Question: D Ltd. and H Corporation are both

> The income statements for Paste Company and its subsidiaries, Waste Company, and Baste Company were prepared for the year ended December 31, Year 9, and are shown below: Additional Information • Paste purchased its 80% interest in Was

> On January 1, Year 1, Spike Ltd. purchased land from outsiders for $200,000. On December 31, Year 1, Pike Co. acquired all of the common shares of Spike. The fair value of Spike's land on this date was $230,000. On December 31, Year 2, Spike sold its lan

> The consolidated income statement of a parent and its 90%-owned subsidiary appears below. It was prepared by an accounting student before reading this chapter. The following items were overlooked when the statement was prepared: • The

> Fast Ltd. is a public company that prepares its consolidated financial statements in accordance with IFRS. Its net income in Year 2 was $200,000, and shareholders' equity at December 31, Year 2, was $1,800,000. Mr. Lombardi, the major shareholder, has ma

> IAS 16 Property, Plant, and Equipment requires assets to be initially measured at cost. Subsequently, assets may be carried at cost less accumulated depreciation, or they can be periodically revalued upward to current value and carried at the revalued am

> Part A On January 1, Year 5, Anderson Corporation paid $650,000 for 20,000 (20%) of the outstanding shares of Carter Inc. The investment was considered to be one of significant influence. In Year 5, Carter reported profit of $95,000; in Year 6, its prof

> List the six steps of the case framework.

> On January 1, Year 7, the Vine Company purchased 60,000 of the 80,000 ordinary shares of the Devine Company for $80 per share. On that date, Devine had ordinary shares of $3,440,000, and retained earnings of $2,170,000. When acquired, Devine had inventor

> On January 2, Year 5, Road Ltd. acquired 70% of the outstanding voting shares of Runner Ltd. The acquisition differential of $520,000 on that date was allocated in the following manner: The Year 9 income statements for the two companies were as follows

> The partial trial balances of P Co. and S Co. at December 31, Year 10, were as follows: Additional Information • The investment in the shares of S Co. (a 90% interest) was acquired January 2, Year 6, for $90,000. At that time, the sha

> The income statements of Evans Company and Falcon Company for the current year are shown below: The following amounts were taken from the statement of changes in eq_uity for the two companies: Evans owns 80% of the outstanding common shares of Falcon

> On January 1, Year 2, PAT Ltd. acquired 90% of SAT Inc. when SAT's retained earnings were $1,000,000. There was no acquisition differential. PAT accounts for its investment under the cost method. SAT sells inventory to PAT on a regular basis at a markup

> On July 1, Year 5, Big purchased 80% of the outstanding common shares of Little for $122,080. On that date, Little's equipment had a fair value that was $21,600 less than carrying amount. The equipment had accumulated depreciation of $20,000 and an estim

> On January 1, Year 4, Cyrus Inc. paid $914,000 in cash to acquire all of the ordinary shares of Fazli Company. On that date, Fazli's retained earnings were $200,000. All of Fazli's assets and liabilities had fair values equal to carrying amounts except f

> On January 1, Year 4, Grant Corporation bought 8,000 (80%) of the outstanding common shares of Lee Company for $70,000 cash. Lee's shares were trading for $7 per share on the date of acquisition. On that date, Lee had $25,000 of common shares outstanding

> Explain if and when it may be appropriate for an accountant to prepare financial statements for external users that are not in accordance with GAAP.

> Briefly explain the concept of fund accounting.

> Peach Ltd. acquired 80% of the common shares of Cherry Company on January 1, Year 4. On that date, Cherry had common shares of $710,000 and retained earnings of $410,000. The following is a summary of the changes in Peach's investment account from Januar

> Pen Ltd. acquired an 85% interest in Silk Corp. on December 31, Year 1, for $646,000. On that date, Silk had common shares of $500,000 and retained earnings of $100,000. The imputed acquisition differential was allocated $70,000 to inventory, with the ba

> Summarized balance sheets of Comer Company and its subsidiary Brook Corporation on December 31, Year 4, were as follows: On the date that Comer acquired its interest in Brook, there was no acquisition differential and the carrying amounts of Brook's ne

