Answer the questions below. Complete the questions in order, and label your work.

Question $1(24$ marks$)$

The following Statement of Financial Position contains errors in format, terminology, classification, and numbers. It has been prepared by the bookkeeper for Hathaway Corporation. Hathaway follows IFRS.

The following additional information is provided:

$$Cash$$ includes prepaid insurance of $$9,400$; as well, the figure includes a bank overdraft of $$1,500$ on a chequing account at another bank.

The net accounts receivable balance includes:

Accounts receivable with debit balances $$62,000$

Accounts receivable with credit balances $$5,000$

Allowance for expected credit losses $$4,800$

Inventory does not include goods costing $$5,000$ shipped out on consignment. Accounts Receivable of $$5,000$ were recorded on these goods.

Investments include investments in common shares, Fair Value Net Income investments $$24,000$ and Fair Value OCI investments $$43,300,$ and franchises $$9,000.$

Equipment costing $$8,000$ with accumulated depreciation $$6,000$ is no longer used and is held for sale. Accumulated depreciation on the other equipment is $$40,000.$

There are $12,000$ common shares issued and outstanding.

The Reserve for contingencies was created by the bookkeeper to provide a cushion for potential economic downturns.

Required

Prepare the $2023$ classified Statement of Financial Position in good format. Fix all errors in classification, terminology, and numbers. Do not simply rewrite the poor$-$quality balance sheet above. Present a numerically correct balance sheet with good format that complies with IFRS classifications, terminology, and standards. Carefully consider each line of the statement, and correct the statement so that it conforms with current standards. Use a Word table with two number columns. $(24$ marks$)$

Question $2(18$ marks$)$

Presented below is information for Drumline Company for $2023$:

Collections of Accounts Receivable

$$1,100,000$

Retained Earnings, January $1,2023$

$800,000$

Sales Revenue

$1,900,000$

Selling and Administrative Expenses

$290,000$

Loss from Flood Damage

$350,000$

Dividends paid on Common Shares

$34,000$

Cost of Goods Sold

$1,100,000$

Loss resulting from calculation error on depreciation charge in $2021($pre$-$tax$)$

$460,000$

Interest Revenue

$180,000$

Interest Expense

$120,000$

Loss on Loan Settlement

$340,000$

Gain on Foreign Currency

$220,000$

The following additional information is provided:

On September $1,2023,$ Drumline Company sold one of its segments $($product line$)$ to Chord Company for a pre$-$tax gain of $$550,000.$ During the period January $1$ to August $31,$ the discontinued segment incurred a pre$-$tax operating loss of $$480,000.$ This loss is not included in any of the numbers shown above.

Required

Prepare a multi$-$step Statement of Income in good form for $2023.$ Assume a $20\%$ income tax rate and that $20,000$ common shares were outstanding during the year. As with the Statement of Financial Position, ensure that you use proper format, including classification of items and correct terminology for section headings and subtotal amounts. Drumline Company follows IFRS. $(18$ marks$)$

Question $3(8$ marks$)$

Baseline Company follows IFRS and had the following balances on December $31,2022$ in thousands:

Preferred shares $$3,012$

Common shares $$4,718$

Contributed surplus $$1,750$

Retained earnings $$16,791$

Accumulated other comprehensive income $$514$

During the year ended December $31,2023,$ the company earned net income of $$3,613,000,$ sold common shares of $$30,000,$ and paid out dividends of $$14,000$ to preferred shareholders and $$5,000$ to common shareholders.

Required

Prepare a statement of changes in equity for the year ended December $31,2023.(8$ marks$)$