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Chapter 13: Q2IFRS (page 658)
Briefly describe some of the similarities and differences between GAAP and IFRS with respect to the accounting for
investments.
Similarities are the classification of investments, fair value and amortised cost.
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Within the current liabilities section, how do you believe the accounts be listed? Defend your position.
(Gain on Sale of Investments and Comprehensive Income) On January 1, 2017, Acker Inc. had the followingbalance sheet.
The accumulated other comprehensive income related to unrealized holding gains on available-for-sale debt securities. The fairvalue of Acker Inc.’s available-for-sale debt securities at December 31, 2017, was \(190,000; its cost was \)140,000. No securities
were purchased during the year. Acker Inc.’s income statement for 2017 was as follows. (Ignore income taxes.)
ACKER INC.
BALANCE SHEET
AS OF JANUARY 1, 2017
Assets Equity
Cash \( 50,000 Common stock \)260,000
Debt investments (available-for-sale) 240,000 Accumulated other comprehensive income 30,000
Total \(290,000 Total \)290,000
ACKER INC.
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2017
Dividend revenue \( 5,000
Gain on sale of investments 30,000
Net income \)35,000
Instructions
(Assume all transactions during the year were for cash.)
(a) Prepare the journal entry to record the sale of the available-for-sale debt securities in 2017.
(b) Prepare the journal entry to record the Unrealized Holding Gain or Loss for 2017.
(c) Prepare a statement of comprehensive income for 2017.
(d) Prepare a balance sheet as of December 31, 2017.
Under what conditions is an employer required to accrue a lability for sick pay? Under what conditions is an employer permitted but not required to accrue a liability for sick pay?
E13-10 (L03) (Warranties) Soundgarden Company sold 200 color laser copiers on July 10, 2017, for \(4,000 apiece, together with a 1-year warranty. Maintenance on each copier during the warranty period is estimated to be \)330.
Instructions
Prepare entries to record the sale of the copiers, the related warranty costs, and any accrual on December 31, 2017. Actual warranty costs (inventory) incurred in 2017 were $17,000.
Southeast Airlines Inc. awards members of its Flightline program a second ticket at half price, valid for 2 years anywhere on its flight system, when a full-price ticket is purchased. How would you account for the full-fare and half-fare tickets?
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