Financial Adjustments: Trading, Inventory, and Goodwill Corrections

Posted on Dec 16, 2024 in Economy

Nominal Purchase Date

Price Quote 31/12/20XX purchase acquisition costs

Answer: In the case of a speculative portfolio, it must be understood that these are assets held for trading. Its assessment is the acquisition price, with expenses being carried to accounts of Group 6. At year-end, they are valued at fair value (trading). Losses are recorded in account 6630 (Loss of trading book) and gains in account 7630 (Gains from trading). The company has not made any entries to reflect these differences, so we make the following changes to align with the settings:

3. The Beta Society uses the weighted average price method to assess stocks. The following entry was made on 31/12/20X0:
The auditor identified the following account:
They counted 20 useless units with a total value of €200.
The market value of these goods is €13,000. The company has accounted for stock at €14,750.
Loss of 20 units – 200 TOTAL = €14,550. It should have done:

Adjustment:

The company did not take into account the deteriorating value of the merchandise, then had to do:

Then the company must perform the following adjustments:

4. The company T in the period X-1 had recorded a deterioration of goods of €300. This exercise has not done anything. A: It had to cancel such impairment; the following entry should reverse such impairment:

After the adjustment, it would be:

5. A company began a research program during the past year x-1, funded by its own means. The costs that were activated were €3,000. In period X, €1,000 has been reactivated. The auditors detected in year X that the project is feasible. Answer: You have to cancel an active X-1 activated worth €3,000.
The adjustment to be made is as follows:

The company did in Year X:

It should have done: Nothing. Then the proposed adjustment is:

6. The company Z has made amortization of goodwill in the years X-2, X-1, and X of €2,000 each. The auditors conclude that an impairment existed in year X-1 of €1,000 and in year X of €500. Answer: Remember that goodwill is not amortized since the introduction of the new Accounting Plan. Impairments can be recorded, but these are directly charged to the profit and loss account. To correct the years X-2 and X-1, the following adjustment will be made:

(1) This account does not exist in the plan; assume that the company used the same account. In Company X, the following was done:

The company should have done:

After the proposed adjustment, it will be: