Question: In 2020, Noshy Corporation had accounting income

> Turcotte Limited, a public company following IFRS 16, decided to upgrade the coffee machines in all of its office locations. Turcotte leased 50 machines from Coffee Tyme Ltd. on July 1, 2020. (To purchase the coffee machines instead would have cost Turco

> Refer to the specimen financial statements at the end of the book, which show excerpts from the 2017 year-end financial statements, including the accompanying notes, of Hudson's Bay Company. The full financial statements are available on SEDAR. In the no

> On January 1, 2020, Quong Corporation (the lessee) entered into a four-year, non-cancellable equipment lease contract with Zareiga Inc. (the lessor). The PV of the minimum lease payments required was $116,025. Also at lease inception, it was estimated th

> Indicate the effect—understated (U), overstated (O), or no effect (NE)—that each of the following errors has on 2019 net income and 2020 net income: 2019 2020 Wages payable were not recorded at Dec. 31, 2019. Equip

> Paudel Limited has been in the retail business for many years and has reached its goal in securing a strong financial position. The board of directors decided that it is time to adopt a policy of paying quarterly dividends. No dividends had been declared

> Matusek Corporation has been experiencing a higher than expected number of warranty claims in the current year, due mainly to less than ideal product design. For this reason, the warranty expense percentage used was changed from 2% to 3% of sales. The wa

> BBF Inc. owns a broadcast licence it purchased for $100,000, which is renewable every 10 years if BBF complies with regulatory requirements and provides an acceptable level of service to its customers. The licence may be renewed indefinitely at little co

> Wong Limited is a start-up company and has suffered a loss in the current year. Although it is confident that its expansion investment will pay off in the future, it decided to not claim any capital cost allowance (CCA) on its assets when it filed its ta

> Bailey Corp. changed depreciation methods in 2020 from straight-line to double-declining balance because management gathered evidence that the assets were being used differently than previously thought. The assets involved were acquired early in 2017 for

> Quinlan Corporation purchased Equipment for $60,000 on January 1, 2018. It was depreciated based on a seven-year life and an $18,000 residual value. On January 1, 2020, Quinlan revised these estimates to a total useful life of four years and a residual v

> Use the information for McCormick Ltd. from BE20.8. Assume that at December 31, 2020, McCormick made an adjusting entry to accrue interest expense of $8,296 on the lease. Prepare McCormick’s May 1, 2021 journal entry to record the second lease payment of

> McCormick Ltd., a public company following IFRS 16, recorded a right-of-use asset and lease liability at $150,000 on May 1, 2020. The interest rate is 10%. McCormick made the first lease payment of $25,561 on May 1, 2020. The lease requires a total of ei

> Refer to the financial statements of Hudson's Bay Company for its fiscal year ended February 3, 2018 (53 weeks), which are reproduced at the end of Volume 2 of this text, and for its fiscal year ended January 28, 2017 (52 weeks), found at www.sedar.com o

> At December 31, 2020, Glover Corporation provided you with the following information: Determine the account and its balance that should be reported on Glover Corporation's December 31, 2020 balance sheet if it applies ASPE. How should the $990,000 be re

> Coa Corporation recently needed to find temporary inventory storage space when transitioning from an old factory to a newly built factory within the same city. Coa signed a 10-month lease on a warehouse requiring monthly payments in advance of $14,500.

> Nilson Inc. had accounting income of $156,000 in 2020. Included in the calculation of that amount is the CEO's life insurance expense of $5,000, which is not deductible for tax purposes. In addition, the undepreciated capital cost (UCC) for tax purposes

> Regina Corporation, which uses ASPE, manufactures replicators. On May 29, 2020, it leased to Barnes Limited a replicator that cost $265,000 to manufacture and usually sells for $410,000. The lease agreement covers the replicator’s five-year useful life a

> Use the information for Lai Corporation from BE20.14. Assume that, instead of costing Lai $175,000, the equipment was manufactured by Lai at a cost of $137,500 and the equipment’s regular selling price is $175,000. Prepare Lai Corporation’s January 1, 20

> Lai Corporation, which uses ASPE, leased equipment it had specifically purchased at a cost of $175,000 for Swander, the lessee. The term of the lease is six years, beginning January 1, 2020, with equal rental payments of $33,574 at the beginning of each

> Use the information for Merrill Corporation from BE20.11 and the information that you gathered while solving BE20.11 and BE20.12. Prepare a schedule contrasting the journal entries prepared using a guaranteed residual value with those using an unguarante

