Question: Labels Ltd experienced the following events during the first quarter

Labels Ltd. experienced the following events during the first quarter of 20X3:
1. The annual sales catalogue was developed and provided online, at a cost of $ 3,500,000.
2. Programming and consulting fees were incurred for annual updates of the internet site, at a cost of $ 1,750,000.
3. Owing to a strike at the principal supplier’s factory, Labels’ inventory fell to the lowest level in 14 years. Labels use the LIFO method for financial reporting.
4. A notice of assessed value for property taxes was received. The tax assessment will be received and be due in the second quarter. Taxes for 20X3 are estimated at $ 1,400,000.
5. Labels uses the declining- balance method for depreciation. The total depreciation for 20X3 on assets held at the start of the year will be $ 5,600,000.
6. The company’s top management receives annual bonuses based on 10% of annual net income after taxes.

For each event reported above, indicate what impact it would have on the first- quarter interim report under each approach to interim statements:
1. The integral or part- of- year approach;
2. The discrete or separate- period approach.

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  • CreatedMarch 13, 2015
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