Question: Gamma Corp. invested in a three-year, $

> Selected account information follows for Entertainment Inc. as at December 31, 2017. All the accounts have debit balances. Assume the company uses IFRS when preparing fi nancial statements. Instructions: (a) Identify which items should be classified as

> The following assets have been recognized as items of property, plant, and equipment: 1 . Head office boardroom table and executive chairs 2. Landfill site 3. Escalator in shopping mall 4. Forklift vehicles in a manufacturing plant 5. Stand-alone trainin

> Odyssey Ltd. purchased machinery on January 1, 2017, for $60,000. The machinery is estimated to have a residual value of $6,000 after a useful life of eight years. (a) Calculate the 2017 depreciation expense using the straight line method. (b) Calculate

> Azure Industries Ltd. acquired two copyrights during 2017. One copyright was on a textbook that was developed internally at a cost of $36,000. This textbook is estimated to have a useful life of three years from July 1, 2017, the date it was published. T

> E-Learning Educational Services Inc. incurred the following costs associated with its research facilities. Indicate whether these items are capitalized or expensed in the current year, assuming the company reports under ASPE. Where applicable, indicate h

> On October 1, 2017, Ocean Airways Ltd. purchased a new commercial aircraft for a total cost of $100 million. Included in the total cost are the aircraft’s two engines, at a cost of $10 million each, and the aircraft’s body, which costs $80 million. The e

> Cella Corporation’s statement of financial position shows property, plant, and equipment of $100,000. The notes to its financial statements state that the amount is represented by a cost of $600,000, accumulated depreciation of $300,000, and accumulated

> Extract Corporation, a publicly traded mining company, acquires a mine at a cost of $500,000. Capitalized development costs total $125,000. After the mine is depleted, $75,000 will be spent to restore the property, after which it can be sold for $157,500

> Andeo Corporation purchased a truck at the beginning of 2017 for $48,000. The truck is estimated to have a residual value of $3,000 and a useful life of 275,000 km. It was driven for 52,000 km in 2017 and 65,000 km in 2018. (a) Calculate depreciation exp

> Refer to the 2014 annual report of Canadian Tire Corporation, Limited, available at SEDAR (www.sedar.com) or the company’s website (www. canadiantire.ca). Note that the company provides a 10-year financial review at the end of its annual report. This sum

> se the information for Odyssey Ltd. in BE11-5. (a) Calculate the 2017 depreciation expense using the sum of-the-years’-digits method. (b) Calculate the 2017 depreciation expense using the sum-of-the-years’-digits method, but assuming the machinery was pu

> Use the information for Odyssey Ltd. in BE11-5. (a) Calculate the 2017 depreciation expense using the double declining-balance method. (b) Calculate the 2018 depreciation expense using the double-declining-balance method, but assuming the machinery was p

> Gilles Corp. purchased a piece of equipment on February 1, 2017, for $100,000. The equipment has an estimated useful life of eight years, with a residual value of $25,000, and an estimated physical life of 10 years, with no salvage value. The equipment w

> Chong Corp. purchased a machine on July 1, 2017, for $30,000. Chong paid $200 in title fees and a legal fee of $100 related to the machine. In addition, Chong paid $500 in shipping charges for delivery, and paid $400 to a local contractor to build and wi

> Julip Corporation purchased a 25% interest in Krov Corporation on January 2, 2017, for $1,000. At that time, the carrying amount of Krov’s net assets was $3,600. Any excess of the cost of the investment over Julip’s share of Krov’s carrying amount can be

> Fong Limited purchased an asset at a cost of $45,000 on March 1, 2017. The asset has a useful life of seven years and an estimated residual value of $3,000. For tax purposes, the asset belongs in CCA Class 8, with a rate of 20%. Calculate the CCA for eac

> In its 2017 annual report, Winkler Limited reports beginning-of-the-year total assets of $1,923 million, end-of-the-year total assets of $2,487 million, total revenue of $2,687 million, and net income of $52 million. (a) Calculate Winkler’s asset turnove

> Use the information presented for Volumetrics Corporation in BE11-17, but assume that the machinery is sold for $5,200 instead of $13,500. Prepare journal entries to (a) update depreciation for 2019 and (b) record the sale. Data from BE11-17: Volumetri

> Volumetrics Corporation owns machinery that cost $20,000 when purchased on January 1, 2017. Depreciation has been recorded at a rate of $3,000 per year, resulting in a balance in accumulated depreciation of $6,000 at December 31, 2018. The machinery is s

> Caley Inc. owns a building with a carrying amount of $1.5 million, as at January 1, 2017. On that date, Caley’s management determined that the building’s location is no longer suitable for the company’s operations and decided to dispose of the building b

> Stora Enso Oyj described its business in its annual report as the “global re thinker of the biomaterials, paper, packaging and wood products industry.” Instructions: Access the financial statements in the financial report of Stora Enso Oyj for its year

> Use the information for Swanton Corp. in BE10-14. Prepare the entries to record the three cash transactions, assuming the deferral method is used. Data from BE10-14: In early January, Swanton Corp. purchased a building to house its manufacturing operat

> Greentree Properties Ltd. is a publicly listed company following IFRS. Assume that on December 31, 2017, the carrying amount of land on the statement of fi nancial position is $500,000. Management determines that the land’s value in use is $425,000 and t

> Hambrecht Corp. is preparing its financial statements for the fiscal year ending November 30, 2017. Certain specialized equipment was scrapped on January 1, 2018. At November 30, 2017, this equipment was being used in production by Hambrecht and had a ca

> Spencer Ltd. traded a used truck (cost $30,000, accumulated depreciation $27,000, fair value $2,000) for a new truck with a fair value of $33,000. Spencer also made a cash payment of $31,000. Prepare Spencer’s entry to record the exchange, and state any

> Wizard Corp., a private company, obtained land by issuing 2,000 of its common shares. The land was appraised at $85,000 by a reliable, independent valuator on the date of acquisition. Last year, Wizard sold 1,000 common shares at $41 per share. Prepare t

> Hamm Inc. purchased land, a building, and equipment from Spamela Corporation for a cash payment of $406,000. The assets’ estimated fair values are land $95,000, building $250,000, and equipment $110,000. At what amounts should each of the three assets be

> Martin Corporation purchased a truck by issuing an $80,000, 8% note to Equinox Inc. Interest is payable annually and the note is payable in four years. Prepare the journal entry to record the truck purchase.

> Chavez Corporation purchased a truck by issuing an $80,000, four-year, non–interest-bearing note to Equinox Inc. The market interest rate for obligations of this nature is 8%. Calculate the purchase price using any of the three methods (tables, fi nancia

> Parolin Limited purchased equipment for an invoice price of $40,000, terms 2/10, n/30. (a) Record the purchase of the equipment and the subsequent payment, assuming the payment was made within the discount period. (b) Repeat (a), but assume the company’s

> Northern Utilities Corporation incurred the following costs in constructing a new maintenance building during the fiscal period: (a) Direct labour costs incurred up to the point when the building is in a condition necessary for use as management intended

> Brookfield Asset Management Inc. (Brookfield), as described in Note 1 to its financial statements, is a “global alternative asset management company” that “owns and operates assets with a focus on property, renewable energy, infrastructure and private eq

> Weaver Limited is a company that distributes hard-to-find computer supplies, such as hardware parts and cables. It sells and ships products all over the world. Recently, the board of directors approved the plan and a budget for the company to design its

> Barnet Brothers Inc. purchased land and an old building with the intention of removing the old building and then constructing the company’s new corporate headquarters on the land. The land and old building were purchased for $570,000. Closing costs were

> TrueNorth Investment Properties Inc. and its subsidiaries have provided you with a list of the properties they own: (a) Land held by TrueNorth for undetermined future use (b) A vacant building owned by TrueNorth and to be leased out under an operating le

> Playtime Corporation purchased a new piece of equipment for production of a new children’s toy. According to market research tests, the toy is expected to be very popular among preschool-aged children. The equipment consists of the following significant

> Use the information for Valued Assets Inc. from BE10-18. On January 5, 2018, Valued sold the building for $325,000 cash. Prepare the journal entries to record the sale of the building after having used (a) the cost model, (b) the revaluation model using

> Valued Assets Inc., a publicly listed company, has a building with an initial cost of $400,000. At December 31, 2017, the date of revaluation, accumulated depreciation amounted to $110,000. The fair value of the building, by comparing it with transaction

> Lowell Corporation acquires a gold mine at a cost of $400,000. Development costs that were incurred total $100,000, including $12,300 of depreciation on movable equipment to construct mine shafts. Based on construction to date, the legal obligation to re

