Question

Parker Inc has the following cash balances:

First bank: $150,000
Second bank ($10,000)
Third Bank 25,000
Fourth Bank ($5,000)
What are the current assets and liabilities in Parker's balance sheet under GAAP and IFRS?

Answer 1

Parker Inc's balance sheet under GAAP and IFRS would show current assets of $160,000 and current liabilities of $15,000, by subtracting negative cash balances from the positive ones.

Step-by-step explanation:

Under both GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards), the calculation of current assets and liabilities in Parker's balance sheet will be primarily based on the cash balances available at the different banks. To determine Parker Inc's current assets, you would add up the positive cash balances and subtract the negative ones. Given:

• First bank: $150,000
• Second bank: ($10,000)
• Third Bank: $25,000
• Fourth Bank: ($5,000)

So, the current assets would be $150,000 + $25,000 - ($10,000) - ($5,000) = $160,000.

The negative cash balances at the Second bank and Fourth bank would be considered current liabilities. Hence, Parker Inc's current liabilities would be $10,000 + $5,000 = $15,000.