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Interim Financial Reporting: Indoyon - Janiola

1. Eureka Corp should report an unrealized loss of P50,000 in its interim financial statements for the first quarter. It should report an unrealized gain of P60,000 in the third quarter as the decline reversed and exceeded the previous decline. 2. The document discusses interim financial reporting requirements under PAS 34 including recognizing expenses as incurred in interim periods and providing condensed financial statements at a minimum on a quarterly basis. 3. The theory questions cover topics like accounting for inventory losses and warranty expenses in interim periods, as well as requirements for recognizing costs and expenses and publishing interim reports.

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Caryl JANIOLA
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2K views

Interim Financial Reporting: Indoyon - Janiola

1. Eureka Corp should report an unrealized loss of P50,000 in its interim financial statements for the first quarter. It should report an unrealized gain of P60,000 in the third quarter as the decline reversed and exceeded the previous decline. 2. The document discusses interim financial reporting requirements under PAS 34 including recognizing expenses as incurred in interim periods and providing condensed financial statements at a minimum on a quarterly basis. 3. The theory questions cover topics like accounting for inventory losses and warranty expenses in interim periods, as well as requirements for recognizing costs and expenses and publishing interim reports.

Uploaded by

Caryl JANIOLA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 11

INTERIM

FINANCIAL
REPORTING
INDOYON | JANIOLA
Problem #1
Eureka Corp. Experienced P50,000 decline in fair value of its held for
trading securities in the first quarter of its fiscal year. Eureka had
expected this decline to reverse in the third quarter, and in fact, the third
quarter recovery exceeded the previous decline by P10,000. Eureka’s
held for trading securities did not experience any other declines in value
during the fiscal year. What amounts of loss and/or gain should Eureka
report in its interim financial statements for the first and third quarters?

Taken from: Integrated Financial Accounting 2018 by Millan (page 487)


Problem #1: Solution
1ST QUARTER 3rd QUARTER
Carrying amount before end of 0 (50,000)
quarter adjustments

Fair value as of the end of quarter 50,000 110,000

Unrealized gain (loss) for the quarter (50,000) 60,000


Theory Questions
1. Due to a decline in market price in the second quarter, an entity incurred an inventory loss.
The market price is expected to return to previous level by the end of the year. At the end of
the year, the decline had not reversed. When should the loss be reported in the interim
income statement?

a) Ratably over the second quarter, third and fourth quarters

b) Ratably over the third and fourth quarters

c) In the second quarter

d) In the fourth quarter

Taken from: Theory Financial Accounting 2018 by Valix (page 249)


Theory Questions
2. Interim financial reports should include as a minimum

a) A complete set of financial statements complying with PAS 1

b) A condensed set of financial statements and selected notes

c) A balance sheet and income statement only

d) A condensed balance sheet, income statement, and cash flow statement only.

Taken from: Integrated Financial Accounting 2018 by Millan (page 474)


Theory Questions
3. PAS 34 provides that losses from inventory write-downs, restructuring, or impairments in an
interim period are accounted for I the same way as in annual financial statements (i.e., losses are
recognized immediately in the interim period which they arise. This recognition principle is in
favor of

a) Integral view

b) Discrete view

c) Both integral view and discrete view

d) None of the above

Taken from: Integrated Financial Accounting 2018 by Millan (page 450-451)


Problem #2
An entity prepares quarterly interim financial reports. The entity sells electrical
goods and normally 5% of customers claim on their warranty.
The provision in the first quarter was calculated at 5% of sales to date which
ampunted to P10,000,000.
However, in the second quarter, a design fault was found and warranty claims were
expected to be 10% for the whole year. Sales for the second quarter amounted to
P15, 000, 000. What amount of warranty expense should be reported for the first
quarter and second quarter?

Taken from: CPAR Reviewer


Problem #2: Solution
1ST QUARTER: P10,000,000 x 5% = P500,000

2nd QUARTER:
Sales (1st Quarter) P10,000,000
Sales (2nd Quarter) 15,000,000
Total P25,000,000
x 10%
Total Warranty Expense P2,500,000
Less: Warranty Expense (1st Quarter) (500,000)
Warranty Expense, 2nd Quarter P2,000,000
Theory Questions
4. Under PAS 34, an entity shall recognize costs and expenses as incurred in an interim period.
Which of the following is false?

a) Expenses associated directly with revenue are recognized in interim period as incurred or
allocated over the interim period benefited

b) Expenses not associated directly with revenue are recognized in interim period as incurred
or allocated over the interim period benefited

c) Cost incurred such as year-end bonuses, insurance, property taxes and depreciation are
allocated over the interim period benefited

d) None of the above

Taken from: Theory Financial Accounting 2018 by Valix (page 243)


Theory Questions
5. Under PAS 34, interim financial reports should be published

a) Once a year at any time in that year

b) Within a month of the half year end

c) On quarterly basis

d) Whenever the entity wishes

Taken from: Integrated Financial Accounting 2018 by Millan (page 474)


Theory Questions
6. The IASB encourages publicly traded entities to provide interim financial reports

a) At least at the end of the half year and within 60 days of the end of the interim
period

b) Within a month of the half year end

c) On quarterly basis

d) Whenever the entity wishes

Taken from: Integrated Financial Accounting 2018 by Millan (page 474)

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