Hale Hardware takes pride in being the "shop around the corner" that can compete with the big box home improvement stores by providing good service from knowledgeable sales associates (many of whom are retired local handymen). Hale has developed the following two revenue arrangements to enhance its relationships with customers and increase its bottom line. 1. Hale sells a specialty portable winch that is popular with many of the local customers for use at their lake homes (putting docks in and out, launching boats, and so on). The Hale winch is a standard-manufacture winch that Hale modifies so it can be used for a variety of tasks. Hale sold 70 of these winches during 2020 at a total price of $21,000, with a warranty guarantee that the product was free of any defects. The cost of winches sold is $16,000. The assurance warranties extend for a three-year period with an estimated cost of $2,100. In addition, Hale sold extended warranties related to 29 Hale winches for two years beyond the three-year period for $400 each. 2. To bolster its already strong customer base, Hale implemented a customer loyalty program that rewards a customer with one loyalty point for every $10 of purchases on a select group of Hale products. Each point is redeemable for a $1 discount on any purchases of Hale merchandise in the following two years. During 2020, customers purchased select group products for $100,000 (all products are sold to provide a 45% gross profit) and earned 10,000 points redeemable for future purchases. The stand-alone selling price of the purchased products is $100,000. Based on prior experience with incentive programs like this, Hale expects 9,500 points to be redeemed related to these sales. (Hale appropriately uses this experience to estimate the value of future consideration related to loyalty points.) Instructions a. Identify the separate performance obligations in the Hale warranty and loyalty point programs, and briefly explain the point in time when the performance obligations are satisfied. b. Prepare the journal entries for Hale related to the cash sales of Hale winches with warranties. c. Prepare the journal entries for the loyalty point sales for Hale in 2020. Round percentage allocations to two decimal places and final amounts to the nearest dollar.
> Fusters Inc. provides audited financial statements to its creditors and is required to maintain certain covenants based on its debt to equity ratio and return on assets. In addition, management of Fusters receives a bonus partially based on revenues for
> Cameo Manufacturers Inc., a publicly listed company, has two machines that are accounted for under the revaluation model. Technology in Cameo's industry is fast-changing, causing the fair value of each machine to change significantly about every two year
> On October 1, 2020, 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
> On July 1, 2020, Lucas Ltd., a publicly listed company, acquired assets from Jared Ltd. On the transaction date, a reliable, independent valuator assessed the fair values of these assets as follows: The buildings are owned by the company, and the land
> Vidi Corporation, a private enterprise, made the following purchases related to its property, plant, and equipment during its fiscal year ended December 31, 2020. The company uses the straight-line method of depreciation for all its capital assets. 1. In
> On June 28, 2020, in relocating to a new town, Kerr Corp. purchased a property consisting of two hectares of land and an unused building for $225,000 plus property taxes in arrears of $4,500. The company paid a real estate broker a fee of $12,000 for fin
> Kiev Corp. was incorporated on January 2, 2020, but was unable to begin manufacturing activities until July 1, 2020, because new factory facilities were not completed until that date. The Land and Building account at December 31, 2020, contained the foll
> Webb Corporation prepares financial statements in accordance with IFRS. Selected accounts included in the property, plant, and equipment section of the company's statement of financial position at December 31, 2019, had the following balances: During 2
> At December 31, 2019, certain accounts included in the property, plant, and equipment section of Golden Corporation's statement of financial position had the following balances: During 2020, the following transactions occurred: 1. Land site No. 621 was
> Adamski Corporation manufactures ballet shoes and is in a period of sustained growth. In an effort to expand its production capacity to meet the increased demand for its products, the company recently made several acquisitions of plant and equipment. Tan
> Wordcrafters Inc. is a book distributor that had been operating in its original facility since 1991. The increase in certification programs and continuing education requirements in several professions has contributed to an annual growth rate of 15% for W
> Inglewood Landscaping Corp. began constructing a new plant on December l , 2020. On this date, the company purchased a parcel of land for $184,000 cash. In addition, it paid $2,000 in surveying costs and $4,000 for title transfer fees. An old dwelling on
> Donovan Resources Group has been in its plant facility for 15 years. Although the plant is quite functional, numerous repair costs are incurred to keep it in good working order. The book value of the company's plant is currently $800,000, calculated as f
> Fong Limited purchased an asset at a cost of $45,000 on March l, 2020. 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
> On March 1, 2020, Jessi Corp. acquired a 10-unit residential complex for $1,275,000, paid in cash. An independent appraiser determined that 75% of the total purchase price should be allocated to buildings, with the remainder allocated to land. On the dat
> December 31, 2017 consolidated statement of financial position lists property and equipment at $9 billion and total assets of $17.7 billion. Air Canada's Note 4 to the financial statements titled Property and Equipment provides a schedule of the transact
> Riverdale Farms Ltd. operates dairy farms. The following are selected transactions that occurred during the fiscal years ended December 31, 2020 and 2021, for one dairy cow and its calf. 1. A calf was born in March 2020. Its fair value less costs to sell
> Milford Company determined its ending inventory at cost and at lower of cost and net realizable value at December 31, 2018, 2019, and 2020, as follows: Instructions a. Prepare the journal entries that are required at December 31, 2019 and 2020, assumin
> Astro Languet established Languet Products Co. as a sole proprietorship on January 5, 2020. At the company's year end of December 31, 2020, the accounts had the following balances (in thousands): A count of ending inventory on December 31, 2020, showed
> The summary financial statements of Langford Landscaping Ltd. on December 31, 2020, are as follows: The following errors were made by the inexperienced accountant on December 31, 2019, and were not corrected. 1. The inventory was overstated by $13,000.
