Fong Corp. reported various transactions in 20X2: 1. Equipment with an original cost of $32,500 and accumulated depreciation of $26,000 was deemed unusable and was sold for $250 scrap value. 2. A new machine was acquired for $37,850. The invoice was marked 2/10, n/30, but Fong did not pay in time to take advantage of the 2% discount for early payment and thus paid the gross amount of $37,850. Wiring was improved to accommodate the needs of the new machinery at a cost of $250. Related software to install in the machine required for operation was purchased for $1,500. Installation of the new machinery cost $1,250. There were no component parts with different useful lives, so the machine was recorded on one account. 3. Regular machine maintenance was carried out for $11,000. 4. A major overhaul was done on heavy machinery for a cost of $37,500. This overhaul is expected to be completed every 5 years. 5. The building roof was replaced during the period at a cost of $22,400 to improve the insulation in the building and save on heating costs. The old roof had been recorded as a separate component. It had an original cost of $10,200 and was three-quarters depreciated. 6. Two machines were acquired for a lump-sum amount of $26,900. One machine had an appraised value of $20,000 and the other, $10,000. 7. Land and building were acquired from a member of the board of directors in exchange for 325,000 of the company’s own common shares. The land was appraised at $37,500 and the building, $200,000. The facility will be used for long-term storage. The market value of common shares has been around $1.25 per share this year, with weekly highs and lows ranging from $1.80 to $0.50, respectively. 8. The company spent $315,000 in a research lab program this year. It was successful in developing three new commercial projects, which represented $122,000 of the expenditures budget. Legal fees associated with the three successful projects amount to $27,500. 9. Fong paved its factory parking lot, previously a dirt lot, at a cost of $80,050. Required: Prepare journal entries to record the transactions listed above. State any assumptions made.
> Boat Ltd. has a major asset that has just been purchased and has been segregated into the following significant components made up of spare parts and major inspections. Component D consists of a group of insignificant components lumped together with an a
> On 1 March 20X9 Tunio Corp. purchased a copper mine on a land site for $3,500,000, and $1 million of the purchase price related to the land. At the time of purchase, an expert estimated 5 million tonnes of copper could be extracted. Tunio invested $500,0
> Gaspe Mining Corp. bought mineral-bearing land for $600,000. Engineers and geologists estimate that the site will yield 400,000 kilograms of economically removable ore. The land will have a net recoverable value of $80,000 after the ore is removed; this
> The following items may represent specific line item requirements on the statement of cash flows. Required: Indicate whether each item is required by IFRS, by ASPE, or by both in preparing a cash flow statement.
> Beans Company purchased a special machine at a cost of $81,000 plus provincial sales tax of $6,480 (non-recoverable). Component parts are not significant and need not be recognized and depreciated separately. The machine is expected to have a residual va
> Bellair Corp. a tool-making company, acquired equipment for $4M on 1 January 20X7. The equipment had an estimated useful life of eight years at acquisition and the residual value was estimated at $440,000. Bellair Corp. estimated that the newly acquired
> Nancy O’Callaghan, the president of Clean Enterprises, is proposing the following amortization policy for property, plant, and equipment: I want to keep things simple and minimize any deferred tax liabilities. I propose we use the CCA rates for declining
> Tillie Corp. had the following accounts relating to property, plant, and equipment on its 31 December 20X2 balance sheet: Land $384,000 Buildings 832,000 Equipment 1,024,000 Leasehold improvements 512,000 The following information was provided relating t
> 1. Cost of an oil change on the company’s truck. 2. Cost of major brake replacement in a large piece of construction equipment that is expected to be completed every two years. 3. Lawyers’ fees associated with a successful patent application. 4. Lawyers’
> GTT Company had the following transactions in 20X4: 1. On 1 January 20X4, a new machine was purchased at a list price of $22,500. The company did not take advantage of a 2% cash discount available upon full payment of the invoice within 30 days. Shipping
> Starling Ltd. bought a building for $1,060,000. Before using the building, the following expenditures were made: Repair and renovation of building $105,000 Construction of new paved driveway 27,500 Upgraded landscaping 4,200 Wiring 16,000 Deposits with u
> Kettle Creek Inc. has various transactions in 20X6: 1. Plant maintenance was done at a cost of $70,400. 2. The entire manufacturing facility was repainted at a cost of $88,000. 3. The roof on the manufacturing facility was replaced at a cost of $132,400.