> Dubois Inc. received equipment as a donation. The equipment has a fair value of $55,000. Prepare the journal entry to record the receipt of the equipment under each of the following assumptions: (a) The equipment was donated by a shareholder. (b) The equ

> In early January, Swanton Corp. purchased a building to house its manufacturing operations in Moose Jaw for $470,000. The company agreed to lease the land that the building stood on for $14,000 per year from the industrial park owner, and the municipalit

> Use the information for Spencer Ltd. from BE10-12. The same used truck is being traded, but Spencer does not know the fair value of the new truck. Spencer did look up the value of its used truck and determined its fair value at the date of the trade is $

> Kongus Inc. traded a used truck (cost $23,000, accumulated depreciation $20,700) for another used truck with a fair value of $3,700. Kongus also paid $300 cash in the transaction. Prepare the journal entry to record the exchange, assuming the transaction

> From SEDAR (www.sedar.com), or the company websites, access the financial statements of Loblaw Companies Limited for its year ended January 3, 2015, and of Empire Company Limited for its year ended May 3, 2014. Review the financial statements and answer

> Caruso Airlines Incorporated is a privately owned commercial airline servicing short-haul routes in Western Canada. Caruso has operated successfully and profitably for five years. It is now considering expanding its fleet of 10 aircraft by adding 15 new

> Global Ltd. had beginning inventory of 50 units that cost $100 each. During September, the company purchased 200 units on account at $100 each, returned 6 units for credit, and sold 150 units at $200 each. (a) Journalize the September transactions, assum

> Tansley Ltd. took a physical inventory count on December 31 and determined that goods costing $4,000 were on hand. This amount included $1,000 of goods held on consignment for Woods Corporation. Not included in the physical count were $800 of goods purch

> Able Limited is a company that is involved in the wholesaling and retailing of automobile tires for foreign cars. Most of the inventory is imported, and it is valued on the company’s records at the actual inventory cost plus freight-in. (a) At year end,

> Saving Energy Inc. is a company that wants to buy coal deposits but does not want the financing for the purchase to be reported on its financial statements. The company therefore establishes a trust to acquire the coal deposits. The company agrees to buy

> Beta Corp. invested in a three-year, $100 face value 8% bond, paying $95.03. At this price, the bond will yield a 10% return. Interest is payable annually. (a) Prepare a bond discount amortization table for Beta Corp., assuming Beta uses the effective in

> Stowe Enterprises owns the following assets at December 31, 2017: If Stowe follows ASPE, what amount should be reported as cash and cash equivalents? Explain how your answer would differ if Stowe followed IFRS. Cash in bank savings account 56,200 1

> Delicious Foods Inc. reported inventory of $5,706 million at the end of its 2017 fiscal year and $5,310 million at the end of its 2016 fiscal year. It reported cost of goods sold of $35,350 million for the fiscal year 2017 and net sales of $54,365 millio

> Both ASPE and IFRS require disclosures about an enterprise’s investments that include the carrying amount of each type of investment by the accounting method used and the income, gains, or losses classified in a similar way. Identify the disclosure objec

> Soon after beginning the year-end audit work on March 10 for the 2017 year end at Arkin Corp., the auditor has the following conversation with the controller: Controller: The year ending March 31, 2017, should be our most profitable in history and, becau

> Beckett Corp. is facing a decision as to whether to purchase 40% of Kyla Corp.’s shares for $1.6 million cash, giving Beckett significant influence over the investee company, or 60% of Kyla’s shares for $2.4 million cash, making Kyla a subsidiary company

> Use the information from BE9-21, except that Julip Corporation is a private enterprise that applies ASPE. Prepare Julip’s 2017 entries to record all transactions and events related to its significant influence investment in Krov Corporation, assuming tha

> Poot Corporation purchased a 40% interest in Moss Inc. for $100. This investment gave Poot significant influence over Moss. During the year, Moss earned net income of $15 and paid dividends of $5. Assuming the purchase price was equal to 40% of Moss’s ne

> Indicate whether the following would be considered inventory for a public company like Ford Motor Corporation. If so, indicate the inventory category to which that item would belong. (a) Engines purchased to make the Ford F-150 (b) Nuts and bolts purchas

> Ramirez Company has an investment in 6%, 10-year bonds of Soto Company. The investment was originally purchased at par for $100 in 2016 and it is accounted for at amortized cost. Early in 2017, Ramirez recorded an impairment on the Soto investment due to

> Assume the same information as in BE9-17. Assume also that management feels that there has been a significant increase in the credit risk and that there is a 5% chance that the company will not collect 50% of the face value of the bond over its life. The

> Assume that Gush Inc. invests in a bond for $55,000. The bond was purchased at par and is accounted for using amortized cost. At year end, management has determined that there is no significant increase in credit risk, but that there is a 1% chance that

> Under the expected loss model, the entity must assess whether there has been a significant increase in credit risk. Explain what the impact is if the assessment results in a yes answer or a no answer.

