Nicholas’s Christmas Tree Farm Ltd. grows pine, fi r, and spruce trees. The farm cuts and sells trees during the Christmas season and exports most of the trees to the United States. The remaining trees are sold to local tree-lot operators. It normally takes 12 years for a tree to grow to a suitable size, and the average selling price of a tree is $24. The biggest costs to the business are pest control, fertilizer, and pruning trees over the 12-year period. These costs average $12 per tree (assume these are incurred evenly over the 12-year growing cycle). Instructions: (a) How should this inventory be recorded under ASPE? (b) How should the costs of pest control, fertilizer, and pruning be recognized under IFRS? (c) Assume that the fair value of each tree at the end of 2017 is $8 and the opening value was $5. Prepare the journal entries if the costs are capitalized each year. (d) Assume that the fair value of each tree at the end of 2017 is $8 and the opening value was $5. Prepare the journal entries if the costs are expensed each year.
> The president of Plain Corp., Joyce Lima, is thinking of purchasing Balloon Bunch Corporation. She thinks that the offer sounds fair but she wants to consult a professional accountant to be sure. Balloon Bunch Corporation is asking for $85,000 in excess
> Macho Inc. has recently become interested in acquiring a South American plant to handle many of its production functions in that market. One possible candidate is De Fuentes SA, a closely held corporation, whose owners have decided to sell their business
> Hotel Resort Limited is a company that builds world-class resorts in tourist areas around the globe. When the company decided to build a resort in Yellowknife, the federal government agreed to provide a forgivable loan in the amount of $50 million to hel
> On September 1, 2017, Madonna Lisa Corporation, a public company, acquired Jaromil Enterprises for a cash payment of $763,000. At the time of purchase, Jaromil’s statement of financial position showed assets of $850,000, liabilities of $430,000, and owne
> In late July 2017, Mona Ltd., a private company, paid $2 million to acquire all of the net assets of Lubello Corp., which then became a division of Mona. Lubello reported the following statement of financial position at the time of acquisition: It was
> Six examples of purchased intangible assets follow. They are reported on the consolidated statement of financial position of Powers Enterprises Limited and include information about their useful and legal lives. Powers prepares financial statements in ac
> Use the data provided in P12-8. Assume instead that Meridan Golf and Sports is a public company. The relevant information for the impairment test on December 31, 2019, is as follows: Instructions: Provide the calculations for the impairment test and an
> Meridan Golf and Sports was formed on July 1, 2017, when Steve Power driver purchased Old Master Golf Corporation. Old Master provides video golf instruction at kiosks in shopping malls. Power driver’s plan is to make the instruction bu
> In 2017, Aquaculture Incorporated applied for several commercial fishing licences for its commercial fishing vessels. The application was successful and on January 2, 2017, Aquaculture was granted 22 commercial fishing licences for a registration fee of
> During 2015, Medicine Hat Tools Ltd., a Canadian public company, purchased a building site for its product development laboratory at a cost of $61,000. Construction of the building started in 2015. The building was completed in late December 2016 at a co
> Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Fields does not manufacture or sell the products and processes it develops. Instead, it conducts research and develops products
> Monsecours Corp., a public company incorporated on June 28, 2016, set up a single account for all of its intangible assets. The following summary discloses the debit entries that were recorded during 2016 and 2017 in that account: The new business star
> Gelato Corporation, a private entity reporting under ASPE, was incorporated on January 3, 2016. The corporation’s financial statements for its first year of operations were not examined by a public accountant. You have been engaged to a
> A machine’s invoice price is $40,000. Various other costs relating to the acquisition and installation of the machine—including transportation, electrical wiring, a special base, and so on—amount to $7,500. The machine has an estimated life of 10 years,
> Information for Naples Corporation’s intangible assets follows: 1. On January 1, 2017, Naples signed an agreement to operate as a franchisee of Copy Service, Inc., for an initial franchise fee of $75,000. Of this amount, $35,000 was paid when the agreeme
> Guiglano Inc. is a large, publicly held corporation. The following are six selected expenditures that were made by the company during the fiscal year ended April 30, 2017. The proper accounting treatment of these transactions must be determined in order
