Question: Adventurers Inc. sold a mountain bike to

> Dave Scotland Inc. (DSI) sold inventory to a new customer, Jamali Ltd., on December 20, 2014. Jamali was given a significant discount to entice it to switch from its regular supplier. Jamali asked DSI not to ship the inventory until January 2, 2015, beca

> On May 3, 2014, Brown Motors Limited consigned 80 motorcycles, costing $25,000 each, to Mississauga Motors Inc. The total cost of shipping the motorcycles was $5,800 and was paid by Brown Motors. On December 30, 2014, an account sales report was received

> Mackenzie Construction Services Ltd. has entered into a contract to construct an office building for Designers Corporation. Mackenzie prepares financial statements in accordance with IFRS. Explain how Mackenzie should recognize revenue under the earnings

> For each of the following scenarios, how will these circumstances affect the recognition of revenue under the earnings approach and under the contract-based approach? (a) The anticipated revenues on a contract are $10 million but the associated costs can

> For each of the scenarios noted in BE6-4 above, when would revenue be recognized under the earnings approach? In BE6-4 (a) A manufacturer makes and sells farm equipment. The customer picks up the equipment upon purchase. In addition, there is a one-year

> The Comfort-Zone Company installs heating, ventilation, and air conditioning in large buildings such as domed stadiums, military bases, airports, and high rises. Its contracts usually take two to three years to complete. At any fiscal year end, this work

> Write a brief essay highlighting the differences between IFRS and ASPE, discussing the conceptual justification for each.

> XYZ Company has manufactured a new product that will be marketed and sold during the current year. To encourage distributors to carry the product, XYZ will not require payment until the distributor receives the final payment from its customers. This is n

> The IASB exposure draft (ED) and re-exposure draft (RED) on revenue recognition discuss how onerous contracts should be reported and measured. Instructions Refer to the IASBs ED and RED "Revenue Recognition in Contracts with Customers" from June 2010 an

> The IASB was considering additional guidance on reporting revenues when other parties are involved in providing goods and services to a company's customer. The Board has been debating the conditions that must be present for a company to record revenue at

> Treetop Pharmaceuticals (TP) researches, develops, and produces over- the-counter drugs. During the year, it acquired 100% of the net assets of Treeroot Drugs Limited (TDL) for $200 million. The fair value of the identifiable assets at the time of purcha

> Comminc Industries (CI) is a leader in delivering communications technology that powers global commerce and secures the world's most critical information. Its shares trade on the Canadian and U.S. national stock exchanges. The company had been experienci

> Stock Car Auto Inc. (SCA) is a promoter and sponsor of motor-sport activities. Its shares trade on the Toronto Stock Exchange. The company owns two racing tracks where it hosts races (including those sponsored by NASCAR the National Association for Stock

> Nimble Health and Racquet Club (NHRC) is a public company that operates eight clubs in a large city and offers one-year memberships. The members may use any of the eight facilities but must reserve racquetball court time and pay a separate fee before usi

> What is the earnings process for each of the following scenarios? (a) A manufacturer makes and sells farm equipment. The customer picks up the equipment upon purchase. In addition, there is a one-year warranty that will be honored by another company. (b)

> Cutting Edge is a monthly magazine that has been on the market for 18 months. It is owned by a private company and has a circulation of 1.4 million copies. Negotiations are underway to obtain a bank loan in order to update its facilities. It is producing

> Vaughan Construction Ltd. has entered into a contract beginning in February 2014 to build two warehouses for Atlantis Structures Ltd. The contract has a fixed price of $9.5 million. The following data are for the construction period: Instructions (a) Us

> Granite Engineering Ltd. has entered into a contract beginning January 1, 2013, to build a bridge in Tuktoyuktuk Shores. It estimates that the bridge will cost $14.8 million and will take three years to construct. The bridge will be billed to the municip

> Consider the following unrelated situations: 1. Book of the Week Limited sends books out to potential customers on a trial basis. If the customers do not like the books, they can return them at no cost. 2. Sea Clothing Company Inc. has a return policy th

> The following are independent situations that require professional judgment for determining when to recognize revenue from the transactions. 1. Costco sells you a one-year membership with a single, one-time upfront payment. This non-refundable fee is pai

> Van Horn Construction Corp. uses the percentage-of-completion method of accounting. In 2014, Van Horn began work under contract #SG-OO1, which provided for a contract price of $5.2 million. Other details follow: Instructions Under the earnings approach:

> Vaneeta Construction Ltd. began operations in 2014. Construction activity for the first year follows. All contracts are with different customers, and any work remaining at December 31, 2014, is expected to be completed in 2015. Instructions Under the ea

> Venetian Construction Corp. began operations on January 1, 2014. During the year, Venetian entered into a contract with Ravi Corp. to construct a manufacturing facility. At that time, Venetian estimated that it would take five years to complete the facil

> During 2014, Darwin Corporation started a construction job with a contract price of S4.2 million. Darwin ran into severe technical difficulties during construction but managed to complete the job in 2016. The following information is available: Instruct

> During 2014, Antoinette started a construction job with a contract price of $2.5 million. The job was completed in 2016 and information for the three years of construction is as follows: Instructions Under the earning approach: (a) Calculate the amount

> In 2014, Ronalda Construction Inc. agreed to construct an apartment building at a price of $10 million. Information on the costs and billings for the first two years of this contract is as follows: Instructions Assun1e the earnings approach is used. Rou

> On April 1, 2014, Lisboa Limited entered into a cost-plus-fixed fee contract to manufacture an electric generator for Martinez Corporation. At the contract date, Lisboa estimated that it would take two years to complete the project at a cost of $6.5 mill

> In 2014, Aldcorn Construction Corp. began construction work on a three-year, $ 10-million contract. Aldcorn uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of co

> Explain the rights and obligations created in the following transactions. (a) A manufacturer sells goods with terms FOB shipping point. (b) A manufacturer sells goods with terms FOB destination point. (c) A manufacturer sells goods with terms FOB shippin

> Chang Industries ships merchandise costing $120,000 on consignment to XYZ Inc. Chang pays the freight of $5,000. XYZ Inc. is to receive a 15% commission upon sale and a 5% allowance to offset its advertising expenses. At the end of the period, XYZ notifi

> Genesis Corporation is an equipment manufacturing company. Instructions (a) How should revenue be recorded under the earnings and contract-based approaches if Genesis has a normal business practice of offering customers a one-year payment term? (b) How

> Discuss how the contract-based approach to revenue recognition is consistent with the definition of revenues in the conceptual framework. Explain the main concepts of the earnings approach and the contract-based approach. What are the conceptual differen

> Rancourt Corp. is a real estate company. Approximately 50% of sales are properties that Rancourt owns. In the remaining 50%, Rancourt brokers the transactions by finding buyers for property owned by other companies. Explain how Rancourt should present th

> Compare the accounting for long-term contracts under ASPE and under IFRS.

> Lombardo Construction Corp. began work on a $100-million construction contract in 2014 to build a luxury hotel to be completed in 2016. During 2014, Lombardo incurred costs of $42 million, billed its customer for $38 million, and collected $35 million. I

> Louis Manufacturing Inc. (LMI) purchased some telecommunications equipment in January of the current year. The equipment normally sells for $2,300. In order to entice LMI to close the deal, the salesperson offered LMI related services that normally sell

> Inexperienced construction company ABC Corp. signed a risky contract to build a research facility at a fixed contract amount of $2 million. The work began in early 2014 and ABC incurred costs of $900,000. At December 31, 2014, the estimated future costs

> Tampa Inc. began work on an $11.5-million contract in 2014 to construct an office building. During 2014, Tampa Inc. incurred costs of $3.3 million, billed its customers for $5.1 million, and collected $2.9 million. At December 31, 2014, the estimated fut

> Seaport Marina has 500 slips (boat docks) that rent for $1,000 per season. Payments must be made in full at the start of the boating season, April 1. Slips may be reserved for the next season if they are paid for by December 31. Under a new policy, if pa

> Explain the basic economics of what is being received and what is being given up in each of the following business transactions. (a) A company sells packaging material to another company. The terms of sale require full payment upon delivery. (b) A compan

> Pennfield Construction Corp. began work on a $5,020,000 construction contract in 2014. During 2014, the company incurred costs of $1,600,000, billed its customer for $ 1,750,000, and collected $1,500,000. At December 31, 2014, the estimated future costs

> On August 15, 2014, Japan Ideas consigned 500 electronic play systems, costing $100 each, to YoYo Toys Company. The cost of shipping the play systems amounted to $1,250 and was paid by Japan Ideas. On December 31, 2014, an account sales sun1mary was rece

> Finch Industries shipped $550,000 of merchandise on consignment to Royal Crown Company. Finch paid freight costs of $5,000. Royal Crown Company paid $1,500 for local advertising, which is reimbursable from Finch. By year end, 75% of the merchandise had b