> Aitocs Inc. sold used equipment with a cost of $15,000 and a carrying amount of $2,500 to Disc Corp. in exchange for a $5,000, three-year non–interest-bearing note receivable. Although no interest was specified, the market rate for a loan of that risk wo

> A review of the financial statements of private and publicly accountable enterprises may result in finding the following measurement approaches used for their non-strategic investments: (1) cost/amortized cost, (2) FV-NI (or FVTPL), (3) FV-OCI (with recy

> Canadian Tire Corporation, Limited is one of Canada’s best-known retailers. The company operates 493 “hard-goods” retail stores through associate dealers, 383 corporate and franchise stores under its subsidiary Mark’s Work Wear house, 297 independently o

> The following information relates to Cortez Corp. for 2017: net income of $672,683; unrealized loss of 20,830 related to investments accounted for at FV-OCI during the year; and accumulated other comprehensive income of $37,273 on January 1, 2017. Determ

> Early in its 2017 fiscal year (December 31 yearend), Hayes Company purchased 10,000 shares of Kenyon Corporation common shares for $26.18 per share, plus $1,800 in brokerage commissions. These securities were accounted for at FV-OCI (with no recycling),

> Angus Enterprises Ltd. reported cost of goods sold for 2017 of $2.5 million and retained earnings of $4.0 million at December 31, 2017. Angus later discovered that its ending inventories at December 31, 2016 and 2017, were overstated by $150,000 and $50,

> Best Corp., a public company using IFRS, signed a long-term non-cancellable purchase commitment with a major supplier to purchase raw materials at an annual cost of $1 million. At December 31, 2016, the raw materials to be purchased in 2017 have a market

> Bali Corp. has $10,000 in surplus funds to invest and is considering investing in either Company A or Company B. Company A promises to return the $10,000 original amount invested in three years’ time and pay a 2% annual return on the principal amount. Co

> Boyko Company received an order from Lister Inc. on May 15, 2017, valued at $3,800. Boyko shipped the goods to Lister on May 31, 2017, with terms f.o.b. shipping point, and credit terms 2/10, n/30. Assuming Boyko uses the gross method of recording sales,

> Highfliers Inc. is a public company that purchases airplanes for sale to others. However, until the airplanes are sold, the company charters and services them. What is the proper way to report these airplanes in the company’s financial statements?

> IFRS requires greater disclosure for inventory than ASPE. List the additional requirements and explain what benefit each one might provide for the users of the financial statements. List some items that would specifically contribute to estimation uncerta

> Loza Corp. purchases inventory costing $4,000 on July 11 on terms 3/10, n/30, and pays the invoice in full on July 15. (a) Prepare the required entries to record the two transactions, assuming Loza uses (1) the gross method of recording purchases, and (2

> Oil Tankers Inc.’s April 30 inventory was destroyed by the explosion of an underground oil tank. January 1 inventory was $250,000 and purchases for January through April totaled $620,000. Sales for the same period were $1 million. Oil Tankers’ normal gro

> IFRS provides guidance on impairment testing—in particular, what is supportable evidence of impairment of loans and receivables. Instructions: Read IFRS 9, 5.5 “Impairment” and reference as appropriate IFRS 9’s Appendix A “Defined Terms” to answer the

> The financial statements of winery Andrew Peller Limited reported net sales of $297,824 thousand for its year ended March 31, 2014. Accounts receivable were $22,693 thousand at March 31, 2014, and $25,484 thousand at March 31, 2013. Calculate the company

> Farmer Brown Industries Inc. is in the business of producing organic foods for sale to restaurants and in local markets. The company uses IFRS and has a June 30 fiscal year end. As an experiment, the company has decided to attempt raising organic free-ra

> Consider a large dairy farming company that reports under IFRS. Beyond manufacturing, farm property, and equipment, the farm’s main assets are the dairy cows and the milk that they produce. Describe how these assets may be presented on the financial stat

