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Sol. Man. Chapter 2 Statement of Comprehensive Income
Sol. Man. Chapter 2 Statement of Comprehensive Income
Requirement (a):
Lunch Co.
Statement of profit or loss and other comprehensive income
For the year ended December 31, 20x1
Notes
22,000,00
Sales 0
(6,000,000
Cost of goods sold 12 )
16,000,00
Gross profit 0
(2,230,000
Distribution costs 13 )
(3,050,000
Administrative expenses 14 )
Impairment loss on financial assets (190,000)
Finance costs (340,000)
10,190,00
Profit before tax 0
(2,000,000
Income tax expense )
Profit for the year 8,190,000
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Other comprehensive income
Items that will not be reclassified subsequently:
Investments in equity instruments 200,000
Items that may be reclassified subsequently to profit or loss:
Cash flow hedges 30,000
Other comprehensive income for the yr., net of tax 230,000
Requirement (b):
PROBLEM 3: EXERCISE
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1. Solutions:
Requirement (a):
Dinner Co.
Statement of profit or loss and other comprehensive income
For the year ended December 31, 20x1
Notes
16,800,00
Sales 0
(8,390,000
Cost of goods sold 12 )
Gross profit 8,410,000
(3,090,000
Distribution costs 13 )
(2,910,000
Administrative expenses 14 )
Impairment of property, plant and equipment (290,000)
Finance costs (280,000)
Profit before tax 1,840,000
Income tax expense (552,000)
Profit for the year 1,288,000
Other comprehensive income
Items that will not be reclassified subsequently:
Revaluation decrease during the period (120,000)
Items that may be reclassified subsequently to profit or loss:
Translation gain on foreign operation 25,000
Other comprehensive income for the yr., net of tax (95,000)
Requirement (b):
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Cost of goods sold 8,390,000
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PROBLEM 4: CLASSROOM ACTIVITIES
1. Solutions:
Requirement (a):
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Requirement (b):
2. Solutions:
Requirement (a):
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Sh. in revaluation increase 36,000
(120,000 x 30%)
Requirement (b):
Buddies Co.
Statement of profit or loss and other comprehensive income
For the year ended December 31, 20x1
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3. Solutions:
Requirement (a):
(a) No entry
(DIT and OC are bank reconciling items;
not book)
(b) No entry
Proof:
SYD denominator = 5 x [(5+1) ÷ 2] = 15
Depreciation, 20x0 = (1.4M – 200K) x 5/15 = 400,000
Depreciation, 20x1 = (1.4M – 200K) x 4/15 = 320,000
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Accumulated amortization 30,000
(3)
Estimated useful life = 17 yrs.
Remaining legal life = 20 yrs. – 5 yrs. = 15 yrs. (shorter)
Amortization expense = 900,000 ÷ 15 x 6/12 = 30,000
(5)
The issue price of the bonds is computed as follows:
Cash flows PVF PV
(6)
Partial amortization table:
Int.
Date Payments expense Amort. Present value
1/1/x1 7,067,608
12/31/x 189,46
1 800,000 989,465 5 7,257,073
The balance of the “interest payable” on the trial balance is tested for its
Nominal
Face amount rate Interest payable
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Required balance 1,040,000
Requirement (b):
COLLEAGUES CO.
STATEMENT OF FINANCIAL POSITION
AS OF DECEMBER 31, 20X1
ASSETS Notes
Current assets:
Inventories 2,608,000
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Noncurrent assets:
Intangible assets
7
870,000
Noncurrent liabilities:
Equity:
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Requirement (c):
COLLEAGUES CO.
STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED DECEMBER 31, 20X1
NOTES
Sales 16,800,000
Cost of sales (7,200,000)
Gross profit 9,600,000
Distribution costs 13 (2,424,000)
Administrative expenses 14 (3,755,000)
Finance costs (1,121,465)
Unrealized gain on investment property 100,000
Profit before tax 2,399,535
Income tax expense (719,861)
Profit for the year 1,679,675
COLLEAGUES CO.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 20X1
NOTES
Profit for the year 1,679,675
Other comprehensive income:
Items that will not be reclassified subsequently:
Investment in equity securities 260,000
Items that may be reclassified subsequently to profit or loss: -
Other comprehensive income for the year, net of tax 260,000
Requirement (d):
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Note 5: Trade and other receivables
This line item consists of the following:
Land 1,600,000
Building 4,500,000
Accumulated depreciation - Bldg. (855,000)
Equipment 1,400,000
Accumulated depreciation - Equipt. (720,000)
Property, plant and equipment 5,925,000
Patent 900,000
Accumulated amortization (30,000)
Intangible assets 870,000
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Note 10: Loans payable
This line item consists of the following:
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8. D
9. B
10. B
3. A
Solution:
Actuarial gain or loss on defined benefit plan (6,000)
Unrealized gain on FVOCI securities 30,000
Reclassification adjustment for cumulative gain on
translation of foreign operation included in profit or loss (5,000)
154,00
Profit for the year
0
173,00
Total comprehensive income 0
4. C
Solution:
5. A
Solution:
250,00
Contribution to youth and educational programs 0
140,00
Contribution to health and human-service organizations 0
(80,000
Contribution shouldered by employees )
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310,00
Charitable contributions expense 0
6. A
Solution:
Finished goods
Jan. 1 400,000
Cost of
COGM (squeeze) 200,000 240,000 sales
360,000 Dec. 31
8. A
Solution:
Advertising 150,000
Freight-out
80,000
Rent for office space (220,000 x 1/2) 110,000
Sales salaries and commissions 140,000
Total selling expenses 480,000
9. A
Solution:
Accounting and legal fees 25,000
Officers’ salaries
150,000
Insurance 85,000
Total general and administrative expenses 260,000
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