> Use the information for Merrill Corporation from BE20.11. Assume that a residual value of $17,000 is expected at the end of the lease, but that Merrill does not guarantee the residual value. Using 1. tables, 2. a financial calculator, or 3. Excel func

> Merrill Corporation, which uses ASPE, enters into a six-year lease of equipment on September 1, 2020, that requires six annual payments of $28,000 each, beginning September 1, 2020. In addition, Merrill guarantees the lessor a residual value of $17,000 a

> Refer to the data for Duster Corporation's defined benefit pension plan in BE19.9. Now assume that the company follows ASPE instead of IFRS. Determine the 2020 effect of the pension plan on pension expense and the company's shareholders' equity. From BE

> The accounting for operating leases has been a controversial issue. Many observers argue that firms that use operating leases are using significantly more assets and are more highly leveraged than their financial statements indicate. As a result, analyst

> Duster Corporation is a private company with a defined benefit pension plan. The following information is available for Duster Corporation for 2020: Assuming that Duster follows IFRS, determine the 2020 effect of the pension plan on pension expense and

> Jonquière Corporation provides the following information about its defined benefit pension plan (in hundreds of thousands of dollars) for 2020: At the end of the year, Jonquière revised the terms of its pension plan, which result

> Mazur Corp. follows IFRS and began operations in 2020 and reported accounting income of $275,000 for the year. Mazur's CCA exceeded its book depreciation by $40,000. Mazur's tax rate for 2020 and years thereafter is 30%. In its December 31, 2020 statemen

> Sonia Corporation has historically followed ASPE, but is considering a change to IFRS. It has temporary differences at December 31, 2020, that result in the following SFP future income tax accounts: Indicate how these balances will be presented in Sonia

> Weiss Inc. reported income from continuing operations of $87,000 and a loss from discontinued operations of $16,000 in 2020, all before income taxes. All items are fully taxable and deductible for tax purposes. Prepare the bottom of the income statement

> Sandeep Corporation had income before income tax of $230,000 in 2020. Sandeep's current tax expense is $43,000, and deferred tax expense is $27,000. a. Prepare Sandeep's 2020 income statement, beginning with income before income tax. b. Calculate Sande

> In 2020, Borovya Limited purchased shares of Gurvir Corp. at a cost of $52,000. This was the first time the company had ever acquired an investment to be accounted for at fair value through other comprehensive income (FV-OCI). At December 31, 2020, the G

> Ditek Corp. provides a defined contribution pension plan for its employees. The plan requires Ditek to contribute 5% of employees' gross pay to a fund trustee each year. Ditek's total payroll for 2020 was $2,735,864. At the start of 2020, Ditek revised t

> At December 31, 2020, Tapper Corporation has a deferred tax asset of $420,000. After a careful review of all available evidence, it is determined that it is more likely than not that $85,000 of this deferred tax asset will not be realized. Prepare the ne

> Use the information for Kyle Inc. given in BE18.16. Assume now that Kyle earns taxable income of $25,000 in 2021 and that at the end of 2021 there is still too much uncertainty to recognize a deferred tax asset. Prepare all the journal entries that are n

> Access the annual financial statements, including the accompanying notes, of Loblaw Companies Limited for its 52 weeks ended December 30, 2017. These can be found on SEDAR (www.sedar.com) or the company’s website. Review the principal statements and the

> Refer to BE19.16 and Saver Corporation's one-person defined benefit pension plan. If the change in the January 1, 2020 defined benefit obligation had been the result of an actuarial revaluation instead of a plan amendment, a. determine the effect that t

> Saver Corporation ended its previous fiscal year with a defined benefit obligation of $137,888 and plan assets of $140,000. On January 1, 2020, the company amended its one-person defined benefit pension plan, resulting in a revised defined benefit obliga

> Legacy Corporation has the following information available concerning its post-retirement benefit plan for 2020: Assuming Legacy follows IFRS, a. calculate Legacy's 2020 post-retirement benefit expense that will be included in net income. b. Calculate

> Petra Ltd. is preparing its financial statements for its year ended December 31, 2020, and has just obtained an actuarial pension valuation as at its year-end date. Prior to the actuarial valuation, Petra determined, based on the individual components of

> Monday Corporation sponsors a defined benefit pension plan and reports under IFRS. On January 1, 2020, the company reported plan assets of $1,000 and a defined benefit obligation of $1,100 (all amounts in thousands of dollars). During 2020, the current s

> Refer to the data provided about Rui Corporation's pension plan in BE19.11. Prepare a pension work sheet for Rui Corporation for 2020 assuming the company applies ASPE. From BE19.11: At January 1, 2020, Rui Corporation had plan assets of $250,000 and a

