Identify the two key categories used to account for non-strategic investments with less than 20% ownership.
> Refer to the financial statements for Spin Master and calculate the percentage change in non-current liabilities from December 31, 2016 to December 31, 2017.
> Refer to the financial statements for Spin Master and calculate the percentage change in revenue from December 31, 2016, to December 31, 2017.
> Zest Company is a Montreal HR firm. Its condensed income statement for the year ended November 30, 2020, is shown below. The liabilities reported on the November 30, 2020, balance sheet were: Accounts payable $ 26,230 Mortgage payable 328,698 Total lia
> What is the difference between comparative financial statements and common-size comparative statements?
> Refer to the financial statements for WestJet and calculate the percentage change in sales and marketing expenses from 2016 to 2017.
> Refer to the financial statements for WestJet and calculate the percentage change in total revenues from 2016 to 2017.
> What ratios would you calculate for the purpose of evaluating management performance?
> Why would a company’s return on total assets be different from its return on common shareholders’ equity?
> Why must the ratio of pledged assets to secured liabilities be interpreted with caution?
> Why is the capital structure of a company, as measured by debt and equity ratios, of importance to financial statement analysts?
> What information does the inventory turnover provide about a company’s short-term liquidity?
> What is the significance of the inventory of days’ sales uncollected?
> What does a relatively high accounts receivable turnover indicate about a company’s short-term liquidity?
> Sask Tractor borrowed $320,000 to purchase inventory on September 17, 2020 for 60 days at 6% interest by signing a note. On December 6, 2020, Sask Tractor sold a tractor for cash of $24,000 (cost $15,400) with a two-year parts and labour warranty. Based
> Which two ratios are the basic components in measuring a company’s operating efficiency? Which ratio summarizes these two components?
> Explain the difference between financial reporting and financial statements.
> On June 3, a company borrowed $50,000 by giving its bank a 60-day, interest-bearing note. On the June 30 statement of cash flows, where should this item be reported?
> Is depreciation an outflow of cash? Explain.
> Explain why non-cash expenses and losses are added to profit in calculating cash provided by operating activities using the indirect method.
> Refer to WestJet’s statement of cash flows. a. Which method was used to calculate net cash provided by operating activities? b. WestJet has two off-balance-sheet arrangements. What are they?
> If a company reports a profit for the year, is it possible for the company to show a net cash outflow from operating activities? Explain your answer.
> Describe the indirect method of reporting cash flows from operating activities.
> Describe the direct method of reporting cash flows from operating activities.
> What are cash equivalents and why are they included with cash when preparing a statement of cash flows?
> Appleton Electronics Company purchases merchandise inventory from several suppliers. On October 1, 2020, Appleton Electronics purchased from Digital Wiring $40,000 of inventory on account. On November 10, 2020, Appleton Electronics sold inventory to Disc
> Fab-Form Industries completed the following transactions involving the purchase of delivery equipment. Required: Prepare journal entries to record the transactions.
> The chapter-opening vignette indicated that Calvin Su follows the cash flow of his business very closely. Why do you think it is imperative for business owners to strictly manage their cash resources?
> Explain how cost of goods sold is converted from an accrual basis to a cash basis for use in the direct method.
> Explain how sales are converted from an accrual basis to a cash basis for use in the direct method.
> When a statement of cash flows is prepared by the direct method, what are some examples of items reported as cash flows from operating activities?
> Refer to Spin Master’s statement of cash flows. What activity comprised the largest financing activity resulting in cash outflows for the year ended December 31, 2017?
> Refer to Spin Master’s balance sheet. First, find the Cash balances on December, 2016, and December 31, 2017, and calculate the change in Cash. Next, refer to Spin Master’s statement of cash flows and identify the change in Cash reported for the year end
> Refer to Indigo’s statement of cash flows. What activity comprised Indigo’s cash outflows from financing activities for the fiscal year ended 2017?
> What are some examples of items reported on a statement of cash flows as financing activities?
