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Prepare a correct statement of profit or loss and other comprehensive income for Friday Corp. (Ignore income taxes)

Prepare a correct statement of profit or loss and other comprehensive income for Friday Corp. (Ignore income taxes)

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter12: Current Liabilities
Section: Chapter Questions
Problem 1EB: Everglades Consultants takes out a loan in the amount of $375,000 on April 1. The terms of the loan...
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Topic: Interim Financial Reporting

 

Requirement: Prepare a correct statement of profit or loss and other comprehensive income for Friday Corp. (Ignore income taxes)

dividends of P1,000,000 on December 20x1. Friday recognizes the estimate as dividend income. c. On January 1, 20x1, Friday has an outstanding 12%, long-term, loan receivable with carrying amount of P2,000,000. Although the principal amount is due only at maturity, interests are collectible every year-end. Friday recognizes interest income every year-end when the interest is collected. d. As of March 31, 20x1, Friday's inventory has a total cost of P2,800,000 and a net realizable value of P2,200,000. The inventory decline is not recognized because Friday believes that it is only temporary. Friday's past experience supports this fact. Requirement: Prepare a correct statement of profit or loss and other comprehensive income for Friday Corp. (Ignore income taxes)
Transcribed Image Text:dividends of P1,000,000 on December 20x1. Friday recognizes the estimate as dividend income. c. On January 1, 20x1, Friday has an outstanding 12%, long-term, loan receivable with carrying amount of P2,000,000. Although the principal amount is due only at maturity, interests are collectible every year-end. Friday recognizes interest income every year-end when the interest is collected. d. As of March 31, 20x1, Friday's inventory has a total cost of P2,800,000 and a net realizable value of P2,200,000. The inventory decline is not recognized because Friday believes that it is only temporary. Friday's past experience supports this fact. Requirement: Prepare a correct statement of profit or loss and other comprehensive income for Friday Corp. (Ignore income taxes)
8. The inexperienced accountant of Friday Corp. prepares the following statement of profit or loss and other comprehensive income for the first quarter ended March 31, 20x1: 9,000,000 100,000 Revenue Dividend income (5,000,000) (60,000) (2,800,000) 1,240,000 Cost of goods sold Commission expense Other operating expenses Profit Other comprehensive income Comprehensive income 1,240,000 Additional information: a. On January 28, 20x1, the entity acquires 10% interest in the ordinary shares of Sunday Co. for P500,000. Transactions costs on the acquisition amounts to P60,000. The transaction costs are recognized as commission expense. The investment is classified as financial asset measured at fair value through other comprehensive income. The fair value of the investment on March 31, 20x1 is P450,000. Friday Corp. strongly believes that the fluctuation in fair value is only temporary. In fact, the fair value of the investment increases to P580,000 on April 5, 20x1. b. Sunday Co. has an established practice of declaring dividends every year-end. Friday expects that Sunday will declare
Transcribed Image Text:8. The inexperienced accountant of Friday Corp. prepares the following statement of profit or loss and other comprehensive income for the first quarter ended March 31, 20x1: 9,000,000 100,000 Revenue Dividend income (5,000,000) (60,000) (2,800,000) 1,240,000 Cost of goods sold Commission expense Other operating expenses Profit Other comprehensive income Comprehensive income 1,240,000 Additional information: a. On January 28, 20x1, the entity acquires 10% interest in the ordinary shares of Sunday Co. for P500,000. Transactions costs on the acquisition amounts to P60,000. The transaction costs are recognized as commission expense. The investment is classified as financial asset measured at fair value through other comprehensive income. The fair value of the investment on March 31, 20x1 is P450,000. Friday Corp. strongly believes that the fluctuation in fair value is only temporary. In fact, the fair value of the investment increases to P580,000 on April 5, 20x1. b. Sunday Co. has an established practice of declaring dividends every year-end. Friday expects that Sunday will declare
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ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
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