Prada Corporation is a publicly traded retail company that follows IFRS. The company's controller, Justin Reece, recently
Question:
Prada Corporation is a publicly traded retail company that follows IFRS. The company's controller, Justin Reece, recently prepared an Income Statement and Retained Earnings Statement for the year ended December 31, 2020 (see below). Reece believes both statements fairly reflect the company's performance, but admits he hasn't been familiar with the latest financial reporting standards under IFRS lately.
Prada Corporation uses a 35% tax rate on all applicable items. Some items are presented on a pre-tax (or pre-tax) basis, while other items are presented on an after-tax (or after-tax) basis.
PRADA COMPANY
Income Statement (prepared by the controller)
For the Year Ended 31 December 2020
Sale 452,109
Cost of goods sold 214,446
Selling expenses 81.305
Administrative expenses 57,418 353.169
Gain and (loss) and profit before tax 98,940
Other gains and (losses)
Remeasurement gain of PV-OCI investment (before tax) 37,500
Dividends received 44,000
Correction of depreciation error in 2019 (before tax) (26,440) 55,060
Profit before tax 154,000
Income tax expense (53,900) (10,400)
Income before damage from the hurricane 100,100
Hurricane loss (after tax) (10,400)
Net income $89,700
PRADA COMPANY
Previous Years Profit Statement (prepared by the controller)
For the Year Ended 31 December 2020
Retained Profits – January 1, 2020 $155,000
To add:
Net income $89,700
Loss due to inventory impairment (after tax) (9,100) 80,600
Retained Profits – December 31, 2020 $23 $5,600
Additional information is as follows:
- On January 1, 2020, the balance in the Accumulated Other Comprehensive Income account was $134,000.
- Additional common stock was issued during the year for $100,000. On December 31, 2020, the closing balance of the common stock account was $515,000.
- The weighted average number of ordinary shares in circulation during 2020 was 200,000 shares.
Necessary:
- Prepare a good Statement of Comprehensive Income in multi-step format for Prada Corporation for the year ending December 31, 2020.
- Prepare a good Statement of Changes in Equity for Prada Corporation for the year ended December 31, 2020.
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield