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Intermediate Accounting Problem 2 1 GROUP 1

The statement of financial position shows Garnet Company had total assets of $3.4 million as of December 31, 2021. Major assets included property, plant & equipment of $1.4 million, investment property of $1 million, and inventory of $322,000. Total liabilities were $1.2 million, including bonds payable of $731,000 and income tax payable of $150,000. Shareholders' equity totaled $2.2 million, with share capital of $1.5 million and accumulated profits of $262,000.

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187 views4 pages

Intermediate Accounting Problem 2 1 GROUP 1

The statement of financial position shows Garnet Company had total assets of $3.4 million as of December 31, 2021. Major assets included property, plant & equipment of $1.4 million, investment property of $1 million, and inventory of $322,000. Total liabilities were $1.2 million, including bonds payable of $731,000 and income tax payable of $150,000. Shareholders' equity totaled $2.2 million, with share capital of $1.5 million and accumulated profits of $262,000.

Uploaded by

Manuel Magadatu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Group 1

Gattud, Karl Cheyenne Soriano, Menalyn


Tipay, Bernadette Retiza, Emily
Eas Justine
Problems 2-1

Garnet Company
Statement of Financial Position
December 31,2021

ASSETS

Current Assets Note/s


Cash and Cash Equivalents 86,250.00
Trade and other receivables 1 107,000.00
Inventory 322,000.00
Financial Asset at FVPL 61,000.00
Total current assets 576,250.00

Non-current Assets
Property, Plant and Equipment 2 1,433,000.00
Investment Property 3 1,000,000.00
Intangible Assets 4 141,000.00
Investment in Associates 250,000.00
Total non-current assets 2,824,000.00
Total Assets 3,400,250.00

LIABILITIES AND EQUITY

Current Liabilities
Trade and other payables 5 256,000.00
Income Tax Payable 150,000.00
Other current liabilities 6 51,250.00
Total current liabilities 457,250.00

Non-current Liabilities
Bonds Payable 7 731,000.00
Deferred tax liability 50,000.00
Total non-current liability 781,000.00

Shareholder's Equity
Share Capital 8 1,510,000
Share Premium 9 321,000.00
Share Dividends Distributable 24,000.00
Accumulated Profits 262,000.00
Appropriated accumulated profits 45,000
Total Shareholder's Equity 2,162,000.00
Total Liabilities and Shareholders Equity 3400250.00
Note 1- Trade and other receivables
Accounts Receivable 115,000.00
Allowance for Bad Debts - 8,000.00
Total 107,000.00

Note 2- Property, Plant and Equipment


Land 250,000.00
Buildings 1,440,000.00
Accumulated Depreciation- buildings - 530,000.00
Equipment 624,000.00
Accumulated Depreciation- equipment - 351,000.00
Total 1,433,000.00

Note 3- Investment Property


Land with an undertermined future use 1,000,000.00
Total 1,000,000.00

Note 4- Intangible Assets


Patents 120,000.00
Accumulated Amortization- patents - 22,000.00
Trademarks 60,000.00
Accumulated Amortization- trademarks - 17,000.00
Total 141,000.00

Note 5- Trade and other payables


Accounts Payable 236,000.00
Salaries Payable 20,000.00
256,000.00

Note 6- Other current liabilities


SSS premium payable 21,250.00
Witholding taxes payable 30,000.00
51,250.00

Note 7- Bonds Payable


Bonds Payable 800,000.00
Discount on bonds payable - 69,000.00
731,000.00

Note 8- Share Capital


Preference share capital, P100 par 210,000.00
Ordinary share capital, P10 par 1,300,000.00
1,510,000.00
Note 9- Share Premium
Share premium- preference 81,000.00
Share premium- ordinary 240,000.00
321,000.00
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basic of Accouting
The Financial Statement are prepared under the accrual basis based on PFRS

Cash and Cash Equivalents


Cash and its equivalents are measured based on the historical cost and accrual
basis. Composed of cash in bank, cash in hand and other highly liquid investments

Trade and Other Receivables


Trade and its receivables are measured based on its net realizable value. Composed
of Accounts Receivable less its allowance for bad debts

Inventory
Inventory is measured lower of cost or net realizable value

Investments
Held for trading measured at Fair Value and subsequently adjusted at the
end of every year baseed on changes in FV

Investment in Associate Associates are accounted for using the 'equity method',
whereby the investment is initially recorded at cost and
adjusted thereafter for the post-acquisition change in
the investor's share of net assets of the associate

Investment Property Measured at cost abd composed of a land with


undetermined future use

Property, plant and equipment


Measured at its carrying amount. Which is determinedby its cost less
accumulated depreciation. Composed of building and equipment.
Land is measured its historical cost.

Intangibles
Initially recognized at cost and subsequently adjusted to its present
value using the amortization method. Composed of patents and trademark

Trade and Other Payables


Composed of payables under the ordinary course of business
such as Accounts and salaries payable. Initially measured at its fair value
and subsequently measured at amortized cost using the effective
interest method.

Income Tax Payables


Income tax due is calculated on the basis of net taxable income
at graduated income tax rate of 20 of 23 %. Payablefor the current year

Other Current Liabilities


Taxes withheld by the entity due to the Government in compliance
with the BIR. Composed of SSS Premiums Payable and witthholding tax

Deferred Tax Liability


Arising from taxable temporary difference multiplied by the tax rate
and payable in the future periods.

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