The following information relates to Wang Group. Instructions Comment on the appropriateness of the accounting procedures followed
Question:
Instructions
Comment on the appropriateness of the accounting procedures followed by Wang Group.
a. Depreciation expense on the building for the year was ¥60,000. Because the building was increasing in value during the year, the controller decided to charge the depreciation expense to retained earnings instead of to net income. The following entry is recorded.
b. Materials were purchased on January 1, 2019, for ¥120,000 and this amount was entered in the Materials account. On December 31, 2019, the materials would have cost ¥141,000, so the following entry is made.
c. During the year, the company purchased equipment through the issuance of ordinary shares. The shares had a par value of ¥135,000 and a fair value of ¥450,000. The fair value of the equipment was not easily determinable. The company recorded this transaction as follows.
d. During the year, the company sold certain equipment for ¥285,000, recognizing a gain of ¥69,000. Because the controller believed that new equipment would be needed in the near future, she decided to defer the gain and amortize it over the life of any new equipment purchased.
e. An order for ¥61,500 has been received from a customer for products on hand. This order was shipped on January 9, 2019. The company made the following entry in 2018.
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
Step by Step Answer:
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield