FA1_Quizz 1

Company A enters into a contract to deliver products and services. The contract includes the following components:

• Product A: $100,000 (delivered immediately)

• Installation Service: $20,000 (to be completed in 2 months)

• Ongoing Maintenance Service for 12 months: $12,000

Question:
Using IFRS 15's five-step revenue recognition model, calculate how much revenue Company A should recognize at the time of product delivery, two months later when the installation is completed, and at the end of the year after the maintenance service is provided.

(a)  

Company B reports the following financial information for the year ended December 31st:

• Sales Revenue: $900,000

• Returns and Allowances: $50,000

• Cost of Goods Sold: $500,000

• Salaries Expense: $150,000

• Depreciation Expense: $40,000

• Interest Expense: $20,000

• Loss on Disposal of Equipment: $10,000

• CALCULATION:
  1. Gross Profit

(a)  

Company B reports the following financial information for the year ended December 31st:

• Sales Revenue: $900,000

• Returns and Allowances: $50,000

• Cost of Goods Sold: $500,000

• Salaries Expense: $150,000

• Depreciation Expense: $40,000

• Interest Expense: $20,000

• Loss on Disposal of Equipment: $10,000
  CALCULATION:
  2. Operating income

(a)  

Company B reports the following financial information for the year ended December 31st:

• Sales Revenue: $900,000

• Returns and Allowances: $50,000

• Cost of Goods Sold: $500,000

• Salaries Expense: $150,000

• Depreciation Expense: $40,000

• Interest Expense: $20,000

• Loss on Disposal of Equipment: $10,000
  CALCULATION:
  3. Income before income tax
  4. Net income

(a)  

Company C has the following information for the year:

• Net Income: $300,000

• Shares Outstanding: 100,000

• Convertible Bonds: $100,000, paying 5% interest annually (convertible into 20,000 shares)

• Tax Rate: 30%
  Calculate the Basic Earnings Per Share

(a)  

Company E reports the following as of December 31, 2024:

• Cash: $50,000

• Accounts Receivable (net): $120,000

• Inventory: $180,000

• Prepaid Expenses: $10,000

• Property, Plant & Equipment (net): $500,000

• Goodwill: $80,000

• Accounts Payable: $70,000

• Notes Payable (due in 18 months): $100,000

• Deferred Tax Liability: $20,000

• Share Capital: $300,000

• Retained Earnings: $350,000
  Total ASSET =?

• 360,000

• 580,000

• 940,000

• 860,000

XYZ Ltd. has a 10-year loan with an outstanding balance of $200,000. The loan requires $20,000 to be repaid within the next year, and the remaining $180,000 will be repaid over the subsequent 9 years. How should XYZ classify this loan on the statement of financial position?

• • A) $200,000 as Non-Current Liability

• • B) $20,000 as Current Liability and $180,000 as Non-Current Liability

• • C) $200,000 as Current Liability

• • D) $100,000 as Current Liability and $100,000 as Non-Current Liability

JKL Co. offers a 3-year warranty on products sold. Based on historical data, the company estimates warranty costs of $15,000 in the next year and $45,000 over the following 2 years. How should the warranty liability be classified?

• $15,000 as Current Liability and $45,000 as Non-Current Liability

• Entire amount as Current Liability

• Entire amount as Non-Current Liability

• Not recorded as a Liability

Beta Corporation has a 15-year mortgage of $600,000. The company is required to make annual payments of $40,000. How should Beta classify the mortgage payable on its statement of financial position at the end of Year 1?

• $600,000 as Current Liability

• $40,000 as Current Liability and $560,000 as Non-Current Liability

• Entire amount as Non-Current Liability

• $300,000 as Current Liability and $300,000 as Non-Current Liability

A company has $1 million in long-term debt that is maturing in 8 months. However, the company has the intention and ability to refinance the debt with a new 5-year loan before maturity. How should this debt be classified on the statement of financial position?

• Current Liability

• Non-Current Liability

• Split between Current and Non-Current Liability

• Not Reported as a Liability