> At December 31, 2019, Chai Inc. had a deferred tax asset of $40,000. At December 31, 2020, the deferred tax asset is $62,000. The corporation's 2020 current tax expense is $70,000. What amount should Chai report as total 2020 income tax expense? Prepare

> Scott Enterprises Inc. sponsors a defined benefit plan for its 500 employees. On December 31, 2020, the company's actuary provided the following information related to the plan: defined benefit obligation $11.3 million, and fair value of plan assets $9 m

> Using the information from BE18.5, and assuming that the $40,000 difference is the only difference between Mazur's accounting income and taxable income, prepare the journal entry(ies) to record the current tax expense, deferred tax expense, income tax pa

> At December 31, 2020, Watzman Inc. owned equipment that had a book value of $178,000 and a tax base of $136,000 due to the use of different depreciation methods for accounting and tax purposes. The enacted tax rate is 30%. Calculate the amount that Watzm

> LGS Inc. is a private company. You have recently been hired as the CFO for the company and are currently finalizing the company year-end report for December 31, 2020. The company has an option to follow either IFRS or ASPE, and has not yet made the choic

> Myers Corp. purchased depreciable assets costing $30,000 on January 2, 2020. For tax purposes, the company uses CCA in a class that has a 30% rate. For financial reporting purposes, the company uses straight-line depreciation over five years. The enacted

> Using the information from BE18.3, calculate the effective rate of income tax for Nilson Inc. for 2020. Also make a reconciliation from the statutory rate to the effective rate, using percentages. Round to one decimal place. From BE18.3: Nilson Inc. had

> The following information is available for Roginski Corporation for 2020. 1. CCA that was reported on the 2020 tax return exceeded depreciation reported on the income statement by $160,000. This difference is expected to reverse in equal amounts of $40,

> Use the information for Kyle Inc. given in BE18.16, but assume instead that it is more likely than not that the entire tax loss carryforward will not be realized in future years. Prepare all the journal entries that are necessary at the end of 2020 assum

> Kyle Inc. incurred a net operating loss of $580,000 in 2020. Combined income for 2017, 2018, and 2019 was $460,000. The tax rate for all years is 30%. Prepare the journal entries to record the benefits of the carryback and the carryforward, assuming it i

> Roper Corporation had the following tax information: In 2020, Roper suffered a net operating loss of $550,000, which it decided to carry back. The 2020 enacted tax rate is 25%. Prepare Roper's entry to record the effect of the loss carryback Year Ta

> At December 31, 2019, Palden Corporation had a deferred tax asset of $800,000, resulting from future deductible amounts of $3.2 million and an enacted tax rate of 25%. In May 2020, new income tax legislation is signed into law that raises the tax rate to

> Powell Corporation has a taxable temporary difference related to net book value versus UCC of $715,000 at December 31, 2020. This difference will reverse as follows: 2021, $53,000; 2022, $310,000; and 2023, $352,000. Enacted tax rates are 25% for 2021 an

> At December 31, 2019, Ambuir Corporation had a deferred tax liability of $35,000. At December 31, 2020, the deferred tax liability is $52,000. The corporation's 2020 current tax expense is $53,000. What amount should Ambuir report as total 2020 income ta

> Alimentation Couche-Tard Inc., Loblaw Companies Limited, and Empire Company Limited are three companies in the same industry. Because of this, the expectation is that their operations and financial positions are also similar. Instructions Go to SEDAR

> At December 31, 2020, Camille Corporation had an estimated warranty liability of $256,000 for accounting purposes and $0 for tax purposes. (The warranty costs are not deductible until they are paid.) The tax rate is 25%. Calculate the amount that Camille

> The 2020 income statement of Tanel Corporation showed net income of $860,000, which included a loss from discontinued operations of $140,000. Tanel had 25,000 common shares outstanding all year. a. Calculate earnings per share (EPS) for 2020 as it shoul

> Assume the same information as in BE17.7 except that on October 1, 2020, Laurin declared a 1- for-2 reverse stock split instead of a 10% stock dividend. Calculate the weighted average number of shares outstanding for Laurin for the year ended December 31

> Assume the same information as in BE17.7 except that on October 1, 2020, Laurin declared a 3- for-1 stock split instead of a 10% stock dividend. Calculate the weighted average number of shares outstanding for Laurin for the year ended December 31, 2020.

