EXERCISE 22-2

(a) Inventory ............................................................... 11,000*

Retained Earnings......................................... 11,000
*($19,000 + $21,000 + $25,000) –
($16,000 + $18,000 + $20,000)
(b) Net Income (FIFO) 2008 $19,000
2009 21,000
2010 25,000

EXERCISE 22-6

(a) Depreciation to date on equipment

Sum-of-the-years’-digits depreciation
2007 (5/15 X $450,000) $150,000
2008 (4/15 X $450,000) 120,000
2009 (3/15 X $450,000) 90,000
$360,000

Cost of equipment .................................................. $465,000

Depreciation to date ............................................... (360,000)
Book value (December 31, 2009) ........................... $105,000
Book value – Residual value = Depreciable cost
$105,000 – $15,000 = $90,000
Depreciation for 2010: $90,000/2 = $45,000
Depreciation Expense ............................................ 45,000
Accumulated Depreciation—Equipment ....... 45,000

(b) Depreciation to date on building

$780,000/30 years = $26,000 per year
$26,000 X 3 = $78,000 depreciation to date
Cost of building ...................................................... $780,000
Depreciation to date ............................................... (78,000)
Book value (December 31, 2009) ........................... $702,000
Depreciation for 2010: $702,000/(40 – 3) = $18,973 (rounded)
Depreciation Expense ............................................ 18,973
Accumulated Depreciation—Buildings ......... 18,973

EXERCISE 22-16 (10–15 minutes)

1. Wages Expense ...................................................... 3,400
Wages Payable................................................ 3,400

2. Vacation Wages Expense....................................... 31,100

Vacation Wages Payable ................................ 31,100

3. Prepaid Insurance ($3,300 X 10/12) ....................... 2,750

Insurance Expense ......................................... 2,750

4. Sales Revenue
 [$1,908,000 ÷ (1.00 + .06)] X 6%.......................... 108,000
Sales Tax Payable........................................... 108,000
Sales Tax Payable................................................... 103,400
Sales Tax Expense.......................................... 103,400

Using Your Judgment

Marks & Spencer
The financial statements of M&S (GBR) are presented in Appendix A. The complete annual
report, including the notes to the financial statements, is available online.
Instructions :
Refer to M&S’s financial statements and the accompanying notes to answer the following
questions.
a. Were there changes in accounting policies reported by M&S during the two years
covered by its income statements (2018-2019)? If so, describe the nature of the change and the
year of change.
M&S adopted the following policies during 1 January 2018 - 30 March 2019 are listed
below:
• IFRS 9 Financial Instruments.
• IFRS 15 Revenue from Contracts with Customers.
• Amendments to IFRS 4 Insurance Contracts regarding the implementation of IFRS
9 Financial Instruments.
• Interpretation IFRIC 22 Foreign Currency Transactions and Advance
Consideration.
• Amendments to IAS 40 Transfer of Investment Property.
• Amendments to IFRS 2 Share-Based Payments, on clarifying how to account for
certain types of share-based payment transactions.
• Annual improvements to IFRS Standards 2014-2016 Cycle (certain items effective
from 1 January 2017).
b. What types of estimates did M&S discuss in 2019?
 The estimates M&S discussed in 2019 were UK store estate, Property provision, Useful
lives and residual values of property, plant and equipment and intangibles, Impairment
of property, plant and equipment and intangibles, and Post-retirement benefits

Adidas and Puma

The financial statements of Adidas (DEU) and Puma (DEU) are presented in Appendix B and
C, respectively. The complete annual reports, including the notes to the financial statements,
are available online.
Instructions :
Use the companies’ financial information to answer the following questions.

a. Identify the changes in accounting policies reported by Puma during the 2 years covered
by its income statements (2017-2018). Describe the nature of the change and the year of
change.
• Laporan keuangan konsolidasi PUMA SE dan anak perusahaannya disusun
sesuai dengan "International Financial Reporting Standards (IFRS)", yakni
standar akuntansi yang dikeluarkan oleh International Accounting Standards
Board (IASB).
• Penyusunan laporan keuangan konsolidasi tersebut didasarkan pada historical
acquisition dan manufacturing costs, kecuali pada laba rugi penilaian aset dan
liabilitas keuangan pada nilai wajar.
• Standar dan interpretasi baru yang diubah berikut ini telah digunakan untuk
pertama kali dalam tahun keuangan saat ini:

b. Identify the changes in accounting policies reported by adidas during the 2 years
covered by its income statements (2017–2018). Describe the nature of the change and
the year of change.
• Laporan keuangan konsolidasi ADIDAS AG dan anak perusahaannya disusun
sesuai dengan "International Financial Reporting Standards (IFRS)" yang
sebagaimana diterapkan di Europe Union (EU).
 • Berikut standar dan interpretasi baru yang diubah dengan standar yang ada dan
telah diterapkan untuk pertama kali untuk laporan keuangan:
~IFRS 2 Amandements: Classification and Measurement of Share-Based
Payment Transactions
~ IFRS 4 Amandements
~ IFRS 9 Financial Instrument
~ IFRS 15 Revenue from Contract with Customers including Amandements to
IFRS 15: Effective Date of IFRS 15
~ Improvements to IFRSs (2014-2016): Amandements to IFRS 1 and IAS 28
~ etc.
• Penyusunan laporan keuangan konsolidasi tersebut didasarkan pada historical
cost basis dengan pengecualian pada items tertentu, seperti: financial
instruments, derivative financial instruments, dan plan assets yang mana yang
diukur pada nilai wajar.

c. For each change in accounting policy by adidas and Puma, identify, if possible, the
cumulative effect of each change on prior years and the effect on operating results in
the year of change.
PUMA
• Adoption of IFRS 15-Revenue from Contracts with Customer

ADIDAS