> On January 1, Year 2, Gros Corporation acquired 70% of the outstanding common shares of Petite Company for a total cost of $84,000. On that date, Petite had $35,000 of common shares and $25,000 of retained earnings. The carrying amounts of each of Petite

> Large Ltd. purchased 70% of Small Company on January 1, Year 6, for $770,000, when the statement of financial position for Small showed common shares of $560,000 and retained earnings of $260,000. On that date, the inventory of Small was undervalued by $

> On January 2, Year 4, Brady Ltd. purchased 80% of the outstanding shares of Partridge Ltd. for $4,320,000. Partridge's statement of financial position and the fair values of its identifiable assets and liabilities for that date were as follows: The pat

> Balance sheet and income statement data for two affiliated companies for the current year appear on the next page. Additional Information • Albeniz acquired an 80% interest in Bach on January 1, Year 3, for $272,000. On that date, the f

> The following financial statements were prepared on December 31, Year 6. Additional Information Pearl purchased 80% of the outstanding voting shares of Silver for $3,300,000 on July 1, Year 2, at which time Silver's retained earnings were $445,000, an

> Foxx Corp. purchased 75% of the outstanding shares of Rabb Ltd. on January 1, Year 3, at a cost of $117,000. Non-controlling interest was valued at $35,000 by an independent business valuator at the date of acquisition. On that date, Rabb had common shar

> On July 1, Year 4, Aaron Co. purchased 80% of the voting shares of Bondi Ltd. for $543,840. The statement of financial position of Bondi on that date follows. The accounts receivable of Bondi were collected in October Year 4, and the inventory was comple

> When writing the final case report, how much attention, if any, should be given to discussing alternatives?

> On December 31, Year 2, Palm Inc. purchased 80% of the outstanding ordinary shares of Storm Company for $350,000. At that date, Storm had ordinary shares of $240,000 and retained earnings of $64,000. In negotiating the purchase price, it was agreed that

> The following information is available for the assets of Saman Ltd. at December 31, Year 5: Required: (The following 3 parts are independent situations.) Part A. Assume that the total fair value for all of Saman's assets as a group is $1,860. (a) Cal

> The balance sheets of Percy Corp. and Saltz Ltd. on December 31, Year 10, are shown below: The fair values of the identifiable net assets of Saltz Ltd. on December 31, Year 10, were as follows: In addition to the assets identified above, Saltz owned

> On January 1, Year 5, Black Corp. purchased 90% of the common shares of Whyte Inc. On this date, the following differences were observed with regard to specific net assets of Whyte: The non-consolidated and consolidated balance sheets of Black Corp. on

> On December 31, Year 1, P Company purchased 80% of the outstanding shares of S Company for $7,900 cash. The statements of financial position of the two companies immediately after the acq,uisition transaction appear below. Required: (a) Calculate conso

> The balance sheets of E Ltd. and J Ltd. on December 30, Year 6, were as follows: The carrying amounts of J Ltd.'s net assets were equal to fair values on this date except for the following: E Ltd. was identified as the acquirer in the combination.

> On December 31, Year 2, Blue purchased a percentage of the outstanding ordinary shares of Joy. On this date all but two categories of Joy's identifiable assets and liabilities had fair values equal to carrying amounts. Following are the statements of fin

> The balance sheets of Hill Corp. and McGraw Ltd. on December 31, Year 4, were as follows: On December 31, Year 4, Hill purchased 80% of the common shares of McGraw for $288,000 plus a commitment to pay an additional $100,000 in two years if sales grow

> The balance sheets of Petron Co. and See view Co. on June 29, Year 2, were as follows: On June 30, Year 2, Petron Co. purchased 90% of the outstanding shares of See view Co. for $52,200 cash. Legal fees involved with the acquisition were an additional

> The balance sheets of Par Ltd. and Sub Ltd. on December 31, Year 1, are as follows: The fair values of the identifiable net assets of Sub on December 31, Year 1, are as follows: Assume that the following took place on January 1, Year 2. (Par acquired

> How will the investment in a private company be reported under IFRS 9, and how does this differ from lAS 39?

