Reference no: EM132543274
Stock Foods Ltd is a fast food company that operates many outlets across the country. The reporting period of Stock Foods Ltd ends on 31 October. Stock Foods Ltd is not registered as a VAT vendor.
MATTER 1
On 1 November 2014 Stock Foods Ltd purchased equipment with an invoice price of N$ 273 600 under a lease agreement. The lease payments will consist of equal annual installments over a period of 4 years, payable in arrears. The interest rate applicable on this lease agreement is 8% per year. All payments due have been paid on time each year. The equipment is depreciated on the straight line basis over 5 years with no residual value.
Required:
Question 1: Disclose the long term borrowings note applicable to the lease liability in the Statement of Financial Position of Stock Foods Ltd on 31 October 2016 in accordance with International Financial Reporting Standards. Note: Round disclosed amounts to the nearest Dollar.
MATTER 2
On 1 January 2016 Stock Foods Ltd signed a 3-year rental agreement on a new outlet to be opened in Groove Mall. The business was able to negotiate a very good deal on this 3-year rental agreement. For the first year of the agreement, Stock Foods Ltd will not have to pay any rent on the outlet. In the second year of the contract, the business will pay N$ 2 500 rental per month and in the third (last) year of the agreement Stock Foods Ltd will pay N$ 5 000 per month. The accountant of Stock Foods Ltd did not recognize any entries in the accounting records of the business for the period ended 31 October 2016 since no payments had to be made during the first year of the agreement.
Required:
Question 1: Explain whether the accountant of Stock Foods Ltd was correct in not recording any journal entries on the rental agreement for the period ended 31 October 2016 in accordance with International Financial Reporting Standards.
Question 2: Provide the journal entry (if any) to appropriately account for the rental agreement in the accounting records of Stock Foods Ltd for the reporting period ended 31 October 2016.
|
Prepare ledger accounts from the transactions
: Prepare ledger accounts from the transactions.Jan 1: Bought goods on credit from Himani Rs. 40,000. Jan 6: Purchased goods from cash Rs. 20,000
|
|
Prepare the first three years of an amortization schedule
: The bonds pay interest semi-annually. Prepare the first three years of an amortization schedule. Assume that the bonds were issued for $565,710
|
|
Provide journal entries to account for all the transaction
: Provide journal entries to account for all the above transactions in Tina Ltd's financial statements for the year ended 31 December 2019
|
|
How much depreciation will they record in year one
: Assuming they use time as their allocation basis and use double-declining balance depreciation, how much depreciation will they record in Year 1
|
|
Explaint he accountant of stock foods ltd was correct
: Explain whether the accountant of Stock Foods Ltd was correct in not recording any journal entries on the rental agreement for the period ended
|
|
What is the amount of Patricias deduction
: What is the amount of Patricia's deduction, assuming that she purchased the stock on December 03, 2016, and the stock had a FMV of $65,000 when donation made
|
|
How much warranty expense does the company report
: On November 22, 2012, the copier requires on-site repairs that are completed the same day. How much warranty expense does the company report
|
|
How much money did the company receive
: The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued
|
|
Summarize the variance
: Summarize the variance that you computed by showing the net overall favorable or unfavorable variance for the month.
|