> Laurin Limited had 42,000 common shares outstanding on January 1, 2020. On March 1, 2020, Laurin issued 20,000 shares in exchange for equipment. On July 1, Laurin repurchased and cancelled 10,000 shares. On October 1, 2020, Laurin declared and issued a 1

> Dencil Corporation had 600,000 common shares outstanding on January 1, 2020. On March 1, 2020, Dencil issued 150,000 shares. On September 1, Dencil repurchased and cancelled 50,000 shares. Calculate Dencil's weighted average number of shares outstanding

> Assume the same information for Hedley Corporation as in BE17.3 except that the preferred shares are cumulative and the dividends have not yet been declared or paid. Calculate Hedley's 2020 earnings per share. Round to the nearest cent. From BE17.3: Hed

> Assume the same information for Hedley Corporation as in BE17.3 except that the preferred shares are non-cumulative and the dividend has not been declared or paid. Calculate Hedley's 2020 earnings per share. Round to the nearest cent. From BE17.3: Hedle

> Hedley Corporation had 2020 net income of $1.4 million. During 2020, Hedley paid a dividend of $5 per share on 100,000 preferred shares. Hedley also had 220,000 common shares outstanding during the year. Calculate Hedley's 2020 earnings per share. Round

> Spencer Ltd. established a SARs program on January 1, 2020, which entitles executives to receive cash at the date of exercise (any time in the next three years) for the difference between the shares' fair value and the pre-established price of $20 on 10,

> Potash Corporation of Saskatchewan Inc., Loblaw Companies Limited, and Air Canada are all Canadian companies with defined benefit plans as at December 31, 2017. Visit www.sedar.com to access financial statements for their 2017 fiscal years. (Note: Potash

> Applegate Inc. established a share appreciation rights (SARs) program on January 1, 2020, which entitles executives to receive cash at the date of exercise for the difference between the shares' fair value and the pre-established price of $16 on 3,700 SA

> On January 1, 2020, Blaine Corporation granted 6,000 options to executives. Each option entitles the holder to purchase one share of Blaine's common shares at $35 per share at any time after January 1, 2022. The shares' market price is $50 per share on t

> Hanover Corporation has 750,000 shares outstanding. The shares have an average cost of $45 per share. On September 5, 2020, the company repurchases 1,500 of its own shares at $75 per share and does not cancel them. The shares are classified as treasury s

> Bedard Corporation reported net income of $300,000 in 2020 and had 200,000 common shares outstanding throughout the year. Also outstanding all year were 45,000 (written) options to purchase common shares at $10 per share. The average market price for the

> Roley Corporation, a private company following ASPE, uses a periodic inventory system and the gross method of accounting for purchase discounts. On July 1, Roley purchased $60,000 of inventory, terms 2/10, n/30, f.o.b. shipping point. Roley paid freight

> In January 2020, Parker Inc. issued preferred shares that must be redeemed by Parker if the fair value of the company's common shares exceeds $100 per share. At time of issuance of the preferred shares, Parker's common shares had a fair value of $60 per

> Assume the same information as in BE17.17 except that Melanie reported net income of $350,000 in 2020. Calculate Melanie's 2020 diluted earnings per share. Round to the nearest cent. From BE17.17: Melanie Corporation reported net income of $550,000 in 2

> Melanie Corporation reported net income of $550,000 in 2020 and had 900,000 common shares outstanding throughout the year. On May 1, 2020, Melanie issued 5% convertible bonds. Each $1,000 bond is convertible into 120 common shares. Total proceeds at par

> Assume the same information as in BE17.15 except that the 10% bonds are convertible into 10,000 common shares. Calculate Thiessen's 2020 diluted earnings per share. Round to the nearest cent. From BE17.15: Thiessen Corporation earned net income of $300,

> Thiessen Corporation earned net income of $300,000 in 2020 and had 100,000 common shares outstanding throughout the year. Also outstanding all year was $800,000 of 10% bonds that are convertible into 26,000 common shares. Thiessen's tax rate is 25%. Calc

> BCE Inc.'s accounting policy note and its note disclosures relating to the company's pension and other postemployment benefits for the year ended December 31, 2017 are set out in the chapter. Instructions Review the disclosures from BCE's 2017 financi

> Access IAS 34 (Interim Financial Reporting), and the interim financial report for the six-month period ended June 30, 2018, for Nestlé SA from the company's website (www.nestle.com). Instructions a. Identify what specific financial statements, and the

> Milliken Corporation reported net income of $700,000 in 2020 and had 115,000 common shares outstanding throughout the year. Also outstanding all year were 9,500 cumulative preferred shares, with each being convertible into two common shares. The preferre

> Francine Limited was incorporated with share capital consisting of 100,000 common shares. In January 2020, it issued 20,000 mandatorily convertible preferred shares. The terms of the prospectus for the issuance of the preferred shares require the convert

> Describe the three-step process followed in arriving at diluted earnings per share when multiple potentially dilutive financial instruments are present.

