1 1 2 3 6 PART C: IFRS & Business Ownership Short-Answer Questions (Communication) - 10...

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1 1 2 3 6 PART C: IFRS & Business Ownership Short-Answer Questions (Communication) - 10 marks 4 ... 5 II 7 1. Emily Hogan recently opened a new business. The business has been very successful and as a reward for all of her hard work, Emily spent the day at the local spa. Emily paid for the spa with the company's debit card and charged the amount to the expense account called Repairs and Maintenance Expense. a) What IFRS rule has been violated? (2 marks-1 mark for the rule and 1 mark for the explanation). b) By Emily charging her spa day to the Repairs and Maintenance Expense, explain how it would impact the financial statements (1 mark) c) How should Emily have recorded her spa day? (What accounts should have been impacted?) (1 mark) 2. Value Properties owns a number of apartment buildings. In January 2021, a new building was purchased for $1,000,000. Because of the rapid increase in real estate prices, by the time the accountant recorded the purchase, the estimated value of the property had increased to $1,200,000. The accountant decided to record the new building at $1,200,000. a) What IFRS rule has been violated? (2 marks - 1 mark for the rule and 1 mark for the explanation) b) By recording the building at $1,200,000, explain how it would impact the financial statements (1) mark) BAT 4M1 6 b) By recording the building at $1,200,000, explain how it would impact the financial statements (1 mark) c) How should this transaction have been dealt with? Explain (1 mark). 3. Michael has just become a mechanic and has decided to open up his own shop. a) What type of business ownership would Michael likely set up? Explain why (1 mark) b) What accounting standards would Michael likely use for his financial statements? (1 mark) 1 1 1 2 3 6 PART C: IFRS & Business Ownership Short-Answer Questions (Communication) - 10 marks 4 ... 5 II 7 1. Emily Hogan recently opened a new business. The business has been very successful and as a reward for all of her hard work, Emily spent the day at the local spa. Emily paid for the spa with the company's debit card and charged the amount to the expense account called Repairs and Maintenance Expense. a) What IFRS rule has been violated? (2 marks-1 mark for the rule and 1 mark for the explanation). b) By Emily charging her spa day to the Repairs and Maintenance Expense, explain how it would impact the financial statements (1 mark) c) How should Emily have recorded her spa day? (What accounts should have been impacted?) (1 mark) 2. Value Properties owns a number of apartment buildings. In January 2021, a new building was purchased for $1,000,000. Because of the rapid increase in real estate prices, by the time the accountant recorded the purchase, the estimated value of the property had increased to $1,200,000. The accountant decided to record the new building at $1,200,000. a) What IFRS rule has been violated? (2 marks - 1 mark for the rule and 1 mark for the explanation) b) By recording the building at $1,200,000, explain how it would impact the financial statements (1) mark) BAT 4M1 6 b) By recording the building at $1,200,000, explain how it would impact the financial statements (1 mark) c) How should this transaction have been dealt with? Explain (1 mark). 3. Michael has just become a mechanic and has decided to open up his own shop. a) What type of business ownership would Michael likely set up? Explain why (1 mark) b) What accounting standards would Michael likely use for his financial statements? (1 mark) 1

Answer rating: 100% (QA)

a The IFRS rule that has been violated is the concept of prudence The concept of prudence requires t... View the full answer