> Calof Inc. acquires 100% of the common shares of Xiyu Company on January 1, Year 4, for the following consideration: • $275,000 market value of 5,000 shares of its common shares. • A contingent payment of $40,000 cash on January 1, Year 5 if Xiyu gener

> The balance sheets of Bates Co. and Casey Co. on June 30, Year 2 just before the transaction described below, were as follows: On June 30, Year 2, Bates Co. purchased 2,400 (80%) of Casey Co.'s common shares for $48,000 in cash. On that date, Casey's

> The July 31, Year 3, balance sheets of two companies that are parties to a business combination are as follows: In addition to the assets identified above, Ravinder Corp. attributed a value of $100,000 to a major research project that Robin Inc. was wo

> The condensed financial statements for OIL Inc. and ERS Company for the year ended December 31, Year 5, follow: On December 31, Year 5, after the above figures were prepared, OIL issued $252,000 in debt and 12,000 new shares to the owners of ERS for 90

> On January 1, Year 5, FLA Company issued 6,300 ordinary shares to purchase 9,000 ordinary shares of MES Company. Prior to the acquisition, FLA had 180,000 and MES had 10,000 ordinary shares outstanding, which were trading at $5 and $3 per share, respecti

> The balance sheets of Prima Ltd. and Donna Corp. on December 31, Year 5, are shown below: The fair values of the identifiable net assets of Donna Corp. on this date are as follows: In addition to the assets identified above, Donna owned a significant

> The statements of financial position of Pork Co. and Barrel Ltd. on December 31, Year 2, are shown next: Pork acquired 70% of the outstanding shares of Barrel on December 30, Year 2, for $329,000. Direct costs of the acquisition amounted to $12,000. Th

> The July 31, Year 3, balance sheets of two companies that are parties to a business combination are as follows: In addition to the property, plant, and equipment identified above, Red Corp. attributed a value of $100,000 to Sax's assembled workforce. T

> The balance sheet of Drake Enterprises as at December 31, Year 5, is as follows: Effective January 1, Year 6, Drake proposes to issue 82,500 common shares (currently trading at $20 per share) for all of the common shares of Hanson Industries. In determ

> How should a private company that has opted to follow ASPE report an investment in an associate?

> The shareholders of Prong Company and Hom Company agreed to a statutory amalgamation under which a share exchange took place. On September 1, Year 5, Prong Company issued 60,000 ordinary shares for all of the ordinary shares of Hom Company, after which H

> The statement of financial position of Bagley Incorporated as at July 31, Year 4, is as follows: On August 1, Year 4, the directors of Bagley considered a takeover offer from Davis Inc., whereby the corporation would sell all of its assets and liabilit

> Three companies, A, L, and M, whose December 31, Year 5, balance sheets appear below, have agreed to combine as at January 1, Year 6. Each of the companies has a very small proportion of an intensely competitive market dominated by four much larger compa

> G Company is considering the takeover of K Company whereby it will issue 7,400 common shares for all of the outstanding shares of K Company. K Company will become a wholly owned subsidiary of G Company. Prior to the acquisition, G Company had 13,000 shar

> The trial balances for Walla Corporation and Au Inc. at December 31, Year 4, just before the transaction described below, were as follows: On December 31, Year 4, Walla purchased all of the outstanding shares of Au Inc. by issuing 20,000 common shares

> The balance sheets of A Ltd. and B Ltd. on December 30, Year 6, are as follows: On December 31, Year 6, A issued 150 common shares for all 60 outstanding common shares of B. The fair value of each of B's common shares was $40 on this date. Required:

> Z Ltd. is a public company with factories and distribution centers located throughout Canada. It has 100,000 common shares outstanding. In past years, it has reported high earnings, but in Year 5, its earnings declined substantially in part due to a loss

> The financial statements for CAP Inc. and SAP Company for the year ended December 31, Year 5, follow: On December 31, Year 5, after the above figures were prepared, CAP issued $314,000 in debt and 12,400 new shares to the owners of SAP to purchase all

> Refer to Problem 11. All of the facts and data are the same except that in the proposed takeover, Myers Company will purchase all of the outstanding common shares of Norris Inc. Required: (a) Prepare the journal entries of Myers for each of the two pro

> Myers Company Ltd. was formed 10 years ago by the issuance of 34,000 common shares to three shareholders. Four years later, the company went public and issued an additional 30,000 common shares. The management of Myers is considering a takeover in which

> Which of the reporting methods described in this chapter would typically report the highest current ratio? Briefly explain.

