In an examination of Arenes Corporation as of December 31, 2020, you have learned that the following

Question:

In an examination of Arenes Corporation as of December 31, 2020, you have learned that the following situations exist. No entries have been made in the accounting records for these items.

1. The corporation erected its present factory building in 2004. Depreciation was calculated by the straight-line method, using an estimated life of 35 years. Early in 2020, the board of directors conducted a careful survey and estimated that the factory building had a remaining useful life of 25 years as of January 1, 2020.

2. An additional assessment of 2019 income taxes was levied and paid in 2020.

3. When calculating the accrual for officers’ salaries at December 31, 2020, it was discovered that the accrual for officers’ salaries for December 31, 2019, had been overstated.

4. On December 15, 2020, Arenes Corporation declared a cash dividend on its common stock outstanding, payable February 1, 2021, to the common stockholders of record December 31, 2020.

Instructions

Describe fully how each of the items above should be reported in the financial statements of Arenes Corporation for the year 2020.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...

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