Question

On December 31, 2011, Hornsby Corporation had $1.2 million of short term debt in the form of notes payable due on February 2, 2012. On January 21, 2012, the company issued 25,000 common shares for $38 per share, receiving $950,000 in proceeds after brokerage fees and other costs of issuance. On February 2, 2012, the proceeds from the sale of the shares, along with an additional $250,000 cash, are used to liquidate the $1.2-million debt. The December 31, 2011 balance sheet is issued on February 23, 2012.
Instructions
(a) Assuming that Hornsby follows private enterprise GAAP, show how the $1.2 million of short-term debt should be presented on the December 31, 2011 balance sheet, including the note disclosure.
(b) Assuming that Hornsby follows IFRS, explain how the $1.2 million of short-term debt should be presented on the December 31, 2011 balance sheet.


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  • CreatedAugust 23, 2015
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