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ACCT 2220 Chapter Notes - Chapter 2: Financial Statement, Intangible Asset, Deferral

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School
University of Guelph
Department
Accounting
Course
ACCT 2220
Professor
Sandra Iacobelli

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Document Summary

The classified statement of financial position (balance sheet) The statement of financial position classifications usually looks like this . Assets are the resources that a company owns or controls that will provide future. Current assets are assets that are expected to be converted into cash or will be sold or used up within one year of the company"s financial statement date or its. Operating cycle the operating cycle of a company is the average period of time it. Common types of current assets include takes for a business to pay cash to obtain products or services and then receive cash from customers for these products or services. Accounts receivable are amounts owed to the company by customers who. Accrued revenues arise when payments for revenues earned by the company have not yet been received in cash normally they are not supported by an invoice. Notes receivable are amounts owed to the company by customers or others that.

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Related Questions

QUESTION 2 (25 Marks: 45 minutes)

2.1 Answer the following questions:

a) Define current liabilities (2 marks)

b) Define current assets (2 marks)

c) In which sequence should notes to the financial statements be presented? (2 marks)

d) Discuss the identification of financial statements as noted in IAS 1. (2 marks)

e) Discuss consistency of presentation as a general feature of financial statements. (2 marks)

f) Discuss materiality and aggregation as a general feature of financial statements.(2 marks)

2.2 You are provided with the following statement of financial position of Brabham Limited:

Statement of financial position ON 31 December 20.12

ASSETS Land and buildings 165

Vehicle 85

Furniture’s 45

Share Capital (2 000 000 authorised NPV shares) 125

Cash on hand (cash float) 5

Bank overdraft (2)

Inventory 26

Trade and other debtors 15

Shareholders for dividends 11

Total assets 475

Equity and liabilities

Retained earnings 305

Trade and other creditors 110

Long term loans 79

Accumulated depreciation 21

Income tax expense 30

Total equity and liabilities 515

Required 1. Critically evaluate the presentation of the above statement according to the requirement of IAS 1. (13 marks)

2. The following are the summarised statements of the financial position of Daffodils Berhad and Camellia Berhad as at 30 June 20X9:

                                                                   Daffodils                   Camellia

                                                                       RM                            RM

Assets                           

Non-current assets

Tangible                                                      360,000                     135,000 Investments                                                300,000                           - Current assets                                             315,000                      210,000

Total assets                                                  975,000                      345,000

 

Equities and Liabilities

Ordinary shares of RM1 each                     504,000                       150,000 Share premium                                            36,000                          15,000 Retained earnings                                      240,000                          75,000 Current liabilities                                        195,000                        105,000

Total equity and liabilities                           975,000                        345,000

Required:

Prepare a statement of the consolidated financial position of Daffodils Berhad and its subsidiary, Camellia Berhad at 30 June 20x9 under the assumption that Daffodils Berhad acquired 150,000 shares in Camellia Berhad for RM2 per share on 30 June 20X9. The investment account contains the cost of shares in Camellia Berhad and non-group investments. 

Calculate the external financing needed given the following financial statements. Assume that all costs, all assets, and accounts payable change proportionally with sales. Sales are projected to grow by 25%. Also assume that the company is operating at full capacity.

Current Statement of Comprehensive Income Sales $50,000 CoGS 30,000 EBDIT 20,000 Depreciation 10,000 EBIT 10,000 Interest expense 5,000 Taxable income 5,000 Taxes (35%) 1,750 Net Income 3,250 Dividends 975 Addition to RE 2,275

Current Statement of Financial Position Cash $8,000 Accounts receivable 22,000 Inventory 30,000 Total current assets 60,000 Fixed assets 90,000 Total assets $150,000 Accounts payable $15,000 Notes payable 5,000 Total current liabilities 20,000 Long-term debt 40,000 Common stock 40,000 Retained earnings 50,000 Total owners’ equity 90,000 Total Liabilities and OE $150,000

Select one answer

A- $33,750

B- $34,656.25

C- $30,906.25

D- $37,500

E- $22,500