Blue Sky Conglomerate is being sued for damages. When preparing the financial statements as of 31 December 20X0, management was of the opinion that the probability of any payments having to be made was remote. In preparing the 20X1 financial statements management changed its view and believed that it was possible that such payments would have to be made, and in preparing the 20X2 statements its view was that such payments were probable. For the 20X3 accounts the payment was assessed to be virtually certain and effectively the payments were made in 20X4. In which financial statements should Blue Sky present a note for a contingent liability and in which financial statement should Blue Sky set up a provision? A. Contingent liabilities in the 20X1 financial statements and provision in the 20X2 financial statements B. Contingent liabilities in the 20X0 financial statements and provision in the 20X1 financial statements C. Contingent liabilities and provision in the 20X3 financial statements D. Contingent liabilities in the 20X2 financial statements and provision in the 20X3 financial statements
Added by Gregg M.
Step 1
In 20X1, the management changed its view and believed that it was possible that such payments would have to be made. This is when a contingent liability should be noted in the financial statements, as there is a possible obligation that may require an outflow of Show more…
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Maxwell Communications was organized on December 1 of the current year and had the following account balances at December 31, listed in tabular form: | Account | Balance | |-------------------|---------| | Assets | | | Liabilities | | | Owners' Equity | | Early in January, the following transactions were carried out by Maxwell Communications: 1. Sold capital stock to owners for $35,000. 2. Purchased land and a small office building for a total price of $90,000, of which $35,000 was the value of the land and $55,000 was the value of the building. Paid $22,500 in cash and signed a note payable for the remaining $67,500. 3. Bought several computer systems on credit for $9,500 (30-day open account). 4. Obtained a loan from Capital Bank in the amount of $20,000. Signed a note payable. 5. Paid the $22,250 accounts payable due as of December 31. Instructions: a. List the December 31 balances of assets, liabilities, and owners' equity in tabular form as shown. b. Record the effects of each of the five transactions in the format illustrated in Exhibit 2-11. Show the totals for all columns after each transaction.
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Blue Spruce Corp. prepares monthly cash budgets. Here are relevant data from operating budgets for 2022. January February Sales $360,700 $401,100 Purchases $121,500 $131,400 Salaries $84,600 $81,000 Administrative expenses $71,000 $73,700 Selling expenses $79,000 $86,900 All sales and purchases are on account. Budgeted collections and disbursement data are given below. All other expenses are paid in the month incurred. Administrative expenses include $1,200 of depreciation per month. Other data: 1. Collections from customers: January $328,100; February $378,200. 2. Payments for purchases: January $111,400; February $144,900. 3. Other receipts: January: collection of December 31, 2021, notes receivable $18,400; February: proceeds from sale of securities $5,500. 4. Other disbursements: February $13,000 cash dividend. The company's cash balance on January 1, 2022, is expected to be $47,400. The company wants to maintain a minimum cash balance of $45,910. Prepare a cash budget for January and February.
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On January 1, 20x2, ABC Co. sells 60% out of its 80% interest in XYZ, Inc. for ₱100,000. ABC's remaining 20% interest in XYZ has a fair value of ₱25,000. This gives ABC significant influence over XYZ. The statements of financial position immediately before the sale are shown below: Statements of financial position As at January 1, 20x2 ABC Co. XYZ, Inc. Consolidated ASSETS Cash 23,000 57,000 80,000 Accounts receivable 75,000 22,000 97,000 Inventory 105,000 15,000 120,000 Investment in subsidiary 75,000 - - Equipment 200,000 50,000 260,000 Accumulated depreciation (60,000) (20,000) (80,000) Goodwill - - 3,000 TOTAL ASSETS 418,000 124,000 476,000 LIABILITIES AND EQUITY Accounts payable 43,000 30,000 73,000 Bonds payable 30,000 - 30,000 Total liabilities 73,000 30,000 103,000 Share capital 170,000 50,000 170,000 Share premium 65,000 - 65,000 Retained earnings 110,000 44,000 118,000 Non-controlling interest - - 20,000 Total equity 345,000 94,000 373,000 TOTAL LIAB. & EQTY. 418,000 124,000 476,000 How much is the gain (loss) on the disposal?
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