Question: Omega Pharmaceuticals Inc. licenses its patent

> On January l, 2020, Algo Ltd. acquires a building at a cost of $230,000. The building is expected to have a 20-year life and no residual value. The asset is accounted for under the revaluation model, using the asset adjustment method. Revaluations are ca

> A partial statement of financial position of Blue water Ltd. on December 31, 2019, showed the following property, plant, and equipment assets accounted for under the cost model (accumulated depreciation includes depreciation for 2019): Blue water uses

> On January l , 2020, Twist Corp. had cash and common shares of $60,000. At that date, the company had no other asset, liability, or shareholders' equity balances. On January 2, 2020, Twist paid $40,000 cash for equity securities that it designated as fai

> Wen Corp., a public company located in Manitoba, both purchases and constructs various pieces of machinery and equipment that it uses in its operations. The following items are for machinery that was purchased and a piece of equipment that was constructe

> In fiscal 2020, Ivanjoh Realty Corporation purchased unimproved land for $55,000. The land was improved and subdivided into building Jots at an additional cost of $34,460. These building lots were all the same size but, because of differences in location

> 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, 2019, included product AG. Relevant per-unit data for product AG follow: There were 1,0

> The net income per books of Russell Industries Limited was determined without any knowledge of the following errors. The 2015 year was Russell's first year in business. No dividends have been declared or paid. Instructions a. Prepare a work sheet to sh

> Eureka Limited has a calendar-year accounting period. The following errors were discovered in 2020. 1. The December 31, 2018 merchandise inventory had been understated by $51,000. 2. Merchandise purchased on account in 2019 was recorded on the books for

> At December 31, 2020, Igor Ltd. has outstanding non cancellable purchase commitments for 32,500 liters of raw material at $2.00 per liter. The material will be used in Igor's manufacturing process, and the company prices its raw materials inventory at co

> During 2020, Buildit Furniture Limited purchased a railway carload of wicker chairs. The manufacturer of the chairs sold them to Buildit for a lump sum of $59,850, because it was discontinuing manufacturing operations and wanted to dispose of its entire

> In an annual audit of Solaro Company Limited, you find that a physical inventory count on December 31, 2020, 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

> Jaeco Corporation asks you to review its December 31, 2020 inventory values and prepare the adjustments that are needed to the books. The following information is given to you: 1. Jaeco uses the periodic method of recording inventory. A physical count re

> The financial statements of Trifolium Corporation for fiscal 2018 to fiscal 2020 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 years ended in 2020

> Cyan Corporation is a manufacturer of paints and specialty coatings. In March 2020, Beck Inc. filed a lawsuit against Cyan Corporation for alleged patent infringement, claiming $1.1 million in damages. Cyan's lawyer disputed the claim, but in December 20

> Nicholas's Christmas Tree Farm Ltd. grows pine, fir, 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 tak

> The inventory of 3T Company on December 31, 2020, consists of the following items. Instructions a. Determine the inventory as at December 31, 2020, by the lower of cost and net realizable value method, applying this method directly to each item. b. Det

> 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, 2019, and December 31, 2020. December 31, 2019, was Tarweed's first year end. This information

> Information is presented in E8.l 7 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 following

> Schonfeld Corporation began operations on December 1, 2019. The only inventory transaction in 2019 was the purchase of inventory on December 10, 2019, at a cost of $20 per unit. None of this inventory was sold in 2019. Relevant information for fiscal 202

> Two or more items are omitted in each of the following tabulations of income statement data for a business following ASPE. Instructions Fill in the amounts that are missing.

> 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

> On April 1, 2020, Ibrahim Corporation assigns $400,000 of its accounts receivable to First National Bank as collateral for a $200,000 loan that is due mJuly 1, 2020. The assignment agreement calls for Ibrahim to continue to collect the receivables. First

> By December 31, 2020, 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, 2022, as payment in fu

> On July 1, 2020, Agincourt Inc. made two sales: 1. It sold excess land in exchange for a four-yea r, 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

> Environmental Corporation specializes in the production and sale of eco friendly packaging. In 2020, Environmental reported net income (earnings) in excess of analyst expectations. This included a significant gain on disposal of investments in the year a

> On September 1, 2020, 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, 2020. Big agreed to substitute a one-year note for the open account. The following two options were present

> At January 1, 2020, the credit balance of Andy Corp.'s Allowance for Doubtful Accounts was $400,000. During 2020, the bad debt expense entry was based on a percentage of net credit sales. Net sales for 2020 were $80 million, of which 90% were on account.

> At the end of 2020, Perez Corporation has accounts receivable of $2.5 million and an allowance for doubtful accounts of $120,000. On January 16, 2021, Perez determined that its $20,000 receivable from Morganfield Ltd. will not be collected, and managemen

> LeB!anc Inc. shows a balance of $519,289 in the Accounts Receivable account on December 31, 2020. The balance consists of the following: Instructions Show how the information above should be presented on the SFP of LeBlanc Inc. at December 31,2020.

> Eli Corp. has just received its August 31, 2020 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

> Kali Corp. established a petty cash fund early in 2020 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

> 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, 2017, 2016, and 2015: Instructions a. Calculate the accounts receivable turnov

> Lute Retail Ltd. Follows ASPE. It transfers $355,000 of its accounts receivable to an independent trust in a securitization transaction on July 11, 2020, receiving 96% of the receivables balance as proceeds. Lute will continue to manage the customer acco

> 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, 2020. Liqu

> Several of Kimper Corporation's major customers experienced cash flow problems in 2020, mainly due to their increasing labour and production costs in 2019 and 2020. As a result, Kimper's accounts receivable turnover ratio (net sales revenue/average trade

> The controller for Fashion Co. is trying to determine the amount of cash to report on the December 31, 2020 statement of financial position. The following information is provided: 1. A commercial savings account with $600,000 and a commercial chequing ac

> Uddin Publishing Co. publishes college textbooks that are sold to bookstores on the following terms. Each title has a fixed wholesale price, terms f.o.b. shipping point, and payment is due 60 days after shipment. The retailer may return a maximum of 30%

> Organic Growth Company is testing a number of new agricultural seeds that it has recently harvested. To stimulate interest, it has decided to grant five of its largest customers the unconditional right to return these products if not fully satisfied. The

> Aaron's Agency sells an insurance policy offered by Capital Insurance Company for a commission of $100. In addition, Aaron will receive a further commission of $10 each year for as long as the policyholder does not cancel the policy. After selling the po

> Blair Biotech enters into a licensing agreement with Pang Pharmaceutical for a drug under development. Blair will receive a payment of $10,000 if the drug receives regulatory approval. Based on prior experience with the drug-approval process, Blair deter

> Presented below are four revenue recognition situations. I. Grupo sells goods to MTN for $1 million, payment due at delivery. 2. Grupo sells goods on account to Grifols for $800,000, payment due in 30 days. The terms are f.o.b. destination. 3. Grupo sell

> Celie Inc. manufactures and sells computers that include an assurance type warranty for 90 days. Celie offers an optional extended coverage plan under which it will repair or replace any defective part for three years from the expiration of the assurance

> On December 31, 2020, Grando Company sells production equipment to Fargo Inc. for $50,000. Grando includes a one-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2020. Gr

> Zagat Inc. enters into an agreement on March 1, 2020, to sell aluminum ingots for $200,000 cash to Werner Metal Company. As part of this agreement, Zagat also agrees to repurchase from Werner the ingots in 60 days at the original sales price of $200,000

> Cramer Corp. sells idle machinery to Enyart Company on July 1, 2020, for $40,000. Cramer agrees to repurchase this equipment from Enyart on June 30, 2021, for a price of $42,400 (an imputed interest rate of 6%). Instructions a. Prepare the journal entry