> Halm Skidoos Limited, a private company that began operations in 2017, always values its inventories at their current net realizable value. The company uses ASPE. Its annual inventory figure is arrived at by taking a physical count and then pricing each
> On February 1, 2020, Akeson Ltd. began selling electric scooters that it purchased exclusively from Ionone Motors Inc. Ionone Motors offers volume rebates based on the volume of annual sales to its customers and calculates and pays the rebates at its fis
> In its 2020 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
> The Eserine Wood Corporation manufactures desks. Most of the company's desks are standard models that are sold at catalogue prices. At December 31, 2020, the following finished desks appear in the company's inventory: The 2020 catalogue was in effect t
> Sier Specialty Corp., a division of FH Inc., manufactures three models of bicycle gearshift components that are sold to bicycle manufacturers, retailers, and catalogue outlets. Since beginning operations in 1969, Sier has used normal absorption costing a
> The following independent situations relate to inventory accounting: Primary Guidance Under IFRS 1. Sanderson Company's inventory of $1.1 million at December 31, 2020, was based on a physical count of goods priced at cost and before any year-end adjustme
> Desrosiers Ltd. had the following long-term receivable account balances at December 31, 2019: Transactions during 2020 and other information relating to Desrosiers' long-term receivables were as follows: 1. The $1.8-million note receivable is dated May
> On December 31, 2020, Zhang Ltd. rendered services to Beggy Corp. at an agreed price of $91,844.10. In payment, Zhang accepted $36,000 cash and agreed to receive the balance in four equal installments of $18,000 that are due each December 31. An interest
> On October 1, 2020, Healy Farm Equipment Corp. sold a harvesting machine to Homestead Industries. Instead of a cash payment, Homestead Industries gave Healy Farm Equipment a $150,000, two-year, 10% notes; 10% is a realistic rate for a note of this type.
> The SFP of Alice Inc. at December 31, 2019, includes the following: Transactions in 2020 include the following: 1. Accounts receivable of $146,000 was collected. 2. Customer accounts of $39,500 were written off during the year. 3. An additional $16,700
> The following information relates to Shea Inc.'s accounts receivable for the 2020 fiscal year: 1. An aging schedule of the accounts receivable as at December 31, 2020, is as follows: 2. The Accounts Receivable control account has a debit balance of $37
> Use the information presented for Volumetrics Corporation in BEll.19, but assume that the machinery is sold for $5,200 instead of $13,500. Prepare journal entries to (a) update depreciation for 2022 and (b) record the disposal.