> The following are summarized statements of financial position of three companies as at December 31, Year3: The fair values of the identifiable assets and liabilities of the three companies as at December 31, Year 3, were as follows: On January 2, Yea

> The balance sheets of Abdul Co. and Lana Co. on June 30, Year 2, just before the transaction described below, were as follows: On June 30, Year 2, Abdul Co. purchased all of Lana Co. assets and assumed all of Lana Co. liabilities for $58,000 in cash.

> All facts are the same as in Problem 8 except that COX applies ASPE. Follow the same instructions as those given in the Required: section of Problem 8. Data from Problem 8: COX Limited is a multinational telecommunication company owned by a Canadian b

> COX Limited is a multinational telecommunication company owned by a Canadian businesswoman. It has numerous long-term investments in a wide variety of equity instruments. Some investments have to be measured at fair value at each reporting date. In turn,

> Right Company purchased 25,000 common shares (25%) of ON Inc. on January 1, Year 11, for $250,000. Right uses the eq_uity method to report its investment in ON because it has significant influence in the operating and investing decisions made by ON. Righ

> On January 1, Year 2, Grow Corp. paid $200,000 to purchase 20,000 common shares of UP Inc., which represented an 8% interest in UP. On December 27, Year 2, UP declared and paid a dividend of $0.50 per common share. During Year 2, UP reported net income o

> Her Company purchased 22,000 common shares (20%) of Him Inc. on January 1, Year 4, for $374,000. Additional information on Him for the three years ending December 31, Year 6, is as follows: On December 31, Year 6, Her sold its investment in Him for $50

> Pender Corp. paid $285,000 for a 30% interest in Saltspring Limited on January 1, Year 6. During Year 6, Saltspring paid dividends of $110,000 and reported profit as follows: Pender's profit for Year 6 consisted of $990,000 in sales, expenses of $110,0

> On January 1, Year 5, Blake Corporation purchased 25% of the outstanding common shares of Stergis Limited for $1,850,000. The following relates to Stergis since the acquisition date: Required: (a) Assume that Blake is a public company and the number of

> Baskin purchased 20,000 common shares (20%) of Robbin on January 1, Year 5, for $275,000 and classified the investment as FVTPL. Robbin reported net income of $85,000 in Year 5 and $90,000 in Year 6, and paid dividends of $40,000 in each year. Robbin's s

> Briefly describe the trend in reporting of investments in equity securities over the past 12 years.

> Harmandeep Ltd. is a private company in the pharmaceutical industry. It has been preparing its financial statements in accordance with ASPE. Since it has plans to go public in the next three to five years, it is considering changing to IFRS for the curre

> The summarized trial balances of Phase Limited and Step Limited as of December 31, Year 5, are as follows (amounts in thousands): Phase had acquired the investment in Step in three stages: The January 1, Year 2, acquisition enabled Phase to elect 3 m

> On December 31, Year 6, Ultra Software Limited purchased 70,000 common shares (70%) of a major competitor, Personal Program Corporation (PPC), at $30 per share. Several shareholders who were unwilling to sell at that time owned the remaining common share

> On January 1, Year 8, Panet Company acquired 40,000 common shares of Saffer Corporation, a public company, for $500,000. This purchase represented 8% of the outstanding shares of Saffer. It was the intention of Panet to acquire more shares in the future

> On January 1, Year 4, a Canadian firm, Canuck Enterprises Ltd., borrowed US$208,000 from a bank in Seattle, Washington. Interest of 7.5% per annum is to be paid on December 31 of each year during the four-year term of the loan. Principal is to be repaid

> The Valleytown Senior's Residential Home (Valleytown) engages in palliative care, education, and fundraising programs. The costs of each program include the costs of personnel, premises, and other expenses that are directly related to providing the progr

> The William Robertson Society is a charitable organization funded by government grants and private donations. It prepares its annual financial statements using the restricted fund method in accordance with the CPA Canada Handbook, and uses both an operat

> All facts about this NFPO are identical to those described in Problem 11, except that the deferral method of recording contributions is used for accounting and for external financial reporting. Fund accounting is not used. The Year 6 transactions are als

> The Far North Centre (the Centre) is an anti-poverty organization funded by contributions from governments and the general public. For a number of years, it has been run by a small group of permanent employees with the help of part-timers and dedicated v

> All facts about this NFPO are identical to those described in Problem 9, except that the Centre wants to use the restricted fund method of accounting for contributions. The Centre will use two separate funds--operating and capital. The capital fund will

> In Year 1, XZY Co. expensed all development costs as incurred. How would the current ratio, debt-to-equity ratio and return on equity change if XZY Co. had capitalized the development costs?

