Sharst Link Company (SLC)is a Public Company and Must File

question 33

Essay

Sharst Link Company (SLC)is a public company and must file interim statements. SLC experienced the following events during the third quarter of 20X9:
1. A large marketing plan was rolled out for a new product costing $9,000,000. The plan is expected to drive sales for the next four quarters.
2. A lawsuit was settled and the company must pay $15 million within the next 90 days. There was no payment made by the end of the third quarter. In previous quarters, there was no provision made for this settlement since it was determined to be not probable.
3. Goodwill was tested for impairment and determined to have an impairment loss of $10 million.
4. In the previous interim period, due to a significant drop in the selling price of the inventory, the inventory was written down to its net realizable value of $9 million from a cost of $10 million. In this quarter, the inventory is still on hand and the circumstances have again changed, resulting in the net realizable value increasing to $12 million.
5. Customers earn volume rebates when annual sales volumes exceed $6 million. This is a contractual agreement that the company has made to pay rebates of 4% on total sales for the year once the amount of $6 million is achieved. Currently, there were sales of $2 million to one customer for the quarter. In each of the previous quarters, sales of $1.5 million had been made to this customer. It is expected that sales of $2 million will be made in quarter four to this customer also.
Required:
For each event, indicate the impact on the interim statement for the third quarter using the guidance required by IAS 34.

---

Definitions:

Relationship Selling

A sales approach focused on building long-term relationships with customers, rather than just making immediate sales.

Television Advertising

A form of marketing communication that uses the medium of television to promote products, services, or ideas to a wide audience.

Special Interest Magazines

Publications targeting niche audiences with specific hobbies, interests, or demographic characteristics.

Mobile Advertising

Advertising that is communicated to the consumer via a handheld device.