> IMG owns a number parcels of land. The land is held by IMG for future development purposes (no intention to sell). IMG accounts for its land using the revaluation model under IFRS. The below graph summarizes the fair-value changes for the land owned for
> On 13 February 20X5, Reekwa Company purchased an office tower for $30 million. The office is a mixed-use property: it is owner-occupied and includes rental units. The fair value of the building on 31 December 20X6 is $30.4 million and $26.9 million on 31
> The following independent items relate to classification on the statement of cash flows in accordance with IFRS. True / False? 1. Cash paid for income tax may be included in any section of the statement of cash flows, based on management discretion. 2. C
> Indicate whether each statement is true or false. If the statement is false, provide a brief explanation of why it is false. 1. The U.S. SEC will accept financial statements from U.S.-listed foreign companies in their home-country accounting standards. 2
> On 28 April 20X2, Peele Realty purchased land and building for $4.65 million and $2.79 million, respectively. The company uses the revaluation model for the land and building. Assume that the land is revalued annually. The building is revalued every two
> Real Estate Inc. (REI) has made the decision to use the revaluation model for its land. This is the only tract of land in this class. REI has a 31 December year-end. The following are independent situations. 1. Case A REI purchased a tract of land in 20X
> Scarlett Inc. purchased a tract of land with an office building and equipment included. The cash purchase price was $900,000 plus $50,000 in fees connected with the purchase. The following data were collected concerning the property: Required: Give the e
> Pipa Incorporated entered into an arrangement with Gianardo Ltd. to exchange equipment and cash. Pipa gave up a piece of equipment that was no longer being used by the business, as well as $11,500 in cash. The equipment had a net book value of $38,000 (c
> Ricardo Heavy Hauling has some earth-moving equipment that cost $432,000; accumulated amortization is $288,000. Ricardo traded equipment with another construction company. The fair value of Ricardo’s old equipment is estimated to be $225,000, and the fai
> 1. GYT Co. exchanges a machine that cost $4,000 and has accumulated amortization of $2,560 for a similar machine. GYT also receives $25 in the exchange. The fair market value of the old asset is $750. The fair market value of the new asset is $725. There
> Refer to the facts in A9-8. Required: For each of the above items, using ASPE, give the name of the account to which the expenditure should be charged. That is, which account should be debited? Be specific. Indicate the items that are different as compar
> Parks Inc. had recently completed construction of a new manufacturing facility. Prior to the approval of the building permits, the company operated a parking lot on the land. The lot had revenues, net of costs, of $130,000. Construction will take place o
> On 27 February 20X7, JJJ Inc. upgraded its windows and doors in order to make the building green-certified. The upgrades have a 20-year useful life. JJJ will receive a 30% rebate on total cost if it can demonstrate reduced utilities draw by 50% over a 5-
> Gysbers Company has embarked on a 2-year pollution-control program that will require the purchase of 2 smokestack scrubbers costing a total of $600,000. One scrubber will be bought in 20X5 and one in 20X6. These scrubbers qualify for an investment tax cr
> Information related to various financial statement items is provided for three cases: Case A Interest expense was $26,400. Interest payable had an opening balance of $11,200 and a closing balance of $7,300. The discount on bonds payable was amortized by
> On 1 July 20X4, Theriout Corp. acquired a manufacturing plant in Cape Breton for $1,750,000. The plant, employing 50 workers, began operation immediately and is expected to be in operation for 16 years with no residual value. In connection with the purch
> On 1 January 20X2, Rental Inc. purchased an apartment building. Apartments in this area are in high demand, and a wait list exists for potential tenants. The following costs were incurred for the purchase: cash $8,000,000; legal fees $1,200,000; and repa
> Real Estate Company (REC) has a number of apartment buildings that it holds for rent. In addition, it is holding land for capital appreciation. REC will either sell the land if the price is right or use it to build additional rental property. This land h
