Question: The unclassified balance sheet accounts for Sorkin Corporation which is

The unclassified balance sheet accounts for Sorkin Corporation, which is a public company using IFRS, for the year ended December 31, 2011, and its statement of comprehensive income and statement of cash flows for the year ended December 31, 2012, are as follows:
Balance Sheet Accounts
December 31, 2011
($ in millions)
Statement of Cash Flows (Indirect Method)
For the Year Ended December 31, 2012
Additional information from the accounting records:
1. The investment income represents Sorkin’s reported income in its 35%-owned, significantly influenced investment in Stoker Inc. Sorkin received a dividend from Stoker during the year.
2. Early in 2012, Sorkin purchased shares for $25 million as a long-term investment at fair value with gains and losses in net income. There were no purchases or sales of these shares during 2012, nor were there any dividends received from this investment.
3. A machine that originally cost $70 million became unusable due to a flood. Most major components of the machine were unharmed and were sold together for $10 million. Sorkin had no insurance coverage for the loss because of the nature of this casualty.
4. Reversing differences in the year between pre-tax accounting income and taxable income resulted in an increase in future taxable amounts, causing the future income tax liability to increase by $3 million.
5. On December 30, 2012, land costing $46 million was acquired by paying $23 million cash and issuing a $23-million, four-year, 15% note payable to the seller.
6. Equipment was acquired through a 15-year financing lease. The present value of minimum lease payments was $82 million when signing the lease on December 31, 2012. Sorkin made the initial lease payment of $2 million on January 1, 2013.
7. Serial bonds with a face value of $60 million were retired at maturity on June 20, 2012. In order to finance this redemption and have additional cash available for operations, Sorkin issued preferred shares for $75 million cash.
8. In February, Sorkin issued a 4% stock dividend (four million shares). The market price of the common shares was $7.50 per share at that time.
9. In April 2012, 1 million common shares were repurchased for $9 million. The weighted average original issue price of the repurchased shares was $12 million.
(a) Prepare the unclassified balance sheet accounts for Sorkin Corporation for the year ended December 31, 2012, as a check on the statement of cash flows. Add whichever accounts you consider necessary.
(b) Prepare the operating activities section of the statement of cash flows for Sorkin Corporation using the direct method.
(c) How would the statement of cash flows differ if the terms on the purchase of land had been essentially the same except that the financing for the note payable had been negotiated with a mortgage company instead of the seller ofthe land?

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