> In 2020, Renato Corp. had cash receipts from customers of $152,000 and cash payments for operating expenses of $97,000. At January 1, 2020, accounts receivable were $13,000 and total prepaid expenses were $17,500. At December 31, 2020, accounts receivabl

> To increase sales, Letourneau Inc., a public company following IFRS, implemented a customer loyalty program that rewards a customer with one loyalty point for every $30 of merchandise purchased. Each point is redeemable for a $2.50 discount on any purcha

> Revenue Recognition under Earnings Approach-Various Consumer Industries Instructions a. Explain the principles and criteria for revenue recognition under the earnings approach. b. For each scenario noted in E6.l, discuss when revenue should be recognized

> On May 1, 2020, Richardson Inc. entered into a contract to deliver one of its specialty mowers to Kickapoo Landscaping Co. The contract requires Kickapoo to pay the contract price of $900 in advance on May 15, 2020. Kickapoo pays Richardson on May 15, 20

> On January 1, 2020, Gordon Co. enters into a contract to sell a customer a wiring base and a shelving unit that sits on the base in exchange for $3,000. The contract requires delivery of the base first but states that payment for the base will not be mad

> Refer to the revenue arrangement in E6.16. Data of E6.16: Instructions Repeat requirements (a) and (b), assuming Crankshaft does not have market data with which to determine the stand-alone selling price of the installation services. As a result, an e

> Crankshaft Company manufactures equipment. Crankshaft's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $200,000 to $1.5 million, and are quoted inclusive of installation. T

> Shaw Company sells goods that cost $300,000 to Ricard Company for $400,000 on January 2, 2020. The sales price includes an installation fee, which is valued at $40,000. The fair value of the goods is $370,000. The goods were delivered on March 1, 2020.ln

> Sanchez Co. enters into a contract to sell Product A and Product Bon January 2, 2020, for an upfront cash payment of $150,000. Product A will be delivered in two years (January 2, 2022) and Product B will be delivered in five years (January 2, 2025). San

> During December 2020, Soft Skin Ltd. sells $20,000 of gift cards to customers. From reliable past experience, management estimates that 8% of the gift cards sold will not be redeemed by customers. In January 2021, $2,000 of these cards is redeemed for me

> In 2020, I & T Corporation reported net income of $8.6 million, and declared and paid preferred share dividends of $3.2 million. During 2020, I & Thad a weighted average of 900,000 common shares outstanding. Calculate I & T's 2020 earnings per share.

> Taylor Marina has 300 available slips that rent for $800 per season. Payments must be made in full by the start of the boating season, April 1, 2021. The boating season ends October 31, and the marina has a December 31 year end. Slips for future seasons

> Best Lawn Care Inc. (BLC) offers its customers two lawn maintenance services. One service is for a one-year maintenance plan at a cost of $200. Customers can earn a 5% discount from this price if they pay before BLC's calendar fiscal year for maintenance

> Assume the facts given in E6.37 except that Vaughn's non-cancellable fixed price contract with Atlantis is for $9.5 million. Billings and collections are lower in 2022 by $500,000 each. Instructions a. Using the percentage-of-completion method, calcul

> Assume the facts given in E6.37 except now assume that the construction industry has experienced significant expansion, making construction materials and labor more costly than originally estimated. Vaughn finds it extremely difficult to estimate the cos

> Vaughn Enterprises Ltd. has entered into a contract beginning in February 2020 to build two warehouses for Atlantis Structures Ltd. The contract is a non-cancellable fixed price contract for $10 million. The following data pertain to the construction per

> Shanahan Construction Company has entered into a non-cancellable contract beginning January 1, 2020, to build a parking complex. It has been estimated that the complex will cost $600,000 and will take three years to construct. The complex will be billed

> Yanmei Construction Company began operations on January 1, 2020. During the year, Yanmei entered into a non-cancellable contract with Lundquist Corp. to construct a manufacturing facility. At that time, Yanmei estimated that it would take five years to c