> A company purchases land for $100,000, paying $20,000 cash and borrowing the remainder on a long-term note payable. How should this transaction be reported on a statement of cash flows?
> What are some examples of items reported on a statement of cash flows as investing activities?
> Africa Safari is a tour business that operates from about April to October each year. The company has an outstanding reputation for the quality of its tours and as a result pre-books customers a full year in advance. Customers must pay 40% at the time of
> What is the purpose and importance of a statement of cash flows to business decision making?
> Using the equity method, dividends received are not recorded as profit. Explain why this is true.
> When share investments are accounted for using the equity method, when should investment income be recognized? What accounts are debited and credited?
> In accounting for common share investments, when should the equity method be used?
> When non-strategic debt investments are accounted for using the amortized cost method, when should interest income be recognized?
> When non-strategic investments are accounted for using the fair value method, when should investment income be recognized?
> Is the FVTPL category used when management plans to hold investments to maturity or if they plan to actively trade the debt investments?
> How is interest recognized on debt investments that are expected to be held for their contract life?
> What is the difference between an equity investment and a debt investment?
> Startup companies such as the Farmery, highlighted in the chapter-opening vignette, often have challenges raising sufficient capital. From the issuing company perspective, what are the advantages and disadvantages, including costs and key considerations
> Tara Kim is the new manager of accounting and finance for a medium-sized manufacturing company. Now that the end of the year is approaching, her problem is determining whether and how to describe some of the company’s liabilities in the financial stateme
> Under what circumstances would a company prepare consolidated financial statements?
> If you know the par value of bonds, the contract rate, and the market interest rate, how can you estimate the market value of the bonds?
> What factors affect the market interest rates for bonds?
> What are the contract and market interest rates for bonds?
> Refer to the annual report for Telus presented. Where are the details regarding the composition of the $12,256,000 December 31, 2017, balance in long term debt?
> What obligation do issuing corporations have to bondholders?
> What is a bond indenture? What provisions are usually included in an indenture?
> What is the main advantage of issuing bonds instead of issuing shares to investors?
> What is the primary difference between a share and a bond?
> On November 9, 2020, Snowbot Snow Removal began to buy and resell snow blowers for $700 each. Snowbot uses the perpetual system to account for inventories. The snow blowers are covered under a warranty that requires the company to replace any non-working
> The initial ZooShare community bond offering highlighted in the chapter-opening vignette offered investors a 11.5–12.5% return. Why would the initial ZooShare bond offering provide investors with such an attractive return at such a high interest rate?
> How would a lease create an asset and a liability for the lessee?
> Refer to the annual report for Spin Master presented. Note 15 includes details that the company reports secured debt separately from unsecured debt as well as interest rates on their respective outstanding loans. Why would financial statement users be co
> Describe two alternative payment patterns for installment notes.
> Why does a company that issues bonds between interest dates collect accrued interest from the bonds’ purchasers?
> What is the cash price of a $2,000 bond that is sold at 98¼? What is the cash price of a $6,000 bond that is sold at 101½? Answer: The cash price of a $2,000 bond sold at 98 1/4 is 98.25% of $2,000, or $1,965. The cash price of a $6,000 bond priced at
> What is the difference between notes payable and bonds payable?
> The chapter-opening vignette highlighted Apple Inc.’s 7:1 stock split. What is the key reason executives at Apple would decide to provide shareholders with seven shares of stock for each common share held?
> After taking five years’ straight-line depreciation expense for an asset that was expected to have an eight year useful life, a company decided that the asset would last another six years. Is this decision a change in accounting policy? How would the fin
> Refer to the financial statements for WestJet. In both 2016 and 2017 the balance of shares issued and outstanding was reduced. What caused the balance of the account to go down? And what had shares been issued for?
> Brad’s Building Supplies entered into the following transactions involving current liabilities during 2020 and 2021: Required: Prepare journal entries to record these transactions for Brad’s Building Supplies.
