Chapter 24: Question 1IFRS (page 1467)
Where can authoritative IFRS be found related to the various disclosure issues discussed in the chapter?
IAS 1, IAS 24, IAS 10, IFRS 8, and IAS 34 are discussed in the chapter.
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(Post-Balance-Sheet Events) For each of the following subsequent (post-balance-sheet) events, indicate whether a company should (a) adjust the financial statements, (b) disclose in notes to the financial statements, or (c) neither adjust nor disclose.
What is the relationship of the asset turnover to the return on assets?
(Disclosure of Estimates) Nancy Tercek, the financial vice president, and Margaret Lilly, the controller, of Romine Manufacturing Company are reviewing the financial ratios of the company for the years 2017 and 2018. The financial vice president notes that the profit margin on sales ratio has increased from 6% to 12%, a hefty gain for the 2-year period. Tercek is in the process of issuing a media release that emphasizes the efficiency of Romine Manufacturing in controlling cost. Margaret Lilly knows that the difference in ratios is due primarily to an earlier company decision to reduce the estimates of warranty and bad debt expense for 2018. The controller, not sure of her supervisor’s motives, hesitates to suggest to Tercek that the company’s improvement is unrelated to efficiency in controlling cost. To complicate matters, the media release is scheduled in a few days.
Instructions
Carlton Company is involved in four separate industries. The following information is available for each of the four industries.
Operating Segment | Total Revenue | Operating Profit (Loss) | Identifiable Assets |
W | \( 60,000 | 15,000 | \)167,000 |
X | 10,000 | 3,000 | 83,000 |
Y | 23,000 | (2,000) | 21,000 |
Z | 9,000 | 1,000 | 19,000 |
\(102,000 | \)17,000 | $290,000 |
Instructions
Determine which of the operating segments are reportable based on the:
a) Revenue test.
Carlton Company is involved in four separate industries. The following information is available for each of the four industries.
Operating Segment | Total Revenue | Operating Profit (Loss) | Identifiable Assets |
W | \( 60,000 | 15,000 | \)167,000 |
X | 10,000 | 3,000 | 83,000 |
Y | 23,000 | (2,000) | 21,000 |
Z | 9,000 | 1,000 | 19,000 |
\(102,000 | \)17,000 | $290,000 |
Instructions
Determine which of the operating segments are reportable based on the:
b) Operating profit (loss) test.
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