Mos3360 Intermediate Accounting – Essaylink

Consider a large dairy farming company that reports under IFRS. Beyond manufacturing, farm property, and equipment, the farm’s main assets are the dairy cows and the milk that they produce. Describe how these assets may be presented on the financial statements. Additionally, discuss the accounting treatments of the following events:

a) A new dairy cow is bought by the farm. [2 Marks]

b) A cow owned by the farm loses its ability to produce milk. [3 Marks]

c) How would this differ if the farm reported under ASPE? Comment on which standard you believe provides better presentation of the assets, and why. [4 marks]

Be sure to label part a, b, and c in your answer

2. D Ltd.’s December 31, Year 22, Statement of financial Position reported inventory of $55,000. There were 10,000 units of inventory on hand at December 31, Year 22. During Year 23. D Ltd. engaged in the following inventory transactions:

Jan. 31 bought 6,000 units for $27,000;

Feb. 20 sold 4,000 units for $32,000;

Mar. 30 sold 2,000 units for $16,500;

June 29 bought 6,000 units for $28,800;

Aug. 4 sold 12,000 units for $102,000; and

Oct. 15 bought 9,000 units for $36,000.

Calculate D Ltd.’s ending inventory and reported gross profit from the above inventory transactions assuming that D Ltd. uses:

a) FIFO Periodic [3 Marks]

b) Weighted Average Periodic [4 Marks]

c) FIFO Perpetual [3 Marks]

d) Moving Weughted Average Perpetual [5 Marks]

3. On February 1, Year 1, Dandan Inc. obtained a contract to build an athletic stadium. The stadium was to be built at a total cost of $5.4 million and was scheduled for completion by September 1, Year 4. Contract price was $6.6 million. Below are the data pertaining to the construction period.

  Year 1 Year 2 Year 3

Costs to date $1,782,000 $3,850,000 $6,300,000

Estimated costs to complete $3,618,000 $2,650,000 $900,000

Progress billings to date $1,200,000 $3,100,000 $5,000,000

Cash collected to date $1,000,000 $2,800,000 $4,500,000

Required:

a) Using the percentage-of-completion method, calculate the estimated gross profit recognized in the years one, two, and three. (Show all of your work to earn part and full marks). [3 Marks]

b) Prepare all journal entries for the years one, two, and three relative to this contract. (label your journal entries with Dr. and Cr.; show calculations where necessary) [21 Marks]