> Refer to the financial statements for Spin Master. Did basic EPS increase or decrease from 2016 to 2017?
> How are earnings per share results calculated for a corporation with a simple capital structure?
> Refer to the financial statements for Indigo. The balance in share capital at April 1, 2017, was 26,351,484 shares. What is the balance as of March 31, 2018? What caused the change in share capital from 2017 to 2018?
> What effects does declaring a share dividend have on the corporation’s assets, liabilities, and total equity? What effects does the distribution of the shares have?
> What is the difference between a share dividend and a share split?
> Refer to the financial statements for WestJet, specifically Note 12. What was the amount during 2017 of the dividends per share?
> Refer again to the financial statements for WestJet, looking at the consolidated statements of cash flows. Notice the same cash dividends paid during the year ended December 31, 2016 and December 31, 2017 as on the consolidated statements of changes in e
> Refer to the financial statements for WestJet, looking at the consolidated statements of changes in equity. What were the total cash dividends declared and paid during the year ended December 31, 2016 and December 31, 2017?
> Why would an investor find convertible preferred shares attractive?
> What is the meaning of the call price of a share?
> Heritage Architect Company of Manitoba purchased some modular office furniture on March 10, 2020 that had a cost of $290,000 (ignore GST/PST). Show the journal entries that would record this purchase and payment under these three separate situations: a.
> What is the preemptive right of common shareholder?
> List the general rights of common shareholders.
> What are organization costs? List examples of these costs.
> Poppy Barley in the opening vignette is a private corporation that was formed by two sisters in Edmonton. Bombardier Inc. is an example of a Canadian public corporation. What is the main difference between a private corporation and a public corporation?
> Who is responsible for directing the affairs of a corporation?
> If the partners in Bloom Partnership, a floral design shop, want the financial statements to show the procedures used to allocate the partnership profit among the partners, on what financial statement should the allocation appear?
> The partnership agreement of lawyers Jenny Nelmida and Fei Abella provides for a two thirds/one-third sharing of profit but says nothing about losses. The first year of partnership operations resulted in a loss and Nelmida argues that the loss should be
> Leung, Lidder, and Lang have shared an equal stake as partners in a sports bar for the past three years. The partnership is being dissolved, as Leung is moving to England and leaving the firm. Lidder and Lang plan to carry on the business. In the final s
> How does a general partnership differ from a limited partnership?
> What does the term unlimited liability mean when it is applied to members of a partnership?
> Home-style Wool Company knits clothing from merino wool and sells online and at craft fairs. Gina takes deposits for custom orders. The person preparing the adjusting entries at year-end left for a vacation prior to completing the adjustments. You have b
> Can partners limit the right of a partner to commit their partnership to contracts? Would the agreement be binding (a) on the partners, and (b) on outsiders?
> As applied to a partnership, what does the term mutual agency mean?
> If a partnership contract does not state the period of time over which the partnership is to exist, when does the partnership end?
> In the chapter-opening vignette featuring Kicking Horse Coffee, Elana Rosenfeld advises that partners avoid a 50/50 partnership split and she strongly suggests obtaining legal counsel in drafting partnership agreements. What are the advantages and disadv
> A partner withdraws from a partnership and receives assets of greater value than the book value of his equity. Should the remaining partners share the resulting reduction in their equities in the ratio of their relative capital balances or in their profi
> Kay, Kat, and Kim are triplets who own a dance studio. In a liquidation, Kay’s share of partnership losses exceeds her capital account balance. She is unable to meet the deficit from her personal assets, and the excess losses are shared by her partners.
> After all partnership assets are converted to cash and all liabilities have been paid, the remaining cash should equal the sum of the balances of the partners’ capital accounts. Why?
> Amie and Lacey are partners. Lacey dies, and her son claims the right to take his mother’s place in the partnership. Does he have this right? Why?
> What is the benefit of a company like Pebble Technology Corp. raising funds through a crowdfunding program such as Kickstarter as opposed to through finding equity investors or obtaining a loan from a bank?
