Exam 4: Reporting Financial Performance

Use the following information for the following questions: Sesame Corp.'s adjusted trial balance at December 31, 2020, included the following: Sales...................................................................... Cost of goods sold.................................................. Administrative expenses........................................ Loss on sale of equipment....................................... Sales commissions.................................................. Interest revenue..................................................... Loss of warehouse due to flood............................... Loss from operation of discontinued division......... Bad debt expense.................................................... Totals..................................................................... \ 70,000 28,000 11,000 9,000 15,000 24,000 \1 70,000 6,000 Sesame uses the perpetual system, and their income tax rate is $30 \%$ . -On Sesame's multiple-step income statement for 2020, income from continuing operations is

On January 1, 2020, Bellair Ltd. decided to discontinue its plastics making division. The division, considered a reportable segment, was sold on June 1, 2020. Division assets with a carrying value of $812,500 were sold for $625,000. Operating income from January 1 to May 31 for the division was $62,500. Ignoring taxes, what amount should be reported on Bellair's income statement for the year ended December 31, 2020, under the caption "discontinued operations"?

Limitations of the income statement include all of the following EXCEPT

Which of the following is INCORRECT regarding differences between IFRS and ASPE?

Cash Basis Explain the theoretical weaknesses of the cash basis approach. Isn't cash management the most important part of a business?

Intraperiod tax allocation

Earnings management is

When an asset is held for sale

If an asset is to be classified as held for sale, which of the following conditions does NOT apply?

The modified cash basis

Gerald Bone, M.D., keeps his accounting records on the cash basis. During 2020, Dr. Bone collected $150,000 from his patients. At December 31, 2019, Dr. Bone had accounts receivable of $45,000. At December 31, 2020, Dr. Bone had accounts receivable of $35,000 and unearned revenue of $5,000. On the accrual basis, how much was Dr. Bone's patient service revenue for 2020?

Terminology In the space provided, write the word or phrase that is defined or indicated.

Calculation of net income from the change in shareholders' equity Presented below are changes in all account balances of Heys Inc. during last year, except for retained earnings. The only entries in retained earnings were for net income and a dividend declaration of $12,000. Instructions Calculate the net income for last year.

Understandability/disclosure trade-off Explain briefly the trade-off between understandability and full disclosure. Would statements provided to external users have more or less detail than internal management reports? Why?

Nature versus function of expense presentation IFRS requires a business to present an analysis of expenses based on either "nature" or "function." Explain what this means.

Comprehensive income Tarzana Corporation completed its first year of operations on December 31, 2020. Results and other information for the year included the following: Sales......................................................................................... \8 10,000 Cost of goods sold.................................................................... 320,000 Operating expenses................................................................... 94,000 Unrealized holding gain from investments (accounted for under the fair value through comprehensive income model)..... 31,000 Instructions Based on the information provided, prepare a combined statement of income and comprehensive income. Ignore income taxes and EPS.

For purposes of discontinued operations, the key elements in determining that a separate segment exists are that the component is

The concept of representational faithfulness requires that the financial statements

During 2020, Honeydew Corp disposed of Blackberry Division, a major segment of its business. Honeydew realized a gain of $1,500,000, net of taxes, on the sale of Blackberry's assets. During 2020, Blackberry's operating losses, net of taxes, were $1,800,000. How should these facts be reported in Honeydew's income statement for 2020? a) $\quad$ $\quad$ Total Amount to be included in Income from Results of \ 1,800,000 loss \ 1,800,000 gain b) 300,000 loss 0 c) 0 300,000 loss d) $1,500,000 \text { gain } \quad 1,800,000 \text { loss }$

Analyzing financial health and quality of earnings List some items that you should be looking for when analyzing the health and quality of earnings of a company.