Answer
(a) All the details including revenue, cost of goods sold and expenses shall be disclosed on the face of the income statement. Further break-ups of such items might be included in the notes to the financial statements. Accounting standard IAS-1 required such detail.
(b) Equipment shall be recorded and disclosed at the full value of $170,000. The notes payable amount should be separately recorded as a liability.
(c) Further details of inventory shall be disclosed as per the accounting standards. The financial statements should include the basis of measurement (LIFO, FIFO, AVCO etc), the amount of inventory recognized as expense (or write-downs) during the period, the carrying amounts and classification of inventory (as appropriate to the entity), any inventories that are pledged as security if any, and the carrying amounts of inventories carried fair value less cost to sell.
(d) Change in the valuation of inventory is a change in accounting policy. For consistency, the method of valuation should not be changed, however, if it is changed, then such policy change should be disclosed in the financial statements along with any material implications.
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