(Interim Reporting) Snider Corporation, a publicly traded company, is preparing the interim financial data which it will issue to its stockholders and the Securities and Exchange Commission (SEC) at the end of the first quarter of the 2017–2018 fiscal year. Snider’s financial accounting department has compiled the following summarized revenue and expense data for the first quarter of the year.

Sales revenue \(60,000,000

Cost of goods sold 36,000,000

Variable selling expenses 1,000,000

Fixed selling expenses 3,000,000

Included in the fixed selling expenses was the single lump-sum payment of \)2,000,000 for television advertisements for the entire year.

Instructions

1. Snider Corporation must issue its quarterly financial statements in accordance with generally accepted accounting principles regarding interim financial reporting.

(2) State how the sales revenue, cost of goods sold, and fixed selling expenses would be reflected in Snider Corporation’s quarterly report prepared for the first quarter of the 2017–2018 fiscal year. Briefly justify your presentation.

Step by step solution

01

Meaning of IFRS

The IFRS is a set of accounting principles that are used globally. It's also recognized as a collection of principles-based standards that are simple to comprehend and apply. The International Financial Reporting Standards Foundation (IFRS Foundation) is in charge of these standards.

02

Explaining the revenues and expenses that should be reflected in Snider Corporation’s quarterly report

Snider Corporation's revenue and expenses should be reported on its quarterly reports under the discrete approach.

The quarterly report for the first quarter of the financial year 2017-18 is as follows:-

Sales revenue	$60,000,000
Cost of goods sold	36,000,000
Variable selling expenses	1,000,000
Fixed selling expenses
Advertising	500,000
Other	1,000,000

Sales revenue and cost of goods sold and other expenses should be given equal treatment if it were an annual report. In addition to product costs, costs and expenses should be charged to expenses as they are incurred in the interim period.

If television advertising remains the same throughout the year, a quarter of it is recorded as a cost in the first quarter. If the benefits of the expense clearly extend beyond the interim period in which the expense is incurred, these expenses may be deferred within the fiscal period.

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