> Macmulk purchased a new facility to run its operations. The total cost of the space was $1,719,000. The facility had the following significant components: Land, building, electrical, roof, interior fixtures, HVAC. The total fair value of the land was est
> Quispamsis Inc. (QI) recorded the following asset disposals during the year: 1. A computer system with an original cost of $47,600, 80% depreciated, was judged obsolete during the period and scrapped. 2. Automotive equipment, a large truck with an origin
> Machinery that cost $192,000 on 1 January 20X1 was sold for $72,000 on 30 June 20X6. It was being depreciated over a 10-year life by the straight-line method, assuming its residual value would be $12,000. A building that cost $1,700,000, residual value $
> During 20X4, the Pencil Corp. entered into negotiations to buy Stilo Company, finally agreeing on a final cash purchase price of $534,000. Pencil will acquire all assets and liabilities of Stilo effective 31 December 20X4, except for the existing cash ba
> Purple Corp. purchased all of the listed assets and liabilities of Sudden Corp. for $1,600,000. The following assets and liabilities were purchased: Required: 1. What is the appropriate amount that would be recorded for goodwill? 2. Prepare the journal e
> Cocochips is a manufacturer of vegan snacks and treats, including a unique brand of granola and a distinct brand of coconut-flavoured chips and snacks. The company began its operations in 20X8, and incurred the following amounts: 1. $4,500 to a consultin
> Transactions during 20X5, the first year of the newly organized Nancy’s Discount Foods Corp. (NDFC), included the following: 2 Jan. Paid $12,000 lawyer’s fees and other, related costs to register the name and trademark of the company in various jurisdict
> Selected accounts from the SFP of TMI Ltd. at 31 December 20X4 and 20X5 are presented below. Required: Calculate the change in cash for the year.
> Yucatan Tours Corp. (YTC) established a new division in 20X8. The mandate of this new division is to establish a presence in the growing luxury eco-tourism travel business. This division will offer, through a sophisticated website, online quotes and book
> Images Ltd. is a new company whose only operation is the development of a new kind of video camera that will link to home computers and easily allow image transfer. The camera will come with a program to allow editing, so customers can edit their home mo
> Impact Systems Inc. has recently designed and developed its own payroll system intended for internal use. If there is a market, the company may also decide to sell it to outside companies. Work on this project was completed over an 18-month period. The f
> Victor Medical Solutions Ltd. has a major scientific program under way, financed through an issuance of common shares. The program has an expected budget in excess of $55 million, and $17.9 million has been spent to date. The program targets technology t
> AGT Ltd. has identified several assets: 1. Airplane 2. Wind farm 3. Manufacturing facility 4. Cruise ship 5. Hydro lines Required: 1. For each asset, identify the possible significant components. 2. AGT has purchased an asset for $170,000; the asset has
> Discoveries Ltd. (DL) is involved in research and development related to new processes to make manufacturing more efficient and environmentally friendly. The company has been working on a number of new projects for the past three years. On 31 October 20X
> Airfield Answers Corp. had several expenditures in 20X5: 1. Testing new plastic prior to use in commercial production 2. Redesign of prototype to improve performance 3. Testing electronic instrument components during their production 4. Study of the poss
> Acehil owns and manages a consortium of apartments in the Edmonton Metropolitan Region. As part of a recent inspection by the fire department, Acehil has been mandated to upgrade the fire monitoring and sprinkler systems in 6 of their older buildings. In
> CC Recyclo Inc (CCRI) is a recycling manufacturer that melts down used plastic and repurposes them into new materials. CCRI has a factory (and land) located just outside of London, Ontario. On 5 January 20X1, new environmental legislation was passed requ
> Bruce Networks Ltd. (BNL) has a 10-year renewable lease contract with Open Ltd. (OL), the owner of a tall building in a major city. BNL is permitted to erect a transmission tower on the top of the building. BNL’s contract with OL requires BNL to dismantl
> 1. ASPE and IFRS both require note disclosure for related party transactions. 2. Future accounting policy changes are required note disclosure in IFRS only. 3. Both ASPE and IFRS require accrual of lawsuits that there is a 70% probability they will lose.