> Hamilton Construction Company uses the percentage-of-completion method of accounting. In 2020, Hamilton began work under non-cancellable contract #E2-D2, which provided for a contract price of $2.2 million. Other details follow: Instructions a. How muc

> On April 1, 2020, Dougherty Inc. entered into a cost plus fixed fee non-cancellable contract to construct an electric generator for Altom Corporation. At the contract date, Dougherty estimated that it would take two years to complete the project at a cos

> During 2020, Nilsen Company started a construction job with a contract price of $1.6 million. The job was completed in 2022. The following information is avai lable. The contract is non-cancellable. Instructions a. Calculate the amount of gross profit

> Neon Limited had 40,000 common shares on January 1, 2020. On April 1, 8,000 shares were repurchased. On August 31, 12,000 shares were issued. Calculate the number of shares outstanding at December 31, 2020, and the weighted average number of shares for 2

> Refer to the information in E6.30. Information of E6.30: Rex's Reclaimers entered into a contract with Dan's Demolition to manage the processing of recycled materials on Dan's various demolition projects. Services for the three-year contract include col

> The following are transactions between Wang Corp., the consignor, and Ren Stores Ltd., the consignee, for the month of June 2020. Wang uses a perpetual inventory system and has a separate perpetual record for inventory sent out on consignment. At the end

> On May 31, 2020, Eisler Company consigned 80 freezers, costing $500 each, to Remmers Company. The cost of shipping the freezers amounted to $740 and was paid by Eisler Company. On December 30, 2020, a report was received from the consignee, indicating th

> Sider Inc., a registered broker, enters into a finder's fee agreement with HOM Homes Ltd. on June 15, 2020. Sider will find leads in the form of buyers potentially interested in purchasing HO M's real estate holdings. Along with finding potential buyers,

> On October 5, 2020, Diamond in the Rough Recruiting Group Inc.'s board of directors decided to dispose of the Blue Division. A formal plan was approved. Diamond derives approximately 75% of its income from its human resources management practice. The Blu

> Assume that Elrond Inc. decided to sell DemandTV Ltd., a subsidiary, on September 30, 2020. 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 the

> Pike Corporation, a clothing retailer, had income from operations (before tax) of $375,000, and recorded the following before-tax gains/(losses) for the year ended December 31, 2020: As at January 1, 2020, Pike had one piece of land that had an original

> Canviar Corp. maintains its financial records using the cash basis of accounting. Because it would like to secure a long-term loan from its bank, the company asks you, as an independent CPA, to convert its cash basis income statement information to the a

> In its first year of operations, 2020, Strats Corp. invoiced $172,000 in service revenue. Of that amount, $18,000 was still owing from customers at the end of year. In 2020, Strats incurred various operating expenses totalling $81,000, of which $77,500 w

> At December 31, 2020, Tres Hombres Corporation had the following shares outstanding: 10% cumulative preferred shares, 107,500 shares outstanding…………………..$10,750,000 Common shares, 4,000,000 shares outstanding……………………………………….20,000,000 During 2020, the c

> Use the information in BE4.l 7 to prepare a statement of retained earnings for Global Corporation, assuming that in 2020, Global discovered that it had overstated 2017 depreciation by $40,000 (net of tax of $17,000).

> The shareholders' equity section of Cadmium Corporation as at December 31, 2020, follows: Net income of $24 million for 2020 reflects a total effective tax rate of 25%. Included in the net income figure is a loss of $15 million (before tax) relating to t

> Rainy Day Umbrella Corporation had the following balances at December 31, 2019 (all amounts in thousands): preferred shares, $3,375; common shares, $8,903; contributed surplus, $3,744; retained earnings, $23,040; and accumulated other comprehensive incom

> Eddie Zambrano Corporation, a private company, began operations on January 1, 2017. During its first three years of operations, Zambrano reported net income and declared dividends as follows: Instructions Prepare a 2020 statement of retained earnings fo

