Question
The adjusted trial balance of Meridian Holdings PLC at December 31, 2025 contains the following accounts (alphabetical order).
| Accounts Payable | $158,000 | Land | $320,000 |
| Accounts Receivable | 168,000 | Long-term Notes Payable | 200,000 |
| Accumulated Depreciation - Buildings | 215,000 | Notes Payable (short-term) | 60,000 |
| Accumulated Depreciation - Equipment | 148,000 | Ordinary Shares, $1 par value | 350,000 |
| Allowance for Doubtful Accounts | 12,000 | Patents | 120,000 |
| 8% Bonds Payable (due 2032) | 600,000 | Preference Shares, 6%, $10 par value | 200,000 |
| Bond Sinking Fund | 95,000 | Prepaid Insurance | 14,000 |
| Buildings | 850,000 | Retained Earnings | 395,000 |
| Cash | 142,000 | Share Premium - Ordinary | 480,000 |
| Deferred Tax Liability | 52,000 | Trading Securities | 65,000 |
| Equipment | 460,000 | Treasury Shares (at cost) | 45,000 |
| Goodwill | 185,000 | Unearned Service Revenue | 12,000 |
| Income Tax Payable | 38,000 | Inventory | 246,000 |
| Investments in Associates | 210,000 | | |
Additional information:
- $20,000 of the long-term notes payable matures on June 30, 2026; the remainder matures in 2029.
- The bond sinking fund is being accumulated to retire the bonds payable at maturity in 2032.
- Trading securities are held for short-term trading. The investments in associates are long-term.
- Treasury shares are carried at cost.
Instructions: Prepare a classified statement of financial position in accordance with IAS 1 (non-current items presented first). Include totals for each classification.
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.