Reference no: EM132566046
After reviewing the financial statements section of Annual report dated Dec-31, 201 the following points regarding Statement of financial Position against which doubts are presented to you.
Inventory: The following items are included in Inventory
a. Goods held on consignment from another company
b. Short term investments in shares and bonds that will be resold in near future
c. Goods sold f.o.b destination that are in transit at Dec-31
d. Office supplies
e. Goods sent on consignment to another company
Investments:
a. Bonds that will mature in 5 years are purchased; the company has a strategy to hold them to collect the contractual cash flow on bonds for 5 years. (These bonds are reported at fair value).
b. Ordinary shares of a distributor are purchased to meet regulatory requirement for doing business in the distributor's region, the investment will be held indefinitely. (Classified as trading).
Property Plant and Equipment
a. Interest cost during the construction of a building is not included in the cost of the building.
b. There is a recovery of impairment loss regarding equipment resulting in an amount in excess of the carrying value that would result had impairment would not occurred.
c. Gain on Revaluation of Land is disclosed in Income statement.
Receivables
The company has treated a tax refund as receivable the outcome of which is probable
Liabilities
Including in liabilities is a contingency regarding a litigation the outcome of which is possible but not probable.
Required: You being Financial Analyst asked to Comment on each Note stated above, also give your suggestions for a right treatment if there is a wrong treatment.
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