> Reach Out Card Company Limited reported the following for 2020: sales revenue, $1.2 million; cost of goods sold, $750,000; selling and administrative expenses, $320,000; gain on disposal of building, $250,000; and unrealized gain-OCI (related to FV-OCI e

> The following balances were taken from the books of Quality Fabrication Limited on December 31, 2020: Assume the total effective tax rate on all items is 25%. Instructions Prepare a multiple-step income statement showing expenses by function. Assume tha

> Two accountants, Yuan Tsui and Sergio Aragon, are arguing about the merits of presenting an income statement in the multiple-step versus the single-step format. The discussion involves the following 2020 information for P. Bride Company (in thousands): C

> The financial records of Geneva Inc. were destroyed by fire at the end of 2020. Fortunately, the controller had kept the following statistical data related to the income statement: 1. The beginning inventory was $84,000 and it decreased by 20% during the

> The following is information for Gottlieb Corp. for the year ended December 31, 2020: The effective tax rate is 25% on all items. Gottlieb prepares financial statements in accordance with IFRS. The FV-OCI equity investments trade on the stock exchange. G

> The following information was taken from the records of Biscay Inc. for the year 2020: The following additional information was also available: income tax applicable to income from continuing operations, $465,000; income tax recovery applicable to loss f

> Income statement information for Flett Tire Repair Corporation for the year 2020 follows: The effective tax rate on all income is 25%, and Flett follows ASPE. Instructions a. Prepare a multiple-step income statement for 2020, showing expenses by function

> Global Corporation prepares financial statements in accordance with ASPE. At January 1, 2020, the company had retained earnings of $1,038,000. In 2020, net income was $335,000, and cash dividends of $70,000 were declared and paid. Prepare a 2020 statemen

> Dr. Gary Morrow, a former surgeon, is the president and owner of Morrow Medical (MM), a private Ontario company that focuses on the design and implementation of various medical and pharmaceutical products. With the recent success of various products put

> Jon Seceda Furnace Corp. purchased machinery for $260,000 on July 1, 2020. It is estimated that it will have a useful life of 10 years, residual value of $40,000, production of 110,000 units, and working hours of 44,000. During 2021, Seceda Corp. uses th

> Deluxe Ezra Company purchases equipment on January 1, 2020, at a cost of $469,000. The asset is expected to have a service life of 12 years and a salvage value of $40,000. Instructions a. Calculate the amount of depreciation for each of 2020, 2021, and 2

> Jared Industries Ltd., a public company, presents you with the following information: Instructions a. Complete the table for the year ended December 31, 2024. The company depreciates all assets for a half year in the year of acquisition and the year of d

> Jupiter Wells Corp. purchased machinery for $315,000 on May 1, 2020. It is estimated that it will have a useful life of 10 years, residual value of $15,000, production of 240,000 units, and 25,000 working hours. The machinery will have a physical life of

> Gambit Corporation purchased a new plant asset on April 1, 2020, at a cost of $769,000. It was estimated to have a useful life of 20 years and a residual value of $300,000, a physical life of 30 years, and a salvage value of $0. Gambit's accounting perio

> Diderot Corp. acquired a property on September 15, 2020, for $220,000, paying $3,000 in transfer taxes and a $1,500 real estate fee. Based on the provincial assessment information, 75% of the property's value was related to the building and 25% to the la

> Barnett Inc. purchased computer equipment on March 1, 2020, for $31, 000. The computer equipment has a useful life of five years and a residual value of $1,000. Barnett uses a double-declining-balance method of depreciation for this type of capital asset

> During 2020, Laiken Limited sold its only Class 3 asset. At the time of sale, the balance of the undepreciated capital cost for this class was $37,450. The asset originally cost $129,500. Instructions a. Calculate recaptured CCA, capital gains, and term

> On August 1, 2020, Iroko Corporation purchased a new machine for its assembly process at a cost of $136,400. The company estimated that the machine would have a trade-in value of $14,200 at the end of its useful life. Its useful life was estimated to be