Sparky Limited (SPL)is a Public Company and Must File Interim

question 24

Essay

Sparky Limited (SPL)is a public company and must file interim statements.SPL experienced the following events during the 2nd quarter of 20X11:
1.In the 1st quarter,an impairment loss on goodwill was recognized in the amount of $5 million.The circumstances leading to this loss have now changed,and the value of the goodwill is once again above its original cost.
2.During the 2nd quarter,the company shut down its manufacturing plant for annual maintenance.The annual maintenance costs totalled $7.5 million in the quarter.
3.As per a lease agreement,the company must pay additional rent charged at 3% of sales if annual sales are greater than $12 million.The contingent rent is payable on the total annual sales.The company reported sales in the 1st quarter related to this leased location of $3 million and in the 2nd quarter sales totalled $4 million.It is expected that sales for the 3rd and 4th quarter will be $5 million and $3 million,respectively.
4.The company made a large sale to a new customer for $6 million.This sale relates to a contract of services that will be provided over the next nine months,which commences in the first month of the 2nd interim period.
Required:
For each event,indicate the impact on the interim statement for the 3rd quarter using the guidance required by IAS 34.

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Definitions:

Interest Revenue

Income that is earned from investments, savings, bonds, or other interest-bearing accounts over a particular period.

Interest Paid

The amount of money paid over time for the use of borrowed funds.

Dividends Received

Payments received by an investor or a company from owning shares in another company.

Corporation Owns

Assets or property held by a corporation, which can include cash, inventory, equipment, and real estate.