Chapter 3, Problem 24P

Listed below are the current Accounting Assumptions and Principles                               Economic Entity Assumption   Monetary Unit Assumption   Historical Cost Principle           Going Concern Assumption   Revenue Recognition Principle   Full Disclosure Principle           Time Period Assumption   Matching Principle                                   Required:                   For the following situations, identify whether the situation represents a violation or a correct application of GAAP, and which assumption/principle is applicable.                   d. Moss Corporation closes the books each month and prepares monthly financial statements.                 Violation: (Yes/No)             Applicable Assumption/Principle:                             e. Carroll Corporation, a US company, purchased a machine from Germany for 10,000 Euros and recorded the machine on their books at $12,000 US                 Violation: (Yes/No)…

On July 1, year 2, a company decided to adopt IFRS. The company’s first IFRS reporting period is as of and for the year ended December 31, year 2. The company will present one year of comparative information. What is the company’s date of transition to IFRS? a. January 1, year 1. b. January 1, year 2. c. July 1, year 2. d. December 31, year 2.

Damian is an entity which prepares financial statements, in accordance with International Financial Reporting Standards (IFRS), to 30 September each year. On 1 April 2018, Damian accepted delivery of a large and complex machine from a supplier. The agreed purchase price for the machine was £2 million. Damian received 10% trade discount.   On 1 April 2018, Damian incurred direct costs of £50,000 in handling the machine and £25,000 in installing the machine at its premises. Although the machine was ready for use from 1 April 2018, Damian did not bring the machine into use until 30 April 2018.   During April 2018 Damian incurred costs of £200,000 in training relevant staff to use the machine.   The directors of Damian estimate that the machine is capable of being usefully employed in the business until 31 March 2023, and that it will have no residual value at that date. Damian uses the straight-line method for calculating the depreciation. On 31 March 2023, Damian will be legally required…

To make the following adjustment entries of 31 December 20X0 of the TEST company, based on the information given:1. On March 1, 20X1, the company prepaid the amount of 20,000 euros, for office rent for the next 10 months.2. On September 1, 20X1, the company prepaid the operating premiums of its factory for the next six months, with a total value of 8,000 euros.3. On November 1, 20X1, the company prepaid its machine rents for the next three months, with a total value of 15,000 euros.It is noted that, as it appears from the calendar, on the above dates the relevant income or expense accounts were credited or debited directly, respectively.4. On 1/12 / 20X1 he receives a loan of 10,000 euros for one year with an obligation to pay interest of 1,200 euros at maturity.

c)Discuss, under the following examples, what the accounting treatment should be and whether Revenue should be recognised or not in the financial statements for the year-end 31 December 2010: (i) On 18 December 2010, DLLA had received ZMK10,000,000 in relation to goods which are due to be shipped on 6 January 2011 to Burundi. At the year-end, the goods are still in the warehouse of DLLA Limited. (ii) On 15 December 2010, DLLA sold goods to a customer amounting to ZMK3,000,000. The customer will pay for these goods on 20 January 2011. The cost of the goods sold was ZMK2,000,000. (iii) On 1 December 2010, DLLA sold goods to a new customer in Zambia. DLLA are trying to break into this market and have done a deal with the new customer whereby the customer has the right to return any unsold goods before 31 March 2011 for a full refund. The amount of the goods sold was ZMK25,000,000. (iv) On 20 December 2010, DLLA sold goods, amounting to ZMK8,000,000 to a customer who normally…

For each separate case below, follow the three-step process for adjusting the prepaid asset account at December 31. Assume no other adjusting entries are made during the year.

Nilo Burgos Haulers is in the cargo business. The entity is servicing the cargo forwarding requirements of businesses within the Calabarzon region. At the end of accounting year, December 31, 2021, the following data must be considered to effect the adjusting entries: On July 1, 2021, an eighteen-months insurance coverage on trucks was paid and debited to Prepaid Insurance. Premiums amounted to P18,000 and coverage began immediately. During 2021, office supplies amounting to P8,000 were purchased for cash and debited to Office Supplies. At the end of 2020, the inventory count of supplies on hand was P2,000. Inventory of supplies as at December 31, 2021 showed P3,000. On December 31, 2021, Lipa Motors completed repairs on one of the trucks at a cost of P8,000; the amount is not yet recorded and by agreement will be paid during January 2022. In December 2021, a real property tax assessment for P16,000 on land owned during 2021 was received from the city. The taxes, which are unpaid and…

A. Jamal Textile Enterprise is a textile manufacturer operating in Selangor. The company was incorporated on 1June 2019 and closes its account annually on 31 December. All machinery purchased was imported from Taiwan and it was delivered on 1January2020, and the business commenced officially on 1February 2020. The following expenditure was incurred: (i) Purchased machinery that cost RM1,000,000 on 1June 2020 and paid deposit RM100,000 on the day of purchase, while the remaining RM900,000 was paid on 1November 2020. (ii) Purchased forklift on hire purchase term on 1January 2020. The total cost of the forklift is RM125,000, and Jamal Textile paid down payment of RM5,000. The total installment payment was RM48,000, excluding an interest amounting RM9,580. (iii) Purchased a new car (Proton X50) on 30December 2020 for the General Manager of the company costing RM120,000 . (iv) Purchased a computer with printer on 1April 2019 for RM5,500. This computer specification however was found to be…

Jack Limited, a newly formed company has requested you as a financial consultant for advice on how to account for provisions, contingent liabilities and contingent assets. The company’s year-end is 31 December. REQUIRED The financial controller of Jack Limited has asked you to prepare a brief report which addresses the following: In accordance with IAS 37 – Provisions, Contingent Liabilities and Contingent Assets, discuss the recognition criteria for the following: (i) A provision (ii) A contingent liability (iii) A contingent asset