For the Year Ended December 31, 2017 — Joe Schreiner controller Time Clock Company Inc recently prepared income statement and

Joe Schreiner, controller for On Time Clock 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.

Instructions

(a) Assume that On Time Clock Company follows IFRS. 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.

(b) Prepare the retained earnings and accumulated other comprehensive income portion of the statement of changes in equity. Assume an opening balance of $120,000 in accumulated other comprehensive income.

SOLUTION

ON TIME CLOCK COMPANY INC.

Statement of Comprehensive Income

For the Year Ended December 31, 2017

Sales revenues $377,852

Less: Sales returns and allowances 16,320

Net sales revenue 361,532

Cost of goods sold 198,112

Gross profit 163,420

Selling expenses $41,850

Administrative expenses 32,142 73,992

Operating income before income tax 89,428

Other revenues and gains

Dividend revenue 40,000