AFM 101 Solutions - Week of Oct 10th

AFM 101 Solutions - Week of Oct 10th - P65 Req. 1 The four...

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P6–5 Req. 1 The four statements of financial position items that had the largest changes in their carrying amounts, and the typical reasons for these changes are summarized below: Statement of financial position element Change Reasons for change Cash +$4,746 Cash receipts from customers, issue of shares Inventories –6,359 Reduction in inventory through sales (greater than purchases), write downs of inventory values Retained earnings –2,156 Loss for the year Property, and equipment –1,973 Sale or disposal Req. 2 Asset/liability Note reference Valuation basis Cash 2 (n) Fair value Trade receivables 2 (n) Amortized cost Inventory 2 (e) and 4 Lower of cost and net realizable value. Property and equipment 2 (f) Cost less accumulated depreciation (except when the asset is impaired) 2 (g) Fair value Bank indebtedness 2 (n) Amortized cost Trade payables and accrued liabilities 2 (n) Amortized cost
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P6–5 (continued) Req. 3 We have learned in chapter 5 that cash flow from operations can be computed by adjusting profit (loss) for non-cash components. We could prepare a detailed analysis of the changes in the statement of financial position accounts, but we may not be able to identify all the adjustments that should be made to the net loss without additional information. The information that is available in the statement of financial position and the income statement as well as the notes
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AFM 101 Solutions - Week of Oct 10th - P65 Req. 1 The four...

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