Question

E5.2 (LO 3) (Classification of Statement of Financial Position Accounts) The classifications on Chesapeake Limited's statement of financial position are as follows: 1. Current assets 2. Long-term investments 3. Property, plant, and equipment 4. Intangible assets 5. Other assets 6. Current liabilities 7. Long-term debt 8. Capital shares 9. Contributed surplus 10. Retained earnings 11. Accumulated other comprehensive income

Answer 1

S. No.	Item	Classification - Number	Classification - Name	Remarks (if any required)
a	Preferred Shares	9	Contributed Surplus	Contributed surplus is basically where stock is issued at more than par-value. Since preferred shares are generally issued at more than par-value, it has been assumed that preferred shares are issued at more than par-value. Alternatively, students may assume them to be issued at par value and then they will be classified as 8-Capital shares.
b	Franchises	4	Intangible Assets
c	Salaries and Wages Payable	6	Current liabilities
d	Accounts Payable	6	Current liabilities
e	Leasehold Imporvements	3	Property, Plant & Equipment
f	FV-NI Investments	2	Long-term Investments
g	Current Portion of Long-term Debt	6	Current liabilities
h	Obligations under lease portion(due for next year)	6	Current liabilities
i	Allowance for doubtful accounts	1	Current Assets	Even though this is a liability, the same is always presented as a deduction from the accounts receivable balance and hence the classification has been made under Current Assets.
j	Accounts receivable	1	Current Assets
k	Bonds Payable (maturing in 2 years)	7	Long-term Debt
l	Notes Payable (Due next year)	6	Current liabilities
m	Supplies	1	Current Assets	Supplies are generally classified under the Inventory head of Current Assets.
n	Mortgage payable(principal portion due beyond next year)	7	Long-term Debt
o	Land (for use)	3	Property, Plant & Equipment
p	Bond sinking fund investment	2	Long-term Investments
q	Inventory	1	Current Assets
r	Prepaid Insurance	5	Other Assets
s	Bonds Payable (maturing next year)	6	Current liabilities
t	Income Tax Payable	6	Current liabilities
u	Unrealized gain or loss - OCI	11	Accumulated OCI
v	Deficit	10	Retained Earnings