J.J. Kersee Corporation, a Canadian publicly traded company, is currently preparing the interim financial data that it

Question:

J.J. Kersee Corporation, a Canadian publicly traded company, is currently preparing the interim financial data that it will issue to its shareholders and the securities commission at the end of the first quarter of its December 31, 2017 fiscal year. Kersee's financial accounting department has compiled the following summarized revenue and expense data for the first quarter of the year:

Sales Cost of goods sold Variable selling expenses Fixed selling expenses $60,000,000 36,000,000 2,000,000

In the first quarter, the company spent $2 million for television advertisements as a lump sum payment for the entire year. Because the company believes that it will receive a benefit for the entire year for this expenditure, it has included only one quarter ($500,000) in the fixed selling expenses. Also, included in inventory is an unfavourable price variance of $245,000 that has been deferred because management anticipates that this will reverse before the third quarter is complete. 

Instructions
(a) Explain whether Kersee should report its operating results for the quarter as if the quarter were an entirely separate reporting period or as if the quarter were an integral part of the annual reporting period.
(b) Indicate the amount of the sales, cost of goods sold, and fixed selling expenses that would be reflected in Kersee Corporation's quarterly report prepared for the first quar- ter of the 2017 fiscal year. Justify your presentation with reference to IAS 34 requirements.
(c) What financial information, at a minimum, must KerseeCorporation disclose to its shareholders in its quarterlyreports?

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Intermediate Accounting

ISBN: 978-1119048541

11th Canadian edition Volume 2

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy

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