> Gelato Corporation, a private entity reporting under ASPE, was incorporated on January 3, 2019. The corporation's financial statements for its first year of operations were not examined by a public accountant. You have been engaged to audit the financial
> Fortini Corporation had record sales in 2020. It began 2020 with an Accounts Receivable balance of $475,000 and an Allowance for Doubtful Accounts of $33,000. Fortini recognized credit sales during the year of $6,675,000 and made monthly adjusting entrie
> A series of unrelated situations follow for several companies that use ASPE: 1. Atlantic Inc.'s unadjusted trial balance at December 31, 2020, included the following accounts: 2. An analysis and aging of Central Corp.'s accounts receivable at December
> Information follows for Quartz Industries Ltd.: Additional information: 1. One June 26 transactions were for bank service charges. 2. One June 30 transactions was a bank debit memo for $1,050.00 for a customer's cheque returned and marked NSF (includ
> The cash account of Villa Corp. shows a ledger balance of $3,969.85 on June 30, 2020. The bank statement as at that date shows a balance of $4,150. When the statement was compared with the cash records, the following facts were determined: 1. There were
> Joseph Kiuvik is reviewing the cash accounting for Connolly Corporation, a local mailing service. Joseph's review will focus on the petty cash account and the bank reconciliation for the month ended May 31, 2020. Petty cash Joseph has collected the follo
> The Patchwork Corporation manufactures sweaters for sale to athletic-wear retailers. The following information was available on Patchwork for the years ended December 31, 2019 and 2020: During 2020, Patchwork had the following transactions: 1. On June
> The Cormier Corporation sells office equipment and supplies to many organizations in the city and surrounding area on contract terms of 2/10, n/30. In the past, over 75% of the credit customers have taken advantage of the discount by paying within 10 day
> In 2020, Ibran Corp. required additional cash for its business. Management decided to use accounts receivable to raise the additional cash and has asked you to determine the income statement effects of the following transactions: 1. On July 1, 2020, Ibra
> Logo Limited follows ASPE. It manufactures sweatshirts for sale to athletic-wear retailers. The following summary information was available for Logo for the year ended December 31, 2019: Part 1 During 2020, Logo had the following transactions: 1. Total
> Dev Equipment Corp. usually closes its books on December 31, but at the end of 2020 it held its cash book open so that a more favorable statement of financial position could be prepared for credit purposes. Cash receipts and disbursements for the first 1
> Volumetrics Corporation owns machinery that cost $20,000 when purchased on January 1, 2020. 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, 2021. The machinery is s
> Essan Construction Inc., which has a calendar year end, has entered into a non-cancellable fixed price contract for $2.8 million beginning September 1, 2020, to build a road for a municipality. It has been estimated that the road construction will be com
> Tablet Tailors sells tablet PCs combined with Internet service (Tablet Bundle A) that permits the tablet to connect to the Internet anywhere (that is, set up a WiFi hot spot). The price for the tablet and a four-year Internet connection service contract
> Martz Inc. has a customer loyalty program that rewards a customer with one customer loyalty point for every $100 of purchases. Each point is redeemable for a $3 discount on any future purchases. On July 2, 2020, customers purchase products for $300,000 (
> Ritt Ranch & Farm is a distributor of ranch and farm equipment. Its products include small tools, power equipment for trench-digging and fencing, grain dryers, and barn winches. Most products are sold direct via its company Internet site. However, gi
> Presented below are three independent revenue arrangements for Colbert Company. The company follows IFRS. Instructions Respond to the requirements related to each revenue arrangement. a. Colbert sells 3-D printer systems. Recently, Colbert provided a sp
> Van Hatten Consolidated has three operating divisions: DeMent Publishing Division, Ankiel Security Division, and Depp Advisory Division. Each division maintains its own accounting system but follows IFRS. DeMent Publishing Division The DeMent Publishing
> Economy Appliance Co. manufactures low-price, no-frills appliances that are in great demand for rental units. Pricing and cost information on Economy's main products are as follows. Customers can contract a purchase either individually at the stated pr
> Assume the facts given in P6.9 for Essan Construction Inc. except assume that at December 31, 2021, Essan estimates the costs to complete the road contract at $1,050,000 instead of $600,000. Instructions a. Using the percentage-of-completion method, cal
> Respond to the requirements related to the following independent revenue arrangements for BBQ Master Products and services. Assume that BBQ Master follows IFRS. a. BBQ Master offers contract BM205, which consists of a free-standing gas barbecue for small
> Caley Inc. owns a building with a carrying amount of $1.5 million, as at January 1, 2020. 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
> The statement of financial position of Manion Corporation follows (in thousands): Instructions Evaluate the statement of financial position. Briefly describe the proper treatment of any item that you find incorrect. Assume the company follows IFRS.
> The statement of financial position of Sargent Corporation follows for the current year, 2020: The following additional information is available: 1. The Current Assets section includes the following: cash $150,000; accounts receivable $170,000, less $10,
> Jia Inc. applies ASPE and had the following statement of financial position at the end of operations for 2019: During 2020, the following occurred: 1. Jia Inc. sold some of its trademarks. The trademarks had an unlimited useful life and a cost of $10,000
> Aero Inc. had the following statement of financial position at the end of operations for 2019: During 2020, the following occurred: 1. Aero liquidated its FV-NI investments portfolio at a loss of $5,000. 2. A parcel of land was purchased for $38,000. 3.
