In an examination of Garganta Limited as at December 31, 2017, you have learned about the following

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In an examination of Garganta Limited as at December 31, 2017, you have learned about the following situations. No entries have been made in the accounting records for these items.
1. The corporation erected its present factory building in 2001. Depreciation was calculated using the straight-line method, based on an estimated life of 35 years. Early in 2017, the board of directors conducted a careful survey and estimated that the factory building had a remaining useful life of 25 years as at January 1, 2017.
2. An additional assessment of 2016 corporate income taxes was levied and paid in 2017.
3. When calculating the accrual for officers' salaries at December 31, 2017, it was discovered that the accrual for officers' salaries for December 31, 2016, had been overstated.
4. On December 15, 2017, Garganta Limited declared a common shares dividend of $1 per share on its issued common shares outstanding, payable February 1, 2018, to the common shareholders of record on December 31, 2017.
5. Garganta Limited, which is on a calendar-year basis, changed its inventory cost formula as at January 1, 2017. The inventory for December 31, 2016, was costed by the weighted average method, and the inventory for December 31, 2017, was costed by the FIFO method.
6. On January 15, 2018, Garganta's warehouse containing raw materials was damaged by a flash flood.
7. During December 2017, the former president retired and a new president was appointed.
8. Garganta suffered a loss from a former employee stealing cash from a deposit of cash sales in the first quarter of the year. The amount has been a reconciling item on the bank reconciliation ever since the theft. Garganta has not yet made any journal entry.
Instructions
Describe fully how each item above should be reported in the financial statements of Garganta Limited for the year 2017.
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Intermediate Accounting

ISBN: 978-1119048534

11th Canadian edition Volume 1

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

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