Prepare an income statement for 2015 for Howell Corporation that is presented inaccordance with IFRS (including format and terminology). Howell Corporation has 50,000ordinary shares outstanding and has a 30% income tax rate on all tax related items. Roundall earnings per share figures to the nearest cent.

HW 1 Problem 1 Shown below is an income statement for 2015 that was prepared by a poorly trained bookkeeper of Howell Corporation. Howell Corporation INCOME STATEMENT December 31, 2015 Sales revenue Interest revenue Cost of merchandise sold Selling expenses Administrative expense Interest expense Income before special item Special item Loss on disposal of a component of the business Net income tax liability Net income $895,000 19,500 (408,500) (145,000) (215,000) (13,000) 133,000 (40,000) (27,900) $65,100 Instructions Prepare an income statement for 2015 for Howell Corporation that is presented in accordance with IFRS (including format and terminology). Howell Corporation has 50,000 ordinary shares outstanding and has a 30% income tax rate on all tax related items. Round all earnings per share figures to the nearest cent. Problem 2 The following statement of financial position was prepared by the bookkeeper for Kraus Company as of December 31, 2015. Kraus Company Statement of Financial Position as of December 31, 2015 Investments Equipment (net) Patents Inventories Accounts receivable (net) Cash 76,300 96,000 32,000 57,000 52,200 80,000 393,500 Equity Non-current liabilities Accounts payable 215,500 100,000 78,000 393,500 The following additional information is provided: 1. Cash includes the cash surrender value of a life insurance policy 12,400, and a bank overdraft of 2,500 has been deducted. 2. The net accounts receivable balance includes: (a) accounts receivabledebit balances 60,000; (b) accounts receivablecredit balances 4,000; (c) allowance for doubtful accounts 3,800. 2 3. Inventories do not include goods costing 5,000 shipped out on consignment. Receivables of 5,000 were recorded on these goods. 4. Investments include investments in ordinary shares, trading 19,000 and non-trading 48,300, and franchises 9,000. 5. Equipment costing 5,000 with accumulated depreciation 4,000 is no longer used and is held for sale. Accumulated depreciation on the other equipment is 40,000. Instructions Prepare a statement of financial position in good form (shareholders' equity details can be omitted.) Problem 3 Your CEO has told you that she has little use for accounting figures based on historical costs. She believes that fair values are of far more significance to the board of directors than "out-of-date costs." Instructions Present some arguments to convince her that accounting data should still be based on historical costs. **********************