> Builder Corp. is constructing a warehouse that is expected to take two years to complete. Builder prepares financial statements in accordance with IFRS. Explain how Builder should recognize revenue under the earnings approach, in each of the following sc

> Eastern Chemicals Corp. produces a chemical compound at its plant in Halifax, Nova Scoria, and Western Polymers Inc. produces the same chemical compound at its plant in Kelowna, British Columbia. Both companies have manufacturing facilities across Canada

> Storage Services Corporation recognizes revenue under the earnings approach. Explain how uncertainty about collectability would affect revenue recognition if Storage prepares financial statements in accordance with (a) ASPE or (b) IFRS.

> Massey Ltd., an equipment manufacturer, sold and delivered a piece of equipment to a buyer for $100,000, with 50% payable in one year and the remaining 50% payable in two years from the date of sale. Massey estimates that the interest rate for a similar

> Gardi Inc. sold a unit of inventory to a buyer for $1,000 payable in one year. Gardi estimates that the interest rate for a similar financing arrangement would be 8%. The unit of inventory normally sells for $900. Calculate the discount rate to be applie

> Alpha Corp. is a major supplier to Beta Corp. To encourage Beta to buy more, Alpha offers Beta an annual volume rebate of 1% of total invoiced purchases exceeding $100,000. Beta's invoiced purchases in 2014 totaled $110,000. Prepare the journal entry to

> Access the financial statements for EADS N .V. for its year ended December 31, 2011, from the company's website (www.eads.com). Instructions Answer the following questions with respect to EADS N.V. (a) What business is EADS in? (b) Explain how the reven

> The adjusted trial balance of West Kayne Consulting is provided in the following worksheet for the month ended Apri130, 2014. Instructions (a) Complete the work sheet and prepare a balance sheet as illustrated in this chapter. (b) How would the balance

> The trial balance of Airbourne Travel Inc. on March 31, 2014, is as follows: Additional information: 1. A physical count reveals only S520 of supplies on hand. 2. Equipment is depreciated at a rate of $ !00 per month. 3. Unearned ticket revenue amounted

> Selected accounts follow for Kings Inc., as reported in the work sheet at the end of May 2014: Instructions Extend the amounts reported in the adjusted trial balance to the appropriate columns in the work sheet. Do not total individual columns. Adju

> At the end of Rafael Limited's first year of operations, its trial balance shows Equipment $20,000; Accumulated Depreciation- Equipment $0; and Depreciation Expense $0. Depreciation for the year is estimated to be $4,000. Prepare the adjusting entry for

> Prepare the following adjusting entries at December 31 for Karpai Ltd: 1. Interest on notes receivable of $600 is accrued. 2. Fees earned but unbilled total $1,800. 3. Salaries earned of $ 1,200 have not been recorded. 4. Bad debt expense for the year is

> Included in Carville Corp.'s December 31, 2014 trial balance is a note payable of $20,000. The note is an eight-month, 12% note dated October I, 2014. Prepare Carville's December 31, 2014 adjusting entry to record the accrued interest, and June I, 2015 j

> The following transactions for Juan More Taco Inc. (JMT) occurred in the month of May. Prepare journal entries for each transaction. May 1 Owners invest $12,000 cash in exchange for common shares of JMT Inc., a small chain of fast food outlets. 3 Buy

> The trial balance of Jangles Corporation at the end of its fiscal year, August 31, 2014, includes the following accounts: Purchases $ 151,600; Sales Revenue $250,000; Freight in $4,000; Sales Returns and Allowances $4,000; Freight-out $1,000; and Purchas

> Kothari Ltd. made the following transactions: 1. Payment of a S200 invoice on account 2. Increase in the fair value of a Fair Value-Net Income Investment by S250 3. Sale on account for $100 4. Purchase of equipment paid for with $500 cash and a $ 1,000 n

> Moosa Corp. has the following accounts: 1. Accounts Receivable 2. Income Tax Expense 3. Rent Revenue 4. Retained Earnings 5. Bank Loans 6. Unrealized Gain or Loss-OCI 7. Accumulated Other Comprehensive Income For each account, indicate (a) whether a $100

> Plant Inc. uses the following accounts in its trial balance: 1. Sales 2. Investment Loss 3. Dividends 4. Salaries and Wages Payable 5. Fair Value-OCI Investment 6. Cost of Goods Sold 7. Accumulated Other Comprehensive Income 8. Allowance for Doubtful Acc

