Solution Manual: Chapter 9 Interim Financial Reporting

Chapter 9

Interim Financial Reporting


PROBLEM 1: TRUE OR FALSE
1. FALSE 6. FALSE
2. TRUE 7. FALSE
3. FALSE 8. TRUE
4. TRUE 9. FALSE
5. FALSE 10. TRUE


PROBLEM 2: FOR CLASSROOM DISCUSSION
1. D

2. A

3. B

4. B

5. B

6. C

7. A

8. Solution:

Revenue 9,000,000
(5,000,000
Cost of goods sold )
Gross profit 4,000,000
(2,800,000
Other operating expenses )
(600,000
Loss on inventory write-down (2.2M – 2.8M) )
60,00
Interest income (2M x 12% x 3/12) 0
Profit 660,000
Other comprehensive income:
(110,000
Unrealized loss on FVOCI [450K – (500K + 60K)] )
Comprehensive income 550,000

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, 9. Solution:
Revenue 7,000,000
Cost of goods sold (3,000,000)
Gross profit 4,000,000
Other operating expenses (2,800,000)
Property tax expense (1.2M x 1/4) (300,000)
Depreciation expense [(1.2M / 5) x
3/12] (60,000)
Insurance expense (15,000)
Profit 825,000
Other comprehensive income:
Revaluation increase (4.4M - 3.8M) 600,000
Comprehensive income 1,425,000


10. Solution:

Revenue 9,000,000
Cost of goods sold (3,000,000)
Gross profit 6,000,000
Other operating expenses (2,800,000)
Salaries expense (2.8M x 3/12) (700,000)
Impairment loss (500,000)
Profit from continuing
operations 2,000,000
Discontinued operations (700,000)
Profit for the year 1,300,000


11. Solution:

Estimated annual profit before tax 1,200,000
Less: Operating loss carryforward (300,000)
Total 900,000
Multiply by: 30%
Estimated annual income tax expense 270,000
Divide by: Estimated annual profit before
tax 1,200,000
Weighted average income tax rate 22.50%

Profit before tax - 1st quarter 350,000
Multiply by: Weighted ave. tax rate 22.50%
Income tax expense 78,750


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