Question: The statement of financial position of Sargent
The statement of financial position of Sargent Corporation follows for the current year, 2020:
The following additional information is available:
1. The Current Assets section includes the following: cash $150,000; accounts receivable $170,000, less $10,000 allowance for doubtful accounts; inventory $180,000; and unearned revenue $5,000.
The cash balance is composed of $190,000, less a bank overdraft of $40,000 (at a separate financial
institution). Inventory is stated at the lower of FIFO cost and net realizable value.
2. The Investments section includes the following: note receivable from a related company, due in
2026, $40,000; FV-NI investments in shares $80,000 (fair value $80,000); FV-OCI investments in
shares $125,000 (fair value $155,000); bond sinking fund $250,000; and patents $115,000, net of
accumulated amortization.
3. Property, Plant, and Equipment include buildings $1,040,000, less accumulated depreciation
$360,000; equipment $450,000, less accumulated depreciation $180,000; land $500,000; and land held for future use $270,000.
4. Intangible Assets include franchise, net of accumulated amortization, $265,000.
5. Current Liabilities include the following: accounts payable $140,000; notes payable, short-term $80,000, long-term $120,000; and income tax payable $40,000.
6. Long-term Liabilities are composed solely of 73 bonds payable issued at a discount, due in 2028.
7. Shareholders' Equity has 70,000 preferred shares (200,000 authorized), which were issued for $450,000, and 100,000 common shares (unlimited number authorized), which were issued at an average price of $10 per share. In addition, the corporation has retained earnings of $290,000 and accumulated other comprehensive income of $30,000.
Instructions
a. Prepare a statement of financial position in good form. (Adjust the amounts in each SFP classification based on the additional information.)
b. What makes the condensed format of the original SFP inadequate in terms of the amount of detail that needs to be disclosed under IFRS and ASPE?
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