement Sales Cost of goods sold Inventory - January 1 Purchases Goods available for sale Inventory-December 31 Gross profit Operating expenses Expenses excluding depreciation Depreciation ncome before income tax Less: Income tax expense Net Income Statement of Financial Position Assets Cash Accounts receivable nventory Land Equipment (Life- 10 years) Accumulated depreciation Total assets Liabilities and Shareholders' Equity Accounts payable Notes payable ncome tax payable Share capital Retained Earnings Net Income Dividends P 650 ( 200 Total liabilities and shareholders' equity Current cost information on December 31, 2020: Cost of goods sold at average current cost nventory Land Equipment

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 74E

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