> Markus Company received two donations during the year. A long-term client donated a piece of artwork from his personal art collection to display in the company’s entranceway as a thank-you for all of the years the company had completed work for him immed
> Casa Corp. needed a warehouse and maintenance facility on its company site, which already housed three manufacturing/storage facilities and the company head office. The lowest outside bid for the facility was $3,200,000. Casa believed that it could succe
> Wonder Mountain Company operates a snow sports resort for skiers and snowboarders. The company has recently decided to replace an existing old chair lift with a new high-speed quad chair and expand the hill to allow for increased capacity. The chair lift
> Ted Khan owns Khan Development Inc. During 20X7, the following transactions took place: 1. Transaction A Khan acquired a parcel of land for $10,500,000 (plus 3% in real estate commissions). On closing, Khan paid $44,500 in legal fees as well as $22,400 i
> For each of the following assets, assign the asset to a category of long-lived asset and identify the available choices for valuation models (IFRS): 1. Rental apartment buildings 2. Manufacturing facility 3. Vacant land held for eventual sale 4. Vines in
> Yarn Textiles manufactures laces used in shoes, boots and sporting goods. The cost to manufacture shoe laces is $0.75 in direct materials, $0.60 in direct labour. Under normal capacity, the company estimates that total overhead is $0.58 per unit, based o
> Nadullo Electronics manufactures, among other things, motherboards used to make cell phones. Direct materials and labour are $5.05/unit and $13.86/unit, respectively. Manufacturing overhead is estimated to be $1,766,000 based on normal production of 550,
> Inventory of $45,000 was purchased and paid for by a company. Taxes paid on the merchandise included GST of $3,150 and PST of $4,050. These amounts were separately tracked. Case B A manufacturing company allocates its fixed manufacturing overhead to unit
> Inventory was received and was recorded at the invoice price of $56,000. The goods had not been paid for at year-end. Consequently, a 2% discount for early payment was not taken. Case B In the lower-of-cost-or-market valuation at year-end, replacement co
> Each of the following events occurred after year-end and before the financial statements were issued: Required: Identify whether each event is an adjusting or a non-adjusting subsequent event.