> Ethan Corporation had 100,000 common shares outstanding on December 31, 2019. During 2020, the company issued 12,000 shares on March 1, retired 5,000 shares on July 1, issued a 20% stock dividend on October 1, and issued 18,000 shares on December 1. For

> Bantec Corporation had 500,000 common shares outstanding on January 1, 2020. On May 1, Bantec issued 50,000 shares. a. Calculate the weighted average number of shares outstanding for the year ended December 31, 2020, if the 50,000 shares were issued for

> Abourawes Services Inc. issued 1,000 $2 convertible preferred shares at $75 and 5,000 common shares at $25 each in 2019. Each preferred share is convertible into three common shares. On March 15, 2020, preferred shareholders converted 200 preferred share

> Spencer Limited has 50,000 common shares outstanding, with an average issue price per share of $8. On August 1, 2020, the company reacquired and cancelled 600 shares at $40 per share. There was contributed surplus of $0.25 per share at the time of the re

> Higgins Inc. has 52,000 common shares outstanding. The shares have an average cost of $21 per share. On July 1, 2020, Higgins reacquired 800 shares at $56 per share and retired them. Assume no contributed surplus balances exist from previous share repurc

> On January 1, 2020, Wolfgang Ltd. paid $1,000 for the option to buy 5,000 of its common shares for $25 each. The contract stipulates that it may be settled only by exercising the option and buying the shares. How should this be accounted for in the finan

> Refer to BE16.4. Assume the same facts except that the forward contract is a futures contract that trades on the Futures Exchange. Ginseng Inc. was required to deposit $30 with the stockbroker as a margin. Prepare the journal entries to update the books

> Maple Leaf Foods Inc. is a Canadian company that produces food products such as prepared meats, ready-to cook and ready-to-serve meals, and fresh pork and poultry. While most of Maple Leaf Foods' business is conducted in Canada, it also generates revenue

> On January 1, 2020, Ginseng Inc. entered into a forward contract to purchase U.S. $6,000 for $6,336 Canadian in 30 days. On January 15, the fair value of the contract was $40 (reflecting the present value of the future cash flows under the contract). Ass

> On February 1, 2020, Daily Produce Ltd. entered into a purchase commitment contract to buy apples from Farmers Corporation. According to the contract, Daily Produce could settle the contact on a net basis; however, Daily Produce intends to take delivery

> Sullivan Limited issued 2,000 common shares for $79,000. Prepare Sullivan's journal entry if a. the shares have no par value, and b. the shares have a par value of $11 per share.

> Sawgrass Corporation, a public company, reported the following balances at January 1, 2020: During the year ended December 31, 2020, the following summary transactions occurred: a. Prepare a statement of changes in shareholders' equity for the year as

> Lu Corporation has the following account balances at December 31, 2020: Prepare the December 31, 2020 shareholders' equity section of the SFP. Common Shares Subscribed $ 250,000 Common Shares 310,000 Subscriptions Receivable Retained Earnings Contri

> Assume that the bonds in BE14.15 were issued for $644,632 and the effective interest rate was 6%. a. Prepare Quinton Corporation's journal entry for the January 1 issuance. b. Prepare the company's journal entry for the July 1 interest payment. c. Prepar

> On January 1, 2020, Quinton Corporation issued $600,000 of 7% bonds that are due in 10 years. The bonds were issued for $559,229 and pay interest each July 1 and January 1. The company uses the effective interest method. Assume an effective rate of 8%. a

> The City of Fram issued 100 bonds at their face value of $6,000 each plus accrued interest on June 1, 2020. The term of the bonds was January 1, 2020, to January 1, 2026, with interest payable semi-annually each January 1 and July 1 at 6%. Fram uses the

> Assume that the bonds in BE14.11 were issued at 103. Assume also that Grenier Limited follows ASPE and records the amortization using the straight-line method. Prepare the journal entries related to the bonds for a. January 1, b. July 1, and c. Decemb

> Mallard Inc. owns shares of Oakwood Corporation that are classified as Mallard's fair value through net income (FV-NI) investment portfolio and accounted for using the FV-NI model. At December 31, 2019, the securities were carried in Mallard's accounting