Reference no: EM132594087
Problem 1. Identify which basic principle of accounting is best described in each of the following items:
a. Neptun Co. reports revenue in its income statement when it delivers goods instead of when the cash is collected.
b. KDD Company recognizes depreciation expense for a machine over the 2-year period during which that machine helps the company earn revenue.
c. Alfa Co. reports information about pending lawsuits in the notes to its financial statements.
d. Adidas reports land on its statement of financial position at the amount paid to acquire it, even though the estimated fair value is greater.
Problem 2. Presented below is information related to Wall sh.p.k (amounts in thousands) (80 points)
Rent revenue € 48,000
Sales revenue 1,100,000
Sales returns and allowances 75,000
Sales discounts 25,000
Cost of goods sold 650,000
Selling expenses 120,000
Administrative and general expenses 42,000
Interest expense 25,000
Gain from sale of Land 100,000
Loss from sale of a division 25,000
Dividends paid on preferred shares 10,000
Assume the total effective tax rate on all items is 10%. 50,000 ordinary shares were outstanding during the year
Required
Prepare an Income Statement.