> The records of Sudbury Menswear report the following data for the month of September: Instructions: (a) Estimate the ending inventory using the conventional retail inventory method. (b) Assuming that a physical count of the inventory determined that th
> In early January 2017, Chi Inc., a private enterprise that applies ASPE, purchased 40% of the common shares of Washi Corp. for $410,000. Chi was now able to exercise considerable influence in decisions made by Washi’s management. Washi Corp.’s statement
> On January 3, 2017, Mego Limited purchased 3,000 (30%) of the common shares of Sonja Corp. for $438,000. The following information is provided about the identifiable assets and liabilities of Sonja at the date of acquisition: During 2017, Sonja reporte
> The following are two independent situations. Situation 1: Lauren Inc. received dividends from its common share investments during the year ended December 31, 2017, as follows: • A cash dividend of $12,250 is received from Peel Corporation. Lauren owns a
> On January 1, 2017, Rae Corporation purchased 30% of the common shares of Martz Limited for $196,000. Martz Limited shares are not traded in an active market. The carrying amount of Martz’s net assets was $520,000 on that date. Any excess of the purchase
> Harnish Inc. acquired 25% of the outstanding common shares of Gregson Inc. on December 31, 2016. The purchase price was $1,250,000 for 62,500 shares, and is equal to 25% of Gregson’s carrying amount. Gregson declared and paid a $0.75 per share cash divid
> Fox Ltd. invested $1 million in Gloven Corp. early in the current year, receiving 25% of its outstanding shares. At the time of the purchase, Gloven Corp. had a carrying amount of $3.2 million. Gloven Corp. pays out 35% of its net income in dividends eac
> Holmes, Inc. purchased 30% of Nadal Corporation’s 30,000 outstanding common shares at a cost of $15 per share on January 3, 2017. The purchase price of $15 per share was based solely on the book value of Nadal’s net assets. On September 21, Nadal declare
> Access the financial statements of BHP Billiton plc for the company’s year ended June 30, 2014. Also access the financial statements of Newfield Exploration Company for the company’s year ended December 31, 2014. These are available at the companies’ web
> On January 1, 2017, Kenn Corp. purchased at par 10% bonds having a maturity value of $300,000. They are dated January 1, 2017, and mature on January 1, 2022, with interest receivable on December 31 of each year. The bonds are accounted for using the amor
> Weekly Corp., a December 31 yearend company that applies IFRS, acquired an investment of 1,000 shares of Credence Corp. in mid-2013 for $29,850. Between significant volatility in the markets and in the business prospects of Credence Corp., the accounting
> On January 1, 2015, Mamood Ltd. paid $322,744.44 for 12% bonds of Variation Ltd. with a maturity value of $300,000. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2015, mature on January 1, 2021, and pay interest each Decem
> Tsui Corporation owns corporate bonds at December 31, 2017, accounted for using the amortized cost model. These bonds have a par value of $800,000 and an amortized cost of $788,000. After an impairment review was triggered, Tsui determined that the disco
> In early 2017, for the first time, HTSM Corp. invested in the common shares of another Canadian company. It acquired 5,000 shares of Toronto Stock Exchange–traded Bayscape Ltd. at a cost of $68,750. Bayscape is projected to reach a value of $15.50 per sh
> Niger Corp. provided you with the following information about its investment in Fahad Corp. shares purchased in May 2017 and accounted for using the FV-OCI method: Cost…………………………………………………………….$ 39,900 Fair value, December 31, 2017………………………..$41,750 Fair
> At December 31, 2017, the equity investments of Wang Inc. that were accounted for using the FV-OCI model without recycling (application of IFRS 9) were as follows: Because of a change in relationship with Ahn Inc., Wang Inc. sold its investment in Ahn
> Assume the same information as in E9-12, except that the bonds are carried at FV-OCI. The fair value of the bonds at December 31 of each year-end is as follows: Instructions: (a) Prepare the journal entries to record the interest received and recogniti
> On January 1, 2016, Hi and Lois Company purchased 12% bonds having a maturity value of $300,000 for $322,744.72. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2016, and mature January 1, 2021, with interest receivable Dece
> Arantxa Corporation made the following purchases of investments during 2017, the first year in which Arantxa invested in equity securities: 1. On January 15, purchased 9,000 shares of Nirmala Corp.’s common shares at $33.50 per share plus commission of $
> Access the financial statements of Brookfield Asset Management Inc. for the company’s year ended December 31, 2014. These are included at the end of the book. Review the information that is provided and answer the following questions about the company.
