Learning Materials
Features
Discover
Chapter 13: Q2ISTQ (page 658)
Information in a company’s first IFRS statements must:
(a) have a cost that does not exceed the benefits.
(b) be transparent.
(c) provide a suitable starting point.
(d) All the above.
The correct option is “d”.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
On December 21, 2017, Zurich Company provided you with the following information regarding its trading investments.
December 31, 2017
Investments (Trading) Cost Fair Value Unrealized Gain (Loss)
Stargate Corp. shares \(20,000 \)19,000 \((1,000)
Carolina Co. shares 10,000 9,000 1000
Vectorman Co. shares 20,000 20,600 600
Total of portfolio \)50,000 \(48,600 \)(1,400)
Previous fair value adjustment balance-0-
Fair value adjustment-Cr. \((1,400)
During 2018, Carolina Co. shares were sold for \)9,500. The fair value of the shares on December 31, 2018, was Stargate Corp.
shares-\(19,300: Vectorman Co. shares-\)20,500
Instructions
(a) Prepare the adjusting journal entry needed on December 31, 2017.
(b) Prepare the journal entry to record the sale of the Carolina Co. shares during 2018.
(c) Prepare the adjusting journal entry needed on December 31, 2018.
Leppard Corporation Sells DVD players. The corporation also offers its customers a 4-year warranty contract. During 2017, Leppard sold 20,000 warranty contracts at \(99 each. The corporation spent \)180,000 servicing warranties during 2017. Prepare Leppard’s journal entries for (a) the sale of contracts, (b) the cost of servicing the warranties, and (c) the recognition of warranty revenue. Assume the service costs are inventory costs.
Explain the accounting for an assurance-type warranty.
(Equity Method) Parent Co. invested $1,000,000 in Sub Co. for 25% of its outstanding stock. Sub Co. pays out
40% of net income in dividends each year.
Instructions
Use the information in the following T-account for the investment in Sub to answer the following questions.
Investment in Sub Co.
1,000,000
110,000
44,000
(a) How much was Parent Co.’s share of Sub Co.’s net income for the year?
(b) What was Sub Co.’s total net income for the year?
(c) What were Sub Co.’s total dividends for the year?
(d) How much was Parent Co.’s share of Sub Co.’s dividends for the year?
Presented below are two independent cases related to available-for-sale debt investments.
Case 1 Case 2
Amortized cost \(40,000 \)100,000
Fair value 30,000 110,000
Expected credit losses 25,000 92,000
For each case, determine the amount of impairment loss, if any
What do you think about this solution?
We value your feedback to improve our textbook solutions.
Explanations 
Textbooks 
Exams 
GCSE 
IGCSE 
AS 
A Level 
International A Level 
University Admissions Tests 
Flashcards 
Vaia AI 
Notes 
Study Plans 
Study Sets 
Find a job 
Find a degree 
Student Deals 
Magazine 
Mobile App