> Extensible business reporting language (XBRL) is a financial reporting system that allows a company to "tag" each piece of financial information as it is input into the company's books of account. Information is tagged in the database according to a stan

> ABC Commerce Corp.'s weekly payroll totals $20,000 and is paid every two weeks. The final payroll for the year was for the week ended December 24. ABC pays full payroll during the holiday season. The next payroll was paid on January 7. To prepare for yea

> ERP software systems include bookkeeping systems as well as systems to monitor and manage human resource functions, quality control functions, and many other aspects of business. The software runs off a centralized database that services all company depa

> The following accounts appeared in the December 31 trial balance of the Majestic Theatre: Instructions (a) From the account balances above and the information that follows, prepare the annual adjusting entries necessary on December 31: 1. The equipment h

> Second-Hand Almost New Department Store Inc. is located near the shopping mall. At the end of the company's fiscal year on December 31, 2014, the following accounts appeared in two of its trial balances: Analysis reveals the following additional informa

> The trial balance of Slum Dog Fashion Centre Inc. contained the following accounts at November 30, the company's fiscal year end: Adjustment data: 1. Store supplies on hand totalled $3,100. 2. Depreciation is $40,000 on the store equipment and $30,000 on

> Noah's Foods has a fiscal year ending on September 30. Selected data from the September 30 work sheet follow: Instructions (a) Prepare a complete work sheet. (b) Prepare a statement of financial position. (In the next fiscal year, $ 10,000 of the mortgag

> Tiger Inc. has the following year-end account balances: Sales Revenue $928,900; Interest Income $17,500; Cost of Goods Sold $406,200; Operating Expenses $ 12 9,000; Income Tax Expense $55, I 00; and Dividends $15,900. Prepare the year-end closing entri

> Below are the completed financial statement columns of the work sheet for Canned Heat Limited: Instructions (a) Prepare a statement of comprehensive income, statement of changes in shareholders' equity, and statement of financial position. Canned Heat's

> A review of the ledger of Rolling Resort Inc. at December 31 produces the following data for the preparation of annual adjusting entries: 1. Salaries and Wages Payable, $0. There are eight salaried employees. Five employees receive a salary of $1,200 eac

> Yancy Advertising Agency Limited was founded by Tang Mia in January 2010. Presented below are both the adjusted and unadjusted trial balances as at December 31, 2014: Instructions (a) Joumalize the annual adjusting entries that were made. (b) Prepare a

> Transactions follow for Emily Cain, D.D.S., for the month of September: Instructions (a) Enter the transactions in appropriate ledger accounts, using the following account titles: Cash; Accounts Receivable; Prepaid Rent; Supplies; Equipment; Accumulated

> Samuels Corp. began operations on January 1, 2014. Its fiscal year end is December 31. Samuels has decided that prepaid costs are debited to an asset account when paid, and all revenues are credited to revenue when the cash is received. During 2014, the

> On September I, it rented storage space to a lessee (tenant) for six months for a total cash payment of $ 12,000 received in advance. Prepare two sets of journal entries for Store-it Here, with each set of journal entries recording the September 1 journa

> To prepare financial statements for the month of March 2014. Mona accumulated all the ledger balances from the business records and found the following: Mona reviewed the records and found the following errors: 1. Cash received from a customer on account

> The unadjusted trial balance of Imagine Ltd. at December 31,2014, is as follows: Additional information: 1. On November 1, 2014, Imagine received $10,200 rent from its lessee for a 12-month lease beginning on that date. This was credited to Rent Revenue.

> The unadjusted trial balance of Clancy Inc. at December 31, 2014, is as follows: Additional information: 1. Actual advertising costs amounted to$1,500 per month. The company has already paid for advertisements in Montezuma Magazine for the first quarter

> The December 31 trial balance of Red Roses Boutique Inc. follows: Instructions (a) Create T accounts and enter the balances shown. (b) Prepare adjusting entries for the following and post to the T accounts. Open additional T accounts as necessary. (The b

> Willis Corporation has Beginning Inventory $76,000; Purchases $486,000; Freight-in $16,200; Purchase Returns 55,800; Purchase Discounts $5,000; and Ending Inventory $69,500. Calculate Willis's cost of goods sold.

