The statement of financial position of Sargent Corporation follows for
The statement of financial position of Sargent Corporation follows for the current year, 2014:
The following additional information is available:
l. The current assets section includes the following: cash $150,000; accounts receivable $ 170,000, less $10,000 allowance for doubtful accounts; inventory $180,000; and unearned revenue $5,000. The cash balance is composed of $ 190,000, less a bank overdraft of $40,000. Inventory is stated at the lower of FIFO cost and net realizable value.
2. T he investments section includes the following: note receivable from a related company, due in 2020, $40,000; fair value- net income investments in shares, $80,000 (fair value $80,000); fair value-OCI investments in shares, $ 125,000 (fair value $155,000); bond sinking fund 5250,000; and patents $115,000, net of accumulated amortization.
3. Property, plant, and equipment includes buildings $1,040,000, less accumulated depreciation $360,000; equipment $450,000, less accumulated depreciation $ 180,000; land $500,000; and land held for future use $270,000.
4. Intangible assets include the following: franchise, net of accumulated amortization $165,000; goodwill $100,000; and discount on bonds payable $40,000.
5. Current liabilities include the following: accounts payable $140,000; notes payable, short-term $80,000, long-term $ 120,000; and income tax payable $40,000.
6. Long-term liabilities are composed solely of 7% bonds payable due in 2022.
7. Shareholders' equity has 70,000 preferred shares (200,000 authorized), which were issued for $450,000, and 100,000 common shares (400,000 authorized), which were issued at an average price of $ 10 per share. In addition, the corporation has retained earnings of $290,000 and accumulated other comprehensive income of $30,000.
(a) Prepare a statement of financial position in good form (adjust the amounts in each statement of financial position classification based on the additional information).
(b) What makes the condensed format of the original statement of financial position inadequate in terms of the amount of detail that needs to be disclosed under !FRS and ASPE?
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