QUESTION 2 (17 MARKS-30 MINUTES)
Income statement information for Hawk Garage Inc. (HGI), a public company traded on the Toronto
Stock Exchange, for the year ended December 31, 2017 is as follows:
General & Admin Expenses
Freight-in
$16,000
Salaries and wages expense
$38,000 Purchase discounts
15,000
Depreciation exp - building
30,500 Dividend revenue
20,000
Other supplies expense
8,200 Inventory (beginning)
130,000
Inventory (Ending)
142,000 Sales returns and allowances
11,000
Loss - Other due to flood damage
24,000 Service Expenses
Gain on sale of equipment
5,400 Salaries and Wages
65,000
Purchases
700,000 Depreciation - garage equipment
17,000
Sales revenue
987,000 Garage supplies expense
6,000
Interest Expense
8,000 Discontinued Operations
36,000
HGI had 200,000 common shares outstanding for all of 2017.
Required
a) Prepare a multi-step income statement for 2017 showing expenses by function with a 25%
income tax rate (15 Marks)
b) Discuss how the requirements of preparing an income statement would differ under ASPE (2
Marks)