> Majestic Stores Inc., a large Canadian publicly traded electronics dealer, buys large quantities of a flat-screen LCD television model that costs $500 and sells for $990. The supplier provides a rebate of $25 per set if Majestic buys 200 or more sets dur
> Organizer Ltd. (Organizer) sells home organization solutions to customers. They have a wide range of products and three locations in the Greater Vancouver area. The company currently uses the retail inventory method to value their inventory at the end of
> Jules Company sells a variety of beauty products online. Their products fall into three broad categories: nail care, makeup, and hair care. The company has over 250 different products in its database. The costs to acquire the inventory are all easily tra
> A farm buys beef cattle for $40,000 at the end of 20X7. The cost to feed, shelter, and grow the cattle was $12,700 and 6,300 in 20X8 and 20X9, respectively. On 2 May 20X9, the cattle were slaughtered at a cost of $8,200. The fair value of the carcasses i
> Gerard Ltd. reported inventory of $689,600 and accounts payable to suppliers of $456,300 for the year ended 31 December 20X6. The company has a periodic inventory system, and the inventory value given is the result of the physical count. 1. The inventory
> A farmer buys 1,000 chickens for $120,000 at the beginning of 20X3. The cost to feed, shelter, and grow the chickens is $22,000 in 20X3 and $24,000 in 20X4. Based on the chickens’ age and size, the fair value at the end of 20X3 was $155,000. On November
> A tree farm harvests a variety of trees that are sold to garden centres. In 20X5, the company was created and they acquired 1,500 immature blue spruce trees and 300 mature blue spruce trees. Each spruce is grown to be 8 feet, at which point they are sold
> Refer to the following list of various products: a. Yarn b. Lumber c. Sheep d. Eggs e. Grapes f. Trees g. Frozen omelets h. Wool i. Chickens j. Logs (felled trees) Required: 1. In this list, identify those items that qualify as a biological asset, as a
> Timber Resource Inc., a forestry company, owns timber resources in northern Quebec. The company produces lumber from these resources. During 20X3, the company cut trees into logs with a fair market value of $600,000. The selling costs estimated at the ti
> A large winery in Kelowna has a number of grapevines and fruit trees. The company develops wine on-site. Required: 1. Identify the types of biological assets that would exist at the vineyard and explain how to account for each type of asset under IFRS. 2
> Required: Determine which segments are reportable segments.
> Carlton Inc. and Dennis Ltd. are two North American manufacturers of auto parts. The two firms use different inventory cost flow accounting policies. This question asks you to determine some of the differences due to the reporting. The two firms report t
> The records of Cordova Corp. showed the following transactions, in the order given, relating to the major inventory item: Required: Complete the following schedule for each independent assumption (round unit costs to the nearest cent; show computations):
> The Yarn Store Inc. inventory records showed the following data relative to a particular item sold regularly (transactions occurred in the order given): Required: 1. Complete the following schedule (round unit costs to the nearest cent and total costs of
> The inventory records of Acme Appliances Ltd. showed the following data related to a food processor in inventory (the transactions occurred in the order given): Required: Compute the cost of goods sold for the period and the ending inventory, assuming th
> The president of Aggressive Ltd. has come to you for advice. Aggressive is a newly established company with prospects for high growth. Decisions must soon be made concerning accounting policies for external financial reporting. The following information
> JAT is finalizing the ending inventory balance. The following information has been collected: 1. The goods counted in the physical inventory had a gross invoice amount of $286,700 for the goods purchased. JAT purchases primarily from one supplier and rec
> Leander Corp. reported the following items in its 20X5 financial statements: aIncludes loss due to decline in market value. From the notes: Inventories are carried at FIFO cost, net of an allowance to reduce finished goods inventory to the lower of cost
> Gamit Ltd. completed the following selected (and summarized) transactions during 20X5: 1. Merchandise inventory on hand 1 January 20X5, $105,000 (at cost, which was the same as lower of cost or NRV). 2. During the year, purchased merchandise for resale a
> The records of Diskount Department Stores Inc. provided the following data for 20X5: Sales (gross) $800,000 Sales returns 2,000 Additional markups 9,000 Additional markup cancellations 5,000 Markdowns 7,000 Purchases: At retail 850,000 At cost 459,500
> Auditors are examining the accounts of Acton Retail Corp. They were present when Acton’s personnel physically counted the Acton inventory; however, the auditors performed their own tests. Acton’s records provided the f
> 1. A contingent liability that is probable is accrued on the financial statements. 2. All accounting policy changes are retrospective adjustments. 3. All related party transactions are disclosed in the notes. 4. A company reporting using IFRS must have a
> Hansard Ltd. estimates its quarterly inventory by the retail inventory method. The following data are available for the quarter ended 30 June 20X7: Required: Prepare a schedule to compute the estimated inventory at 30 June 20X7.
