Question

Edge Co., a toy manufacturer, is in the process of preparing its financial statements for the year ended December 31, 2013. Edge expects to issue its 2013 financial statements on March 1, 2014.

Given in question are various information that has not been reflected in the financial statements. For each item:

1) Determine if an adjustment is required and select the appropriate amount, if any, from the options provided:

a) No adjustment Required b) $150,000 c) $100,000

2) Enter either Yes or No if additional disclosure is required, either on the face of the financial statements or in the notes to the financial statements. Question - "On January 24, 2014, inventory purchased FOB shipping point from a foreign country was detained at that country s border because of political unrest. The shipment is valued at $150,000. Edge s attorneys have stated that it is probable that Edge will be able to obtain the shipment." No adjustment is required; Yes "$100,000; Yes" "$150,000; Yes" No adjustment is required; No

Answer 1

1) If the shipment is designated as freight on board (FOB) shipping point, ownership transfers to the buyer as soon as the shipment departs the seller. Inventory purchased on January 24, 2014 But , Edge Co., a toy manufacturer, is in the process of preparing its financial statements for the year ended December 31, 2013. this transit Inventory does not related to Financial Year from 2013. so in this case, No adjustment is required.

2) But, in the point of auditor, It is highlight of Key Point, So additional disclosure is required. Because Financial Statement are

prepared on concern of stakeholder (going on Past Trend F.Y. 2013 & Going on Current Trend as on March 2014)