> The following information is available about Kao Corp.’s investments at December 31, 2017. This is the first year Kao has purchased securities for investment purposes. Assume that Kao Corp. follows IFRS and applies IFRS 9. Instructio
> Transactions follow for Cassio Limited: March 10………………Purchased goods billed at $40,000, terms 3/10, n/60. 11…………………………..Purchased goods billed at $25,000, terms 1/15, n/30. 19……………………………………………………………………Paid invoice of March 10. 24………………………….Purchased go
> Eureka Limited has a calendar-year accounting period. The following errors were discovered in 2017. 1. The December 31, 2015 merchandise inventory had been understated by $51,000. 2. Merchandise purchased on account in 2016 was recorded on the books for
> Salamander Limited makes the following errors during the current year. Each error is an independent case. 1. Ending inventory is overstated by $1,020, but purchases are recorded correctly. 2. Both ending inventory and a purchase on account are understate
> At December 31, 2017, Igor Ltd. has outstanding non-cancellable purchase commitments for 32,500 litres of raw material at $2.00 per litre. The material will be used in Igor’s manufacturing process, and the company prices its raw materials inventory at co
> During 2017, Build it Furniture Limited purchased a railway car load of wicker chairs. The manufacturer of the chairs sold them to Build it for a lump sum of $59,850, because it was discontinuing manufacturing operations and wanted to dispose of its enti
> In an annual audit of Solaro Company Limited, you find that a physical inventory count on December 31, 2017, showed merchandise of $441,000. You also discover that the following items were excluded from the $441,000: 1. Merchandise of $61,000 is held by
> The following is a list of items that may or may not be reported as inventory in J Soukas Corp.’s December 31 balance sheet: 1. Goods out on consignment at another company’s store 2. Goods sold on an installment basis 3. Goods purchased f.o.b. shipping p
> Jaeco Corporation asks you to review its December 31, 2017 inventory values and prepare the necessary adjustments to the books. The following information is given to you: 1. Jaeco uses the periodic method of recording inventory. A physical count reveals
> Khalfan Industries would like to determine the fair value of its manufacturing facility in London, Ontario. The facility consists of land, building, and manufacturing equipment. Instructions: (a) Identify some of the considerations that are involved in
> Companies in the same line of business usually have similar investments and capital structures, and an opportunity for similar rates of return. One of the key performance indicators that is used to assess the profitability of companies is the return on a
> The financial statements of Trifolium Corporation for fiscal 2015 to fiscal 2017 are as follows (in thousands): Instructions: (a) Calculate Trifolium’s (1) inventory turnover and (2) average days to sell inventory for each of the two
> Milan Company Limited uses the gross profit method to estimate inventory for monthly reports. Information follows for the month of May: Instructions: (a) Calculate the estimated inventory at May 31, assuming that the gross profit is 25% of sales. (b) C
> The Becker Milk Company Limited, a real estate and investment management company, reports the following information in its financial statements for the years ended April 30, 2014, 2013, and 2102: Instructions: (a) Calculate the accounts receivable turn
> The inventory of 3T Company on December 31, 2017, consists of the following items. Instructions: (a) Determine the inventory as at December 31, 2017, by the lower of cost and net realizable value method, applying this method directly to each item. (b)
> As a result of its annual inventory count, Tarweed Corp. determined its ending inventory at cost and at lower of cost and net realizable value at December 31, 2016, and December 31, 2017. This information is as follows: Instructions: (a) Prepare the jo
> The Ogale Equipment Corporation maintains a general ledger account for each class of inventory, debiting the individual accounts for increases during the period and crediting them for decreases. The transactions that follow are for the Raw Materials inve
> Information is presented in E8-18 on the inventory of mini-kettles at Funnell Company Limited for the month of May. Instructions: (a) Assuming that the perpetual inventory method is used, calculate the inventory cost at May 31 under each of the followin
> The following information is for the inventory of mini-kettles at Funnell Company Limited for the month of May: Instructions: (a) Assuming that the periodic inventory method is used, calculate the inventory cost at May 31 under each of the following co
> Schonfeld Corporation began operations on December 1, 2016. The only inventory transaction in 2016 was the purchase of inventory on December 10, 2016, at a cost of $20 per unit. None of this inventory was sold in 2016. Relevant information for fi scal 20
> Access the annual financial statements of Stora Enso Oyj for the company’s year ended December 31, 2014. These are available at the company’s website, www.storaenso.com. Review the information that is provided and answer the following questions about the
> Aquino Corporation is a multi-product fi rm. The following information concerns one of its products, the Trinton: Instructions: Calculate cost of goods sold, assuming Aquino uses: (a) A periodic inventory system and FIFO cost formula (b) A periodic inv
> On July 1, 2017, Agincourt Inc. made two sales: 1. It sold excess land in exchange for a four-year, non–interest-bearing promissory note in the face amount of $1,101,460. The land’s carrying value is $590,000. 2. It rendered services in exchange for an e
> Two or more items are omitted in each of the following tabulations of income statement data. Fill in the amounts that are missing. 2015 2016 2017 Sales $290,000 6,000 $410,000 Sales returns 13,000 347,000 32,000 Net sales Beginning inventory Ending
> In fiscal 2017, Ivanjoh Realty Corporation purchased unimproved land for $55,000. The land was improved and subdivided into building lots at an additional cost of $34,460. These building lots were all the same size but, because of differences in location
> Linsang Corporation’s retail store and warehouse closed for an entire weekend while the year-end inventory was counted. When the count was finished, the controller gathered all the count books and information from the clerical staff, co
> Iqbal Corporation uses the lower of FIFO cost and net realizable value method on an individual item basis, applying the direct method. The inventory at December 31, 2016, included product AG. Relevant per-unit data for product AG follow: Estimated selli
> The net income per books of Russell Industries Limited was determined without any knowledge of the following errors. The 2012 year was Russell’s first year in business. No dividends have been declared or paid. Instructions: (a) Prepar
> At January 1, 2017, the credit balance of Andy Corp.’s Allowance for Doubtful Accounts was $400,000. During 2017, the bad debt expense entry was based on a percentage of net credit sales. Net sales for 2017 were $80 million, of which 90% were on account.
