Question
Presented below is the trial balance of Castellane SpA at December 31, 2027.
| Debit | Credit |
|---|
| Cash | 236,400 | |
| Sales Revenue | | 9,480,000 |
| Trading Securities (at cost, $174,000) | 183,600 | |
| Cost of Goods Sold | 5,760,000 | |
| Long-term investments in Bonds | 358,800 | |
| Long-term Investments in Shares | 332,400 | |
| Notes Payable (Short-term) | | 108,000 |
| Accounts Payable | | 546,000 |
| Selling Expenses | 2,400,000 | |
| Investment Revenue | | 75,600 |
| Land | 312,000 | |
| Buildings | 1,248,000 | |
| Dividends Payable | | 163,200 |
| Accrued Liabilities | | 115,200 |
| Accounts Receivable | 522,000 | |
| Accumulated Depreciation - Buildings | | 422,400 |
| Allowance for Doubtful Accounts | | 30,000 |
| Administrative Expenses | 1,080,000 | |
| Interest Expense | 253,200 | |
| Inventory | 716,400 | |
| Pension Liability (Long-term) | | 96,000 |
| Notes Payable (Long-term) | | 1,080,000 |
| Equipment | 720,000 | |
| Bonds Payable | | 1,200,000 |
| Accumulated Depreciation - Equipment | | 72,000 |
| Franchises | 192,000 | |
| Share Capital - Ordinary ($5 par) | | 1,200,000 |
| Treasury Shares | 229,200 | |
| Patents | 234,000 | |
| Retained Earnings | | 93,600 |
| Accumulated Other Comprehensive Income | | 96,000 |
| Total | 14,778,000 | 14,778,000 |
Instructions: Prepare a statement of financial position at December 31, 2027 for Castellane SpA. (Ignore income taxes.)
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IFRS 9 — Financial Instruments
Classification drives the accounting, so settle it first: amortised cost, fair value through profit or loss, or fair value through other comprehensive income. Only then decide where remeasurement gains and losses land, because the same price movement is reported in different places under different classifications.
Common mistakes
- Routing a fair value movement through profit or loss when the instrument is measured at FVOCI, or the reverse.
- Capitalising transaction costs on an instrument held at fair value through profit or loss, where they are expensed.
- Forgetting to remove the cumulative gain or loss from equity on the disposal of an FVOCI investment.