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Discussion Question 16
1. C 11 C 21. E
2. C 12. B 22. B
3. B 13 A 23. E
4. E 14 F 24. A
5. A 15 B 25. F
6. B 16. B 26. B
7. E 17. E 27. D
8. A 18. A
9. D 19. B
10. E 20 F
Problems
Assets
Current liabilities
Trade and other payables (8) P 336,000
Income tax payable 150,000 P 486,000
Noncurrent liabilities
Bonds payable (9) 701,000
Deferred tax liability 50,000 751,000
Shareholders equity
Share capital (10) P 1,534,000
Additional paid in capital (11) 321,000
Accumulated profits (12) 307,000 2,162,000
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY P3,399,000
8
Chapter 3 The Statement of Financial Position
9 and Notes to the Financial Statements
Note 5 Trade and other receivables
Accounts receivable P115,000
Less allowance for bad debts 8,000
Net trade and other receivables P107,000
Note 7 Intangibles
Patents P120,000
Less accumulated amortization 22,000 P 98,000
Trademarks P 60,000
Less accumulated amortization 17,000 43,000
Total P141,000
Ruby Corporation
Statement of Financial Position
December 31, 2016
Assets
Current assets
Cash and cash equivalents P 116,000
Financial assets through profit or loss (Note 5) 160,000
Trade and other receivables (Note 6) 308,000
Inventories (Note 7) 985,000
Prepaid expenses 31,000
Non-current assets held for sale (Note 8) 210,000 P1,810,000
9
Chapter 3 The Statement of Financial Position
10 and Notes to the Financial Statements
Non-current assets
Property, plant and equipment (Note 9) P3,248,000
Other financial assets (Note 10) 339,000
Intangible assets (Note 11) 182,000 3,769,000
TOTAL ASSETS P5,579,000
Current liabilities
Trade and other payables P 580,000
Income tax payable 247,000
Unearned revenues 62,000
Provision for product warranty 73,000 P 962,000
Noncurrent liabilities
Bonds payable (Note 12) 848,000
Shareholders equity
Share capital (Note 13) P2,028,000
Share premium (Note 14) 537,000
Retained earnings 1,204,000 3,769,000
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY P5,579,000
Land held for future use, which conventionally was classified as long-term investment,
is not qualified to be reported as Investment Property under par. 9 of IAS 40. Thus,
property held for future development and subsequent use as owner-occupied property is
part of property, plant and equipment.
10
Chapter 3 The Statement of Financial Position
11 and Notes to the Financial Statements
Note 11 Intangible assets
Patents P200,000
Less Accumulated amortization 18,000
Total P182,000
Assets
Current assets
Cash P 230,000
Financial assets at fair value through profit or loss 320,000
Trade and other receivables (Note 5) 510,000
Inventory 600,000
Prepaid expenses (Note 6) 130,000 P1,790,000
Noncurrent assets
Property, plant and equipment (Note 7) P3,450,000
Financial assets at fair value through OCI 1,030,000
Intangible assets 470,000
Deferred tax asset 70,000 5,020,000
TOTAL ASSETS P6,810,000
Current liabilities
Trade and other payables (Note 8) P1,390,000
Unearned rent 90,000 P1,480,000
Noncurrent liabilities
Bonds payable (Note 9) 1,000,000
Shareholders equity
Ordinary share capital, P10 par P1,200,000
Share Premium 1,040,000
Retained earnings 2,300,000
Total 4,540,000
Treasury shares, at cost (330,000)
Accumulated holding gains (losses) investments
through other comprehensive income 120,000
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY P6,810,000
11
Chapter 3 The Statement of Financial Position
12 and Notes to the Financial Statements
Note 5 Trade receivables
Accounts receivable P590,000
Less Allowance for uncollectible accounts 80,000
Net trade receivables P510,000
Emerald Company
Statement of Financial Position
December 31, 2016
Assets
Current liabilities
Trade and other payables (12) P 1,750,000
Income taxes payable 720,000
Provision for warranties 200,000 P 2,670,000
Noncurrent liabilities
Notes payable (13) 1,000,000
Bonds payable (14) P 4,430,000
Mortgage payable 1,600,000 7,030,000
Total Liabilities P 9,700,000
12
Chapter 3 The Statement of Financial Position
13 and Notes to the Financial Statements
Shareholders equity
Share capital (15) P 1,700,000
Share premium 1,820,000
Retained earnings 3,605,000
Total P 7,125,000
Treasury shares, at cost (180,000) 6,945,000
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY P16,645,000
Note 11 Intangibles
Patents P820,000
Less accumulated amortization 230,000 P 590,000
Trademarks P520,000
Less accumulated amortization 150,000 370,000
Total P 960,000
13
Chapter 3 The Statement of Financial Position
14 and Notes to the Financial Statements
Note 13 Notes payable
The notes payable was issued on June 30, 2015 and are supposed to mature on June
30, 2017. As of December 31, 2016, the company has negotiated with the lender to
extend the maturity date to June 30, 2018.
Note: The entire amount of mortgage notes payable is classified as current liabilities
because as of December 31, 2016, the company has no discretion yet to refinance the
obligation on a long-term basis. The refinancing of the mortgage payable in 2017 is non-
adjusting event that requires disclosure in the notes to the financial statements.
14
Chapter 3 The Statement of Financial Position
15 and Notes to the Financial Statements
3-7. (OPAL COMPANY)
Current assets:
Accounts receivable (net)148,000 12,000 P136,000
Citibank current account 98,000
Inventories 217,500
Office supplies 3,500
Total current assets P455,000
Current liabilities:
Accounts payable P124,000
Income tax payable 16,000
Advances from customers 150,000
Accrued interest on bonds payable 17,000
Provision for warranties 60,000 367,000
Working capital P 88,000
15
Chapter 3 The Statement of Financial Position
16 and Notes to the Financial Statements
3-11.
1. C 5. B 9. A
2. A 6. C 10. B
3. C 7. A
4. A 8. A
Problems
16