Reference no: EM13301514
Annapolis Group Ltd. (AGL) designs, develops, manufactures, and sells photonics-based solutions, including lasers, laser systems, and electro-optical components. The company has manufacturing operations in British Columbia, Ontario, and Nova Scotia, and sells primarily in North American markets.
In the past, the company has prepared its financial statements in accordance with ASPE, but is looking to comply with IFRS for the 2012 financial statements, in conjunction with a planned public offering. The public offering is still being negotiated, and depends on the stability of financial markets. However, the company has decided to draft financial statements that comply with IFRS to ensure that they are prepared for the eventuality.
The company has prepared a draft statement of financial position (Exhibit 1-1) and is satisfied that the format of this statement is compliant with IFRS. However, some differences in measurement between ASPE and IFRS have yet to be recorded (Exhibit 1-2). Additional information on financial statement elements is provided in Exhibit 1-3.
At this stage in the analysis, the company is concerned only with the statement of financial position, not earnings. AGL is required, as part of its bond agreement, to maintain a minimum current ratio of 1-to-1 and a maximum debt-to-equity ratio of 5-to-1. (Debt in this ratio is defined as "total liabilities.") Since a number of the outstanding items affect debt and/or equity, the CFO wants to ensure that these key financial targets continue to be met.
AGL's current concern is covenant compliance in 2012. Because the focus is on the statement of financial position, all of the impact of any adjustment to earnings, whether related to the current year or a prior year, will be recorded as an increase or decrease to retained earnings. AGL will further analyze these changes and restate comparative numbers for 2011 at a later date.
Requirements
1. Record journal entries to account for the transactions and information.
2. Using Accpac, prepare the revised statement of financial position.
Attachment:- 1_Assignment.pdf
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