Question: On May 1, 2020, Green Machine Inc.

> Diagnostics Corp. follows IFRS and sells its products in expensive, reusable containers that can be tracked. The customer is charged a deposit for each container that is delivered and receives a refund for each container that is returned within two years

> Stellar Corp. had the following shareholders' equity on January 1, 2020: The contributed surplus arose from net excess of proceeds over cost on a previous cancellation of common shares. Stellar prepares financial statements in accordance with ASPE. The

> As at December 31, 2019, Cayenne Ltd., a public company, had 40,000 common shares outstanding. During 2020, Cayenne had the following transactions. 1. Issued 6,000 common shares at $29 per share, less $2,000 in costs related to the issuance of the share

> Use the same information as in E14.24 but assume now that Green Bank reduced the principal to $1.6 million rather than $1.9 million. On January 1, 2024, Troubled Inc. pays $1.6 million in cash to Green Bank for the principal. The market rate is currently

> Assume the same information as in E14.24 and answer the following questions related to Green Bank (the creditor). Green Bank prepares financial statements in accordance with IFRS 9. There is no evidence of a significant increase in credit risk and 12-mon

> On December 31, 2020, Green Bank enters into a debt restructuring agreement with Troubled Inc., which is now experiencing financial trouble. The bank agrees to restructure a $2-million, 12% note receivable issued at par by the following modifications: 1

> Strickland Inc. owes Heartland Bank $200,000 plus $18,000 of accrued interest. The debt is a 10-year, 10% note. During 2020, Strickland's business declined due to a slowing regional economy. On December 31, 2020, the bank agrees to accept an old machine

> On December 31, 2019, Mohr Inc. borrowed $81,241 from Par Bank, signing a $125,000, five-year, non–interest-bearing note. The note was issued to yield 9% interest. Unfortunately, during 2020 Mohr began to experience financial difficulty. As a result, thi

> Selzer Equipment Limited sold 500 Rollomatics on account during 2020 for $6,000 each. Ignore any cost of goods sold. During 2020, Selzer spent $30,000 servicing the two-year warranties that are included in each sale of the Rollomatic. All servicing trans

> On January 2, 2015, Kowalchuk Corporation, a small company that follows ASPE, issued $1.5 million of 10% bonds at 97 due on December 31, 2024. Legal and other costs of $110,000 were incurred in connection with the issue. Kowalchuk Corporation has a polic

> Anaconda Inