Question

Joe Fraser, controller for BB Company Inc., recently prepared the company’s income statement and statement of changes in equity for 2017. Fraser 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.

Income Statement For the Year Ended December 31, 2017 Sales revenues Less: Sales returns and allowances Net sales revenue Cost of goods sold $367,100 16,000 351,100 $ 51,000 Inventory, January 1, 2017 Purchases Less: Purchase discounts Cost of goods available for sale Inventory, December 31, 2017 Cost of goods sold s 188,100 3,490 184,610 235,610 41,910 193,700 Gross profit Selling expenses Administrative expenses Income before income tax Other revenues and gains 157,400 40,010 31,800 71,810 85,590 37,700 41,700 164,990 49,497 $115,493 Unrealized gain on FV-OCI investments Dividends received Income tax Net income

Assume that BB 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.

Answer 1