> At the end of 2017, Perez Corporation has accounts receivable of $2.5 million and an allowance for doubtful accounts of $120,000. On January 16, 2018, Perez determined that its $20,000 receivable from Morganfield Ltd. will not be collected, and managemen
> Information on Janut Corp., which reports under ASPE, follows: July 1 Janut Corp. sold to Harding Ltd. merchandise having a sales price of $9,000, terms 3/10, n/60. Janut records its sales and receivables net. 3 Harding Ltd. returned defective merchandis
> Access the financial statements of Magna International Inc. for the company’s year ended December 31, 2014. These are available at www. sedar.com or the company’s website. Review the information that is provided and answer the following questions about t
> Assume that Lee Inc. has the following accounts at the end of the current year: 1. Common Shares 2. Raw Materials Inventory 3. FV-OCI Investments 4. Unearned Rent Revenue 5. Work-in-Process Inventory 6. Intangible Assets—Copyrights 7. Buildings 8.
> The bookkeeper for Garfield Corp. has prepared the following statement of financial position as at July 31, 2017: The following additional information is provided: 1. Cash includes $1,200 in a petty cash fund and $12,000 in a bond sinking fund. 2. The
> Bruno Corp. has decided to expand its operations. The bookkeeper recently completed the following statement of financial position in order to obtain additional funds for expansion: Instructions: (a) Prepare a revised statement of financial position usi
> LeBlanc Inc. shows a balance of $519,289 in the Accounts Receivable account on December 31, 2017. The balance consists of the following: Installment accounts due in 2018……………………………………………..$ 91,000 Installment accounts due after 2018……………………………………………80,0
> Selected accounts follow for Kings Inc., as reported in the work sheet at the end of May 2017: Instructions: Extend the amounts reported in the adjusted trial balance to the appropriate columns in the work sheet. Do not total individual columns. Ad
> Eli Corp. has just received its August 31, 2017 bank statement, which is summarized as follows: The general ledger Cash account contained the following entries for the month of August: Deposits in transit at August 31 are $3,800, and cheques outstand
> The following independent situations require professional judgement for determining when to recognize revenue from the transactions. 1. Air Yukon sells you an advance purchase airline ticket in September for your flight home at Christmas. 2. Better Buy L
> Kali Corp. established a petty cash fund early in 2017 to increase the efficiency of accounting for small cash transactions and to improve control over many of the small expenditures it makes. The company decided to set up the imprest fund at $500 and a
> Use the information in E5-17 for Dropafix Inc. Instructions: (a) Calculate the current and acid test ratios for 2016 and 2017. (b) Calculate Dropafix’s current cash debt coverage ratio for 2017. (c) Calculate Dropafix’
> Lute Retail Ltd. follows ASPE. It transfers $355,000 of its accounts receivable to an independent trust in a securitization transaction on July 11, 2017, receiving 96% of the receivables balance as proceeds. Lute will continue to manage the customer acco
> Financial statements can be a valuable tool for many parties interested in a company’s performance. Consider a public company in Alberta that drills oil and sells it to refineries in the United States. The company prepares its financial statements using
> The classifications on Chesapeake Limited’s statement of financial position are as follows: 1. Current assets 2. Long-term investments 3. Property, plant, and equipment 4. Intangible assets 5. Other assets 6. Current liabilities 7. Non-current liab
> Chessman Corporation factors $600,000 of accounts receivable with Liquidity Financing, Inc. on a with recourse basis. Liquidity Financing will collect the receivables. The receivable records are transferred to Liquidity Financing on August 15, 2017. Liqu
> The trial balance before adjustment for Bassel Company shows the following balances. The following cases are independent: 1. To obtain cash, Bassel factors without recourse $20,000 of receivables with Anila Finance. The finance charge is 10% of the amo