> In an examination of Garganta Limited as at December 31, 2020, you have learned about the following situations. No entries have been made in the accounting records for these items. 1. The corporation erected its present factory building in 2004. Deprecia
> Lydia Trottier has prepared baked goods for sale since 1998. She started a baking business in her home and has been operating in a rented building with a storefront since 2003. Trottier incorporated the business as MLT Inc. on January 1, 2020, with an in
> The statement of financial position of Delacosta Corporation as at December 31, 2020, is as follows: Note 1: Goodwill in the amount of $70,000 was recognized because the company believed that the carrying amount of assets was not an accurate representati
> The trial balance of Eastwood Inc. and other related information for the year 2020 follows: Additional information: 1. The inventory has a net realizable value of $212,000. The FIFO method of inventory valuation is used. 2. The FV-OCI investments' fair v
> Martineau Inc., a major retailer of high-end office furniture, operates several stores and is a publicly traded company. The company is currently preparing its statement of cash flows. The comparative statement of financial position and income statement
> L&G Inc., a retailer of garden tools that follows ASPE, had the following statements prepared as of December 31, 2020: Additional information: 1. Dividends on common shares in the amount of $12,000 were declared and paid during 2020. 2. Depreciation
> Compare the cost recovery impairment model used under ASPE with the rational entity model used under IFRS. Which model provides better information for financial statement users?
> A comparative statement of financial position for Spencer Corporation follows: Additional information: 1. Net income for the fiscal year ending December 31, 2020, was $19,000. 2. In March 2020, a plot of land was purchased for future construction of a pl
> Statement of financial position items for Montoya Inc. Follow for the current year, 2020: Instructions a. Prepare a classified statement of financial position in good form. The numbers of authorized shares are as follows: unlimited common and 20,000 pref
> The following financial statement was prepared by employees of Intellisys Corporation, which follows ASPE: Note 1: New styles and rapidly changing consumer preferences resulted in a $37,000 loss on the disposal of discontinued styles and related accessor
> The trial balance follows for Thompson Corporation at December 31, 2020: A physical count of inventory on December 31 showed that there was $64,000 of inventory on hand. Instructions Prepare a condensed single-step income statement and a statement of re
> Wave crest Inc. reported income from continuing operations before tax of $1,790,000 during 2020. Additional transactions occurring in 2020 but not included in the $1,790,000 were as follows: 1. The corporation experienced an insured flood loss of $80,000
> Information for 2020 follows for Rolling Thunder Corp.: Rolling Thunder decided to discontinue its entire wholesale division (a major line of business) and to keep its manufacturing division. On September 15, it sold the wholesale division to Dylane Corp
> On November l, 2019, Campbell Corporation management decided to discontinue operation of its Racketeer Division and approved a formal plan to dispose of the division. Campbell is a successful corporation with earnings of $150 million or more before tax f
> Dr. Emma Armstrong, M.D., maintains the accounting records of the Blood Sugar Clinic on a cash basis. During 2020, Dr. Armstrong collected $146,000 in revenues and paid $55,470 in expenses. At January 1, 2020, and December 31, 2020, she had accounts rece
> On January 1, 2020, Caroline Lampron and Jenni Meno formed a computer sales and service enterprise in Montreal by investing $90,000 cash. The new company, Razorback Sales and Service, had the following transactions in January: 1. Paid $6,000 in advance f
> Greentree Properties Ltd. is a publicly listed company following IFRS. Assume that on December 31, 2020, the carrying amount of land on the statement of financial position (SFP) is $500,000. Management determines that the land's value in use is $425,000
> The equity accounts of Good Karma Corp. as at January 1, 2020, were as follows: During 2020, the following transactions took place: Instructions Prepare a statement of changes in equity for the year ended December 31, 2020. The company follows IFRS. Ass
> Amos Corporation was incorporated and began business on January 1, 2020. It has been successful and now requires a bank loan for additional capital to finance an expansion. The bank has requested an audited income statement for the year 2020 using IFRS.
