Objective: The assignment is aimed at enhancing students understanding about IAS 8,
IFRS 15 and preparation of statement of cash flows.
Contents:
1. Accounting Policies, Change in Accounting estimates and Error Analysis(IAS8)
1.1 Treatment of changes in accounting policy
1.2 Treatment of changes in accounting estimates
1.3 Treatment of changes in errors
2. During 2022, Nilsen Company started a construction job with a contract price of
$1,600,000. The job was completed in 2024. The following information is
available.
2022 2023 2024
Costs incurred to date $400,000 $825,000 $1,070,000
Estimated costs to complete 600,000 275,000 –0–
Billings to date 300,000 900,000 1,600,000
Collections to date 270,000 810,000 1,425,000
Instructions
i. Compute the amount of gross profit to be recognized each year, assuming the
percentage-of-completion method is used.
ii. Prepare all necessary journal entries for 2023.
iii. Compute the amount of gross profit to be recognized each year, assuming the
cost-recovery method is used.
3. Data presented below are from the records of Antonio Brasileiro SA.
December 31,2022 December 31,2021
Plant assets $335000 $215000
Long-term investments 10000 53000
Current assets other than cash 85000 60000
Cash 15000 8000
$445000 $336000
Retained earnings $ 56000 $ 20000
Ordinary shares 254000 254000
Bonds payable 75000 –0–
Current liabilities 40000 22000
Accumulated depreciation 20000 40000
$445000 $336000
Additional information:
i. In 2022, the company sold for $34,000 held-for-collection and selling debt
investments carried at a cost of $43,000 on December 31, 2022. No unrealized
gains or losses were recorded on this investment in 2022.
ii. In 2022, the company sold for $8,000 plant assets that cost $50,000 and were
80% depreciated. The loss was incorrectly charged directly to Retained Earnings.
iii. Net income as reported on the income statement for the year was $48,000.
iv. The company paid dividends totaling $10,000. 5. Depreciation charged for the
year was $20,000.
Instructions: Prepare a statement of cash flows for the year 2022 using the indirect
method.
4. Cassy Corporation’s statement of financial position at the end of 2021 included
the following items.
Land $36000
Buildings 144000
Equipment 108000
Accumulated depreciation—buildings (36000)
Accumulated depreciation—equipment (13200)
Patents 48000
Current assets 282000
Total $568800
Share capital—ordinary $216000
Retained earnings 52800
Bonds payable 120000
Current liabilities 180000
Total $568800
The following information is available for 2022.
i. Treasury shares were purchased at a cost of $13,200.
ii. Cash dividends of $36,000 were declared and paid.
iii. A long-term investment in shares was purchased for $19,200.
iv. Current assets other than cash increased by $34,800.
v. Current liabilities increased by $15,600.
vi. Depreciation expense was $4,800 on the building and $10,800 on equipment.
vii. Net income was $66,000.
viii. Bonds payable of $60,000 were issued.
ix. An addition to the building was completed at a cost of $32,400.
x. Patent amortization was $3,000.
xi. Equipment (cost $24,000 and accumulated depreciation $9,600) was sold for
$12,000.
Instructions: Prepare a statement of cash flows for 2022.
Submission date: June 1, 2024
Marking: the assignment will be evaluated out of 10%
NB: Copying from each other will results in zero value.
