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

question 23

Essay

Sparky Limited (SPL)is a public company and must file interim statements. SPL experienced the following events during the second quarter of 20X11:
1. In the first 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 second 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 first quarter related to this leased location of $3 million, and in the second quarter sales totalled $4 million. It is expected that sales for the third and fourth quarters 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 second interim period.
Required:
For each event, indicate the impact on the interim statement for the second quarter using the guidance required by IAS 34.

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Definitions:

Social Disapproval

Negative reactions or responses from a social group or society towards certain behaviors, actions, or ideas.

Referent Informational Influence

The impact of adopting the behaviors or beliefs of a group or individual that one identifies with or aspires to be like for reasons of accuracy.

Innovation

The process of translating an idea or invention into a good or service that creates value or for which customers will pay.

Minorities

Groups in society distinguished by cultural, ethnic, racial, religious, or linguistic characteristics, often having less power or fewer rights compared to the dominant group.