> Faldo Corp. is a public company and has 100,000 common shares outstanding. In 2020, the company reported income from continuing operations before income tax of $2,710,000. Additional transactions not considered in the $2,710,000 are as follows: 1. In 202
> In recent years, Grace Inc. has reported steadily increasing income. The company reported income of $20,000 in 2017, $25,000 in 2018, and $30,000 in 2019. Several market analysts have recommended that investors buy Grace Inc. shares because they expect t
> Zephyr Corporation began operations on January 1, 2017. Recently the corporation has had several unusual accounting problems related to the presentation of its income statement for financial reporting purposes. The company follows ASPE. You are the CPA f
> A combined statement of income and retained earnings for DC 5 Ltd. for the year ended December 31, 2020, follows. (As a private company, DC 5 has elected to follow ASPE.) Also presented are three unrelated situations involving accounting changes and the
> Using Excel functions, calculate the present value of the net cash flows required of Dunn Inc. for (1) The purchase alternative and (2) The lease alternative. Hint: For the annuity due for the lease payments, use type 1. b. Which of the two alternatives
> Using a financial calculator, calculate the present value of the net cash flows required of Dunn Inc. for: 1. The purchase alternative and 2. The lease alternative. Hint: For the annuity due for the lease payments, program your calculator to annuity due
> M&B Tooling Ltd. is assessing two available options for the purchase of new equipment with a negotiated cash price of $100,000. The manufacturer is willing to accept a down payment of 20% of the purchase price and an instalment note for the balance. The
> EMI Inc. is a public company that operates numerous movie theatres in Canada. Historically, it operated as a trust and its business model consisted of distributing all of its earnings to shareholders through dividends. As a result of tax changes two year
> Hambrecht Corp. is preparing its financial statements for the fiscal year ending November 30, 2020. Certain specialized equipment was scrapped on January 1, 2021. At November 30, 2020, this equipment was being used in production by Hambrecht and had a ca
> Grappa Grapes Inc. (GGI) grows grapes and produces sparkling wines. The company is located in a very old area of town with easy access to fertile farmland that is excellent for growing grapes. It is owned by the Grappa family. The company has been in ope
> Snow Spray Corp. (SSC) recently filed for bankruptcy protection. The company manufactures downhill skis and reports under ASPE. With the increased popularity of such alternative winter sports as snowboarding and tubing, sales of skis are sagging. The com
> Iskra Vremec and Colin McFee are experienced scuba divers who have spent many years in the salvage business. About a year ago, they decided to start their own company to recover damaged and sunken vessels and their cargoes off the east coast of Canada. T
> ASPE and IFRS have differing criteria for whether an element should be recognized or not. Assume that Thatcher Inc. (TI) is the subject of a lawsuit. TI sells prepared food on a wholesale basis to supermarket chains (which resell the food at a retail lev
> The ASPE conceptual framework acknowledges the concept of conservatism. Instructions a. Define the term "conservatism." b. IFRS introduced the term "prudence" in the new Conceptual Framework. Explain what this means. c. Is conservatism and/or prudence i
> Jasper Bakery Limited signed a purchase order to buy 50 kg of butter from a farmer over the next month at a fixed price. The butter is of exceptional quality and will be used in baked goods that will be sold in the bakery. Instructions a. Define the ter
> On December 31, 2019, Zurich Corp. provided you with the following pre-adjustment information regarding its portfolio of investments held for short-term profit-taking: During 2020, the Bilby Corp. shares were sold for $9,500. The fair values of the secur
> Refer to the information in E9.3, except assume that Mustafa hopes to make a gain on the bonds as interest rates are expected to fall. Mustafa accounts for the bonds at fair value with changes in value taken to net income, and separately recognizes and r
> On January 1, 2020, Phantom Corp. acquires $300,000 of Spider Products Inc. 9% bonds at a price of $278,384. The interest is payable each December 31, and the bonds mature on December 31, 2022. The investment will provide Phantom Corp. with a 12% yield.
> On January 1, 2020, Mustafa Limited paid $537,907.40 for 12% bonds with a maturity value of $500,000. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature on January 1, 2025, with interest receivable on December
> Chuckwalla Limited purchased a computer for $7,000 on January l, 2020. Straight-line depreciation is used for the computer, based on a five-year life and a $1,000 residual value. In 2022, the estimates are revised. Chuckwalla now expects the computer wil
> (Entries for Cost/ Amortized Cost Investments) On January 1, 2020, Kenn Corp. purchased at par 10% bonds having a maturity value of $300,000. They are dated January 1, 2020, and mature on January 1, 2025, with interest receivable on December 31 of each y
> Each of the following investments is independent of the others. 1. A bond that will mature in four years was bought one month ago when the price dropped. As soon as the value increases, which is expected next month, it will be sold. 2. Ten percent of the
> Tennessee Corp., reporting under ASPE, has provided the following information regarding its intangible assets: 1. A patent was purchased from Marvin Inc. for $1.2 million on January 1, 2019. Tennessee estimated the patent's remaining useful life to be 1