> The trial balance follows of the Masters Golf Club, Inc. as at December 31. The books are closed annually on December 31. Instructions (a) Enter the balances in ledger accounts. Allow five lines for each account. (b) From the trial balance and the inform

> The following information relates to Joachim Anderson, Realtor, at the close of the fiscal year ending December 31: 1. Joachim paid the local newspaper S335 for an advertisement to be run in January of the next year, and charged it to Advertising Expense

> Brook Corporation was founded by Ronnie Brook in January 2003. The adjusted and unadjusted trial balances as at December 31, 2014, follow: Instructions (a) Journalize the annual adjusting entries that were made. (b) Prepare an income statement and state

> The trial balance and the other information for consulting engineers Mustang Rovers Consulting Limited follow: Additional information: 1. Fees received in advance from clients were $6,900. 2. Services performed for clients that were not recorded by Decem

> LD Driving Range Inc. was opened on March 1 by Phil Woods. The following selected events and transactions occurred during March: Woods uses the following accounts for his company: Cash; Prepaid Insurance; Prepaid Rent; Land; Buildings; Equipment; Accoun

> The trial balance of Mis-Match Inc. on June 30, 2014, is as follows: The following transactions took place in July 2014: 1. Payments received from customers on account amounted to $ 1,320. 2. A computer printer was purchased on account for $500. 3. Ser

> On August I, Secret Sauce Technologies Inc. paid $ 12,600 in advance for two years' membership in a global technology association. Prepare two sets of journal entries for Secret Sauce, with each set of journal entries recording the August I journal entry

> Below is the April 30 trial balance of Blues Around the Corner Corporation: An examination of the ledger shows these errors: 1. Salaries and Wages Payable include $300 of salaries and wages accrued in April, which are related to employee services provid

> The April 30, 2014 trial balance below of Many Happy Returns Company, a sole proprietorship, does not balance. Your review of the ledger reveals the following: 1. Each account has a normal balance. 2. The debit footings (totals) in Prepaid Insurance, Acc

> Bill Rosenberg recently opened his legal practice. During the first month of operations of his business (a sole proprietorship), the following events and transactions occurred: Instructions Prepare a correct trial balance. April 2 Invested $15,000 c

> Jerry Holiday is the maintenance supervisor for Ray's Insurance Co. and has recently purchased a riding lawn mower and accessories that will be used in caring for the grounds around corporate headquarters. He sent the following information to the account

> Financial information follows for four different companies: Instructions Determine the missing amounts for (a) to (i). Show all calculations. Pamela's Scheibli Berthault Kaiserman Cosmetics Inc. $98,000 Grocery Inc. Supply Ltd. $120,000 9,000 Wholesa

> Financial information follows for two different companies: Instructions Calculate the missing amounts. Bessembinder Ltd. Doberman Inc. $192,000 (a) 162,000 55,500 (b) 35,000 (c) Sales Revenue (d) $16,000 65,000 (e) 37,000 23,000 14,000 Sales Returns

> Selected accounts for Winslow Inc. as at December 31, 2014, are as follows: Instructions Prepare closing entries for Winslow Inc. on December 31, 2014. Inventory FV-NI Investments FV-OCI Investments Retained Earnings Dividends Accumulated Other Comp

> Information follows for Shakira Corporation for the month of January: Instructions Prepare the necessary closing entries. $228,000 62,000 3,200 33,000 9,000 12,000 20,000 $ 61,000 16,000 1,200 7,000 1,000 364,000 14,000 Cost of Goods Sold Salary and

> The adjusted trial balance of Serious Limited shows the following sales data at the end of its fiscal year on October 31, 2014: Sales $1,250,000; Freight-out $18,000; Sales Returns and Allowances $4,000; and Sales Discounts $15,000. Instructions (a) Pr

> The trial balance for Hanna Resort Limited on August 31 is as follows: Additional information: 1. The balance in Prepaid Rent includes payment of the final month's rent and rent for August 2014. 2. An inventory count on August 31 shows $650 of supplies

> Selected accounts of Bang Bang Boom Fireworks Limited follow: Inst ructions From an analysis of the T accounts, reconstruct (a) the August transaction entries, and (b) the adjusting entries that were recorded on August 3 I. Supplies Accounts Receiva

> Using the data in BE3-6, prepare two sets of journal entries for No Claims Insurance, with each set of journal entries recording the July I, 2014 entry and the December 31, 2014 adjusting entry. No Claims uses an Unearned Revenue account and an Insurance

> Alberto Rock is the new owner of Summer Computer Services Inc. At the end of August 2014, his first month of ownership, Alberto is trying to prepare monthly financial statements. Information follows for transactions that occurred in August: 1. At August