> On April 1, 2017, Ibrahim Corporation assigns $400,000 of its accounts receivable to First National Bank as collateral for a $200,000 loan that is due July 1, 2017. The assignment agreement calls for Ibrahim to continue to collect the receivables. First
> By December 31, 2017, Clearing Corp. had performed a significant amount of environmental consulting services for Rank Ltd. Rank was short of cash, and Clearing agreed to accept a $200,000, non–interest-bearing note due December 31, 2019, as payment in fu
> On September 1, 2017, Myo Inc. sold goods to Khin Corporation, a new customer. Before shipping the goods, Myo’s credit and collections department conducted a procedural credit check and determined that Khin is a high-credit-risk customer. As a result, My
> Little Corp. was experiencing cash flow problems and was unable to pay its $105,000 account payable to Big Corp. when it fell due on September 30, 2017. Big agreed to substitute a one-year note for the open account. The following two options were present
> The current assets and current liabilities sections of the statement of financial position of Agincourt Corp. are as follows: The following errors have been discovered in the corporation’s accounting: 1. January 2018 cash disbursement
> Uddin Corp.’s statement of financial position at the end of 2016 included the following items: The following information is available for the 2017 fiscal year: 1. Net income was $391,000. 2. Equipment (cost of $20,000 and accumulated
> Selected accounts follow of Aramis Limited at December 31, 2017: The following additional information is available: 1. Inventory is valued at the lower of cost and net realizable value using FIFO. 2. Equipment is recorded at cost. Accumulated depreciat
> Hans Hoogervorst, Chair of the IASB, delivered a speech at the Korean Accounting Review International Symposium in Seoul, Korea, on March 31, 2015, entitled “Mind the Gap (Between non-GAAP and GAAP).” In this presentation, he spoke of issues related to t
> The controller for Fashion Co. is trying to determine the amount of cash to report on the December 31, 2017 statement of financial position. The following information is provided: 1. A commercial savings account with $600,000 and a commercial chequing ac
> Lujie Xie is the controller of Lincoln Corporation and is responsible for the preparation of the year-end financial statements on December 31, 2017. Lincoln prepares financial statements in accordance with ASPE. The following transactions occurred during
> The trial balance of Zhang Ltd. at December 31, 2017, follows: Instructions: (a) Prepare a classified statement of financial position as at December 31, 2017. Ignore income taxes. (b) Is there any situation where it would make more sense to have a stat
> Samson Corporation is preparing its December 31, 2017 statement of financial position. The following items may be reported as either current or long-term liabilities: 1. On December 15, 2017, Samson declared a cash dividend of $1.50 per common share to s
> Assume that Elrond Inc. decided to sell Demand TV Ltd., a subsidiary, on September 30, 2017. There is a formal plan to dispose of the business component, and the sale qualifies for discontinued operations treatment. Pertinent data on the operations of th
> Keith Nobrega is trying to determine the amount to set aside so that he will have enough money on hand in two years to overhaul the engine on his vintage used car. While there is some uncertainty about the cost of engine overhauls in two years, by conduc
> Corporation during the current year. 1. Ordinary operating maintenance on equipment was recorded as follows: Equipment……………………………………………..2,500 Accounts Payable…………………………………….2,500 2. Trimm received an advance on a custom order for merchandise that will
> Selected accounts for Winslow Inc. as at December 31, 2017, are as follows: Instructions: Prepare closing entries for Winslow Inc. on December 31, 2017. Inventory FV-NI Investments FV-OCI Investments Retained Earnings Dividends Accumulated Other $
> Use the information in E5-14 for Carmichael Industries. Instructions: (a) Calculate the current and acid test ratios for 2016 and 2017. (b) Calculate Carmichael’s current cash debt coverage ratio for 2017. (c) Based on the analyses in
> Use the information in E5-18 for Sensify Corporation. Instructions: (a) Calculate the current ratio and debt to total assets ratio as at December 31, 2016 and 2017. Calculate the free cash flow for December 31, 2017. (b) Based on the analysis in (a), co
