Problem 2-5

Dilemma Company
Statement of Financial Position
December 31, 2017

ASSETS
Current Assets
Cash P 800,000
Trade and other receivables (1) 700,000
Prepaid expenses 160,000
Inventory 1,000,000
Financial assets at fair value (2) 440,000
Total Current Assets 3,100,000

Non-current Assets
Property, plant, and equipment (3) 6,700,000
Intangible asset (4) 200,000
Total Non-current Assets 6,900,000

TOTAL ASSETS P 10,000,000

LIABILITIES AND SHAREHOLDER’S EQUITY

Current Liabilities
Trade and other payables (5) 1,200,000

Non-current Liabilities
Bonds payable, net (6) 1,800,000
Note payable, due 7/1/2019 250,000
Total Non-current Liabilities 2,050,000

Shareholder’s Equity
Share capital 3,000,000
Reserves (7) 250,000
Retained earnings (8) 3,750,000
Treasury shares (250,000)
Total Shareholder’s Equity 6,750,000

TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY P 10,000,000

NOTES

1. Accounts receivable P 750,000

Allowance for doubtful accounts (50,000)
TRADE AND OTHER RECEIVABLES 700,000

2. Financial assets at fair value 690,000

Shares acquired at cost 250,000
FINANCIAL ASSETS AT FAIR VALUE 440,000

3. Land 500,000
Building in process 5,000,000
Machinery and equipment 1,500,000
Accumulated depreciation (300,000)
CARRYING AMOUNT 6,700,000

4. Patent 200,000
INTANGIBLE ASSET 200,000

5. Accounts payable 900,000

Accrued interest on bonds payable
(2,000,000 X 10% X 3/12) 50,000
Accrued expenses (200,000 – 50,000) 150,000
Lawsuit liability 100,000
TRADE AND OTHER PAYABLES 1,200,000

6. Bonds payable 2,000,000

Discount on bonds payable (200,000)
BONDS PAYABLE, NET 1,800,000

7. Appropriated for treasury shares 250,000

RESERVES 250,000

8. Retained earnings 4,000,000

Canceled appropriation 150,000
Interest in bonds payable (50,000)
Treasury appropriation (250,000)
Loss on lawsuit (100,000)
UNAPPROPRIATED RETAINED EARNINGS 3,750,000