Leopard
Corporation is currently preparing its annual financial statements for the
fiscal year ended April 30, 2011, following IFRS. The company manufactures
plastic, glass, and paper containers for sale to food and drink manufacturers
and distributors. Leopard maintains separate control accounts for its raw
materials, work-in-process, and finished goods inventories for each of the
three types of containers. The inventories are valued at the lower of cost and
net realizable value.
The
company’s property, plant, and equipment are classified in the following major
categories: land, office buildings, furniture and fixtures, manufacturing
facilities, manufacturing equipment, and leasehold improvements. All fixed
assets are carried at cost. The depreciation methods that are used depend on
the type of asset (its classification) and when it was acquired.
Leopard
plans to present the inventory and fixed asset amounts in its April 30, 2011
balance sheet as follows:
Inventories
……………………………………………………… $4,814,200
Property,
plant, and equipment (net of depreciation) …………. $6,310,000
Instructions
What
information regarding inventories and property, plant, and equipment must be
disclosed by Leopard Corporation in the audited financial statements issued to
shareholders, either in the body or the notes, for the 2010–11 fiscal years?
(CMA
adapted)
Leopard Corporation must disclose the following
information regarding inventories:
1. The
dollar amount assigned to inventory.
2. The
method of inventory costing; e.g., FIFO, weighted average or specific
identification.
3. The basis of valuation: i.e., cost or lower of
cost or net realizable value; if an amount other than cost is presented,
then cost should still be presented by
stating the amount of cost or by stating the amount of the valuation
allowance.
4. The
composition of the inventory, identifying the value of raw materials,
work-in-process, finished goods and manufacturing supplies.
5. Inventory
pledged as collateral for loans.
The following information must be disclosed for
property, plant, and equipment:
1. The
balance of major classes of depreciable assets (assets classified by nature or
function) and their cost.
2. Accumulated
depreciation, either by major classes of depreciable assets or in total
including any write-downs.
3. A
general description of the methods used in computing depreciation on major
classes of depreciable assets and the depreciation rate or period of useful
life.
4. The amount of depreciation expense for the period.
5. Site restoration costs.
6. Liens, pledges and commitments.
The information regarding inventories and property, plant, and equipment
will be disclosed in the body of the financial statements and in the notes,
which are an integral part of the statements.
