Mgcr 211 Financial Accounting Answers

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McGill University Desautels Faculty of Management Introduction to Financial Accounting MGCR 211-All Sections Fall 2013 SECTION (DAY & TIME): T/H 4.05-5.30 Due Date: Refer to your Outline as the due date is indicated there. Instructions:  There are 2 questions on 9 pages total including the cover page.  Answers must be submitted in typewritten form and in TEAMS. No assignment completed by a single individual will be accepted. This will be enforced. See your course lecturer if you're not on a team. All team members are expected to participate equally. GOOD LUCK! QUESTION 1. (25 Marks) Report on the accounting issues of Montreal Cheese Factory (MCF) Inc. (All numbers are in thousand dollars) Table of Contents…show more content…
Now “it is presently early January 2015”; therefore, by exam MCF’s draft copy of statement of earnings for 2014, we can find that if MCF really experienced economic hardship. First of all, we will analyze the statement of earnings gross profit part: Year Ended Dec 31 | 2014 | Change | 2013 | Change | 2012 | Revenue | 2,088 | 102% | 1,036 | 94% | 534 | Cost of Goods Sold | 1,285 | 110% | 611 | 91% | 320 | Gross Profit | 803 | 89% | 425 | 99% | 214 | | | | | | | Selling General and Administrative | 612 | 903% | 61 | 74% | 35…show more content…
does not have to accrue the liability because the exact amount of the liability cannot be reasonably estimated. The company has to make a note disclosure and state all the facts of the case and the high chance of losing the case because this lawsuit (and the possibility of 20more) is relevant to the future financial position of the company and thus the users of the financial statement should know about the situation. Part C - 5 Marks i.) Lower of cost and net realizable value method (LCNRV) is a method of inventory valuation in which the company reports its cost of goods sold as either the cost or the net realizable value depending on which is lower (in accordance with the relevance and prudence criteria of accounting). This is in order to ensure that their inventory and income statement are not overstated. ii.) From the table, the lower of cost and net realizable value are selected for each of the jewelleries. Thus the inventory would be: = 2,150,000+5,000,000+1,700,000+450,000 =

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