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Chapter 3: Q1IFRS (page 150)

How is the date of transition and the date of reporting determined in first-time adoption of IFRS?

Short Answer

Expert verified

IFRS requires an organisation acquiring IFRS standards initially to arrange a definite collection of accounting statements enclosing its initial IFRS listing period and the prior year.

Step by step solution

01

Meaning of Date of Transition

The date of transition is the start of the prior period for which an organisation states to complete illustrative information under IFRS.

02

Date of transition and the date of reporting determined in first-time adoption of IFRS

The first time IFRS adoption of, IFRS needed an organisation to remake its prior two financial statements according to the transition requirement lay down under IFRS 1.

In case an organisation wants to adopt IFRS from April 1, 2015 (presuming that the accounting year commences from April 1 and ends on March 31). It has to recognise April 1, 2014, as the transition date, and the listing date will be March 31, 2015, March 31, 2016, And March 31 2017.

Thus, an organisation's initial IFRS assembled financial statement should have a financial position for the preceding three periods.

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Most popular questions from this chapter

The accounts listed below appeared in the December 31 trial balance of the Savard Theater.

Debit

Credit

Equipment

\(192,000

Accumulated Depreciation—Equipment

\) 60,000

Notes Payable

90,000

Admissions Revenue

380,000

Advertising Expense

13,680

Salaries and Wages Expense

57,600

Interest Expense

1,400

Instructions

  1. From the account balances listed above and the information given below, prepare the annual adjusting entries necessary on December 31. (Omit explanations.)
    1. The equipment has an estimated life of 16 years and a salvage value of \(24,000 at the end of that time. (Use straightline method.)
    2. The note payable is a 90-day note given to the bank October 20 and bearing interest at 8%. (Use 360 days for denominator.)
    3. In December, 2,000 coupon admission books were sold at \)30 each and recorded as Admissions Revenue. They could be used for admission any time after January 1.
    4. Advertising expense paid in advance and included in Advertising Expense \(1,100.
    5. Salaries and wages accrued but unpaid \)4,700.
  2. What amounts should be shown for each of the following on the income statement for the year?
    1. Interest expense.
    2. Admissions revenue.
    3. Advertising expense.
    4. Salaries and wages expense.

The adjusted trial balance of Anderson Cooper Co. as of December 31, 2017, contains the following.

ANDERSON COOPER CO.

ADJUSTED TRIAL BALANCE

DECEMBER 31, 2017

Dr.

Cr

Cash

\(19,472

Accounts Receivable

6,920

Prepaid Rent

2,280

Equipment

18,050

Accumulated Depreciation—Equipment

\) 4,895

Notes Payable

5,700

Accounts Payable

5,472

Common Stock

20,000

Retained Earnings

11,310

Dividend

3,000

Service Revenue

11,590

Salaries and Wages Expense

6,840

Rent Expense

2,260

Depreciation Expense

145

Interest Expense

83

Interest Payable

83

\(59,050

\)59,050

Instructions

(a) Prepare an income statement.

(b) Prepare a statement of retained earnings.

(c) Prepare a classified balance sheet.

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.

E3-1 (L02) (Transaction Analysis—Service Company) Beverly Crusher is a licensed CPA. During the first month of operations of her business (a sole proprietorship), the following events and transactions occurred.April 2 Invested \(32,000 cash and equipment valued at \)14,000 in the business.2 Hired an administrative assistant at a salary of \(290 per week payable monthly.3 Purchased supplies on account \)700. (Debit an asset account.)7 Paid office rent of \(600 for the month.11 Completed a tax assignment and billed client \)1,100 for services rendered. (Use Service Revenue account.)12 Received \(3,200 advance on a management consulting engagement.17 Received cash of \)2,300 for services completed for Ferengi Co.21 Paid insurance expense \(110.30 Paid administrative assistant \)1,160 for the month.30 A count of supplies indicated that \(120 of supplies had been used.30 Purchased a new computer for \)6,100 with personal funds. (The computer will be used exclusively for business purposes.)InstructionsJournalize the transactions in the general journal. (Omit explanations.)

BE3-10 (L03) At the end of its first year of operations, the trial balance of Alonzo Company shows Equipment \(30,000 and zero balances in Accumulated Depreciation—Equipment and Depreciation Expense. Depreciation for the year is estimated to be \)2,000. Prepare the adjusting entry for depreciation at December 31, and indicate the balance sheet presentation for the equipment at December 31.
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