> On December 31, Year 2, PAT Inc. of Halifax acquired 90% of the voting shares of Gioco Limited of Italy, for 690,000 euros (€). On the acquisition date, the fair values equaled the carrying amounts for all of Gioco's identifiable assets

> The Ford Historical Society is an NFPO funded by government grants and private donations. It uses both an operating fund and a capital fund. The capital fund accounts for moneys received and restricted for major capital asset acquisitions. The operating

> The Brown Training Centre is a charitable organization dedicated to providing computer training to unemployed people. Individuals must apply to the center and indicate why they would like to take the three-month training session. If their application is

> All facts about this NFPO are identical to those described in Problem 5, except for the following: 1. The Society will use the restricted fund method of accounting for contributions. 2. The Society will use three separate funds for reporting purposes--

> The Fara Littlebear Society is an NFPO funded by government grants and private donations. It was established in Year 5 by the friends of Fara Littlebear to encourage and promote the work of Native Canadian artists. Fara achieved international recognition

> Protect Purple Plants (PPP) uses the deferral method of accounting for contributions and has no separate fund for restricted contributions. On January 1, Year 6, PPP received its first restricted cash contribution-$120,000 for the purchase and maintenanc

> All facts about this NFPO are identical to those described in Problem 2, except that the association wants to use the deferral method of accounting for contributions. The center will continue to use the three separate funds. Required: Prepare a stateme

> The Perch Falls Minor Hockey Association was established in Perch Falls in January Year 5. Its mandate is to promote recreational hockey in the small community of Perch Falls. With the support of the provincial government, local business people, and many

> The OPI Care Centre is an NFPO funded by government grants and private donations. It prepares its annual financial statements using the deferral method of accounting for contributions, and it uses only the operations fund to account for all activities. T

> You, CPA, are employed at Beaulieu & Beauregard, Chartered Professional Accountants. On November 20, Year 3, Dominic Jones, a partner in your firm, sends you the following email: Our firm has been reappointed auditors of Floral Impressions Ltd. (FIL)

> Identify the financial statement ratios typically used to assess profitability, liquidity and solvency, respectively.

> Foreign Infants Adoption Inc. (FIA) is a consulting company wholly owned by Roger Tremblay, a wealthy, recently retired lawyer. FIA helps Canadian families adopt infants from other countries. Typically, these infants have been abandoned or have lost thei

> Mega Communications Inc. (MCI) is a Canadian-owned public company operating throughout North America. Its core business is communications media, including newspapers, radio, television, and cable. The company's year-end is December 31. You, a CPA, have r

> RAD Communications Ltd. (RAD), a Canadian public company, recently purchased the shares of TOP Systems Inc. (TOP), a Canadian-controlled private corporation. Both companies are in the communications industry and own television, radio, and magazine and ne

> Vulcan Manufacturing Limited (VML) is a Canadian-based multinational plastics firm, with subsidiaries in several foreign countries and worldwide consolidated total assets of $500 million. VML's shares are listed on a Canadian stock exchange. VML is attra

> Long Life Enterprises was a well-€stablished Toronto-based company engaged in the importation and wholesale marketing of specialty grocery items originating in various countries of the western Pacific Rim. They had recently also entered the high-risk bus

> The Rider Corporation operates throughout Canada buying and selling widgets. In hopes of expanding into more profitable markets, the company recently decided to open a small subsidiary in California. On October 1, Year 2, Rider invested CDN$1,000,000 in

> You, CPA, have been working for Plener and Partners, Chartered Professional Accountants (P&P), a mid-size CPA firm, for three years. You have been assigned a new project for a long-term client of your firm, Oxford Developments Inc. (ODI). Information