> The manager of Seaton Books Ltd., a book retailer, requires an estimate of the inventory cost for a quarterly financial report to the owner on 31 March 20X5. In the past, the gross margin method was used because of the difficulty and expense of taking a
> You are auditing the records of Lin Corp. The company took a physical inventory under your observation. However, the valuations have not been completed. The records of the company provide the following data: sales, $400,000 (gross); returned sales, $17,5
> 1. Case A Internal auditors for Sandu Corp. discovered during 20X4 that finished goods inventory of $800,000 had been shipped to a customer on 30 December 20X3, the last working day of the year. The ending inventory for 31 December 20X3 had been properly
> Flint Publishers Inc. prepared its draft 20X6 financial statements in February 20X7. The draft SCI showed earnings of $1,100,000. After the draft statements were prepared, but prior to their approval and release, the external auditors discovered several
> On 31 December 20X5, Office Systems Ltd.’s books showed an ending inventory valuation of $490,000. The accounts for 20X5 have been adjusted and closed. Subsequently, the bookkeeper prepared a schedule that showed that the inventory should be $569,800, no
> Digger Enterprises Ltd. has prepared the following information to support an inventory valuation as of 31 December 20X3 (in thousands of dollars): 1. Physical count, 31 December 20X3: Cdn$60,000 2. Advance payment for inventory due before year-end but no
> During 20X7, Omega Corp. signed a contract with Alpha Inc. to purchase 20,000 subassemblies at $90 each during 20X8. Required: 1. On 31 December 20X7, the end of the annual accounting period, the financial statements are to be prepared. Assume that the c
> Pino Inc. (Pino) is a BC-based wine producer. In anticipation of a particularly bounteous grape harvest and a potential problem in obtaining a sufficient volume of shipping crates, Pino entered into a noncancellable agreement with Lumber Products Ltd. to
> Olson Metrics Ltd. has been the dominant firm in its field. The company’s most popular product has been the Model T, which carries a retail price of $350. The Model T costs $250 per unit to produce. Recently, the company introduced a new version, Model A
> 1. Voluntary accounting policy change 2. Involuntary accounting policy change 3. Change in accounting estimate 4. Correction of an error 5. None of the above 1. _____ 1. This is the first year the company has incurred costs for development of a new produ
> Telma Ltd. (Telma) is a public company incorporated in Alberta and traded on the Toronto Stock Exchange. In December 20X6, Telma management decided that cost exceeded NRV for a significant portion of the inventory. Consequently, the company wrote the Cla
> The information shown below relating to the ending inventory was taken at lower of cost or NRV from the records of Electronics Corp.: Required: 1. Determine the valuation of the above inventory at cost and at lower of cost or NRV, assuming application of
> The records of Loren Movers Ltd. contained the following inventory data: Required: 1. Calculate two different amounts that could justifiably be recorded as the allowance to reduce inventory to lower-of-cost-or-NRV at the end of 20X1. 2. Record the 20X1 l
> At the end of 20X4, Sherpa Lighting Ltd. has a large stock of incandescent lighting fixtures that are becoming obsolete due to a new trend to low-energy fluorescent and LED lighting fixtures. The current inventory of incandescent fixtures has a cost of $
> At the end of 20X5, Singh Inc. has four inventory items, two of which management believes should be written down. The cost and estimated NRVs of the items are as follows: Required: 1. Determine the amount by which the inventory should be written down if
> Alomar Ltd. has been suffering the effects of strong price competition on a particular inventory item from an overseas company that has moved into Alomar’s Canadian market. At the end of 20X4, Alomar management decided that the carrying cost (at historic
> Oporto Corp. produces and sells forklift trucks. Model 17A (the “Protex”) has a list price of $140,000. The production cost for the 20 finished Protex units in inventory at the end of 20X4 was $120,000 per unit. Due to recent improvements in manufacturin
> Rondo Ltd. (RL) is a wholesaler operation, with an active warehouse. Staff at RL have prepared a preliminary list of inventory, following its count on November 30. 1. Goods counted in the physical inventor $280,000 2. Provincial sales tax on the amount i
