Appendix I
Review Exercise Solutions
388
Chapter 3 Review Exercise—Solutions
Part 1
Prepare the assets portion of the balance sheet assuming it was prepared under IFRS. Do not
adjust the account balances.
Hollinger Runners Inc.
Balance Sheet
As at April 30, 2016
2016
2015
Assets
(in thousands)
Non-Current Assets
Property, plant and equipment
1,210
2,120
Goodwill
40
50
Available-for-sale investments
60
65
Total Non-Current Assets
1,310
2,235
Current Assets
Inventory
5
120
Accounts receivable
10
140
Other current assets
60
70
Cash
10
500
Total Current Assets
85
830
Total Assets
1,395
3,065
Part 2
Which of the four fundamental characteristics of financial information has HRI failed to apply?
Explain.
Relevance
• A particular piece of information is relevant if its omission means that the user’s decision may
change. In the financial statements, the company did not disclose that two different currencies
were used in the comparative balance sheet (one for 2016 and another for 2015).This omission
can potentially affect users’ (investors’) decisions.
• A component of relevance is timeliness. HRI only prepares financial statements on an annual
basis.However, the company’s hundreds of shareholders would benefit from more timely finan-
cial statements (e.g. quarterly or monthly).
