Joe Schreiner, controller for Ayayai Company Inc., recently prepared the company
ID: 2340550 • Letter: J
Question
Joe Schreiner, controller for Ayayai Company Inc., recently prepared the company’s income statement and statement of changes in equity for 2017. Schreiner believes that the statements are a fair presentation of the company’s financial progress during the current period, but he also admits that he has not examined any recent professional pronouncements on accounting.
315,550
Assume that Ayayai Company follows IFRS, and has a tax rate of 30%. Assume that investments are accounted for as FV-OCI investments with gains/losses recycled through net income. Prepare a statement of comprehensive income showing expenses by function. Ignore calculation of EPS. (Round answers to 0 decimal places, e.g. 5,275. Round tax rate to 4 decimal places, e.g. 52.7525%.)
AYAYAI COMPANY INC.Income Statement
For the Year Ended December 31, 2017 Sales revenues $ 350,000 Less: Sales returns and allowances 15,000 Net sales revenue 335,000 Cost of goods sold: Inventory, January 1, 2017 $ 48,000 Purchases $ 186,000 Less: Purchase discounts 2,500 183,500 Cost of goods available for sale 231,500 Inventory, December 31, 2017 40,000 Cost of goods sold 191,500 Gross profit 143,500 Selling expenses 39,000 Administrative expenses 30,000 69,000 Income before income tax 74,500 Other revenues and gains Unrealized gain on FV-OCI investments 33,000 Dividends received 37,000 144,500 Income tax 43,350 Net income $ 101,150
Explanation / Answer
Solution:-
Statement of comprehensive income :-
= (74,500 + 37,000 + 29,400) - 11,000
= $129,900
= 129,900 * 30%
= $38,970
= 129,900 - 38,970
= $90,930
= 33,000 * 30%
= $9,900
= 33,000 - 9,900
= $23,100
= 23,100 + 90,930
= $114,030
Income before tax $74,500 Dividends received $37,000 Loss on expropriation $11,000 Gain from sale of long term investments $29,400 Correceted income before tax= (74,500 + 37,000 + 29,400) - 11,000
= $129,900
Income tax 30%= 129,900 * 30%
= $38,970
Net income= 129,900 - 38,970
= $90,930
Other coprehensive income(OCI): Unrealized gain on FV-OCI investment $33,000 INcome tax @30%= 33,000 * 30%
= $9,900
Net OCI= 33,000 - 9,900
= $23,100
Comprehensive income= 23,100 + 90,930
= $114,030
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