> For each of the scenarios noted in BE6-17, when would revenue be recognized under the earnings approach? Data from BE6-17: What is the earnings process under ASPE for each of the following scenarios? (a) A manufacturer makes and sells farm equipment. T

> More & More Limited uses a periodic inventory system. On June 24, the company sold 600 units. The following additional information is available: (a) Calculate the June 30 inventory and the June cost of goods sold, using the weighted average cost fo

> Bluebell Enterprises Ltd.’s records reported an inventory cost of $55,600 and a net realizable value of $54,000 at December 31, 2015. At December 31, 2016, the records indicated a cost of $68,700 and a net realizable value of $61,625. All opening invento

> Doors Unlimited Ltd. purchases units of wood frames that have manufacturer’s rebates from Traders Inc. The rebate requires Doors Unlimited to purchase a minimum number of units in a calendar year. The initial unit cost of each wood frame is $2.50 before

> Newvo Ltd. shows on its statement of financial position a patent. At its year end of October 31, 2015, the caption read Patent (net) $66,000 and at its year end of October 31, 2016, the caption read Patent (net) $40,000. Newvo’s recorded amortization on

> Gamers’ World buys 1,000 computer game CDs from a distributor that is discontinuing those games. The purchase price for the lot is $7,500. Gamers’ World will group the CDs into three price categories for resale, as fol

> Creative Corporation is a manufacturer of children’s toys. Creative has signifi cant debt outstanding that has been used to purchase equipment and inventory used in its manufacturing process. Creative has positive cash from operating activities during th

> Access the annual financial statements for Maple Leaf Foods Inc. for the year ended December 31, 2014. These statements are available from the company’s website or from SEDAR (www.sedar. com). Instructions: (a) Explain the securitization that the compan

> Referring to the revenue arrangement in BE6-8, determine the transaction price for this contract, assuming (a) Nair is only able to estimate whether the building can be completed by August 1, 2017, or not (Nair estimates that there is a 70% chance that t

> Nair Corp. enters into a contract with a customer to build an apartment building for $1,000,000. The customer hopes to rent apartments at the beginning of the school year and offers a performance bonus of $150,000 to be paid if the building is ready for

> Use the information for Melon Company in BE7-6, but assume instead that Melon uses the net method of recording sales. Prepare the journal entries for the transactions. Data from BE7-6: Melon Company made sales of $40,000 with terms 1/10, n/30. Within t

> Melon Company made sales of $40,000 with terms 1/10, n/30. Within the discount period, it received a cash payment on $35,000 of the sales from customers. After the discount period, it received $5,000 in payments from customers. Assuming Melon uses the gr

> Staj Co., a clothing manufacturer, is preparing its statement of financial position at December 31, 2017. For each of the following amounts as at December 31, 2017, indicate whether the amount is (a) current or non-current; and (b) a trade receivable, a

> Insert the appropriate discount factor into the table below for each of the situations given. These factors have to be interpolated from Tables PV-1 and PV-2. PV of 1 PV of an Annuity of 1 (Table PV-1) (Table PV-2) (a) n = 4, i = 4%% (b) n = 6, i =

> Talarczyk Company sold 10,000 Super Spreaders on July 1, 2017, at a total price of $1,000,000, with a warranty guarantee that the product was free of any defects. The cost of the spreaders sold is $550,000. The assurance warranties extend for a two-year

> Use the information in BE7-23. Assume that Genesis decides (a) to increase the size of the petty cash fund to $600 immediately after the reimbursement, and (b) to reduce the size of the petty cash to $250 immediately after the reimbursement. Prepare the

> Genesis Ltd. designated Alexa Kidd as petty cash custodian and established a petty cash fund of $400. The fund is reimbursed when the cash in the fund is at $57. Petty cash receipts indicate that funds were disbursed for $174 of office supplies and $167

> The financial statements of BCE Inc. reported net sales of $21,042 million for its year ended December 31, 2014, and $20,400 million for its year ended December 31, 2013. Accounts receivable (net) were $2,999 million at December 31, 2014, $2,995 million

> In December 2014, the IASB issued an Exposure Draft (ED) called Disclosure Initiative: Proposed Amendments to IAS 7 concerning potential improvements to the statement of cash flows. The first proposed recommendation’s purpose is to improve the informatio

> On July 10, 2017, Amodt Music sold CDs to retailers on account for a selling price of $700,000 (cost $560,000). Amodt grants the right to return CDs that do not sell in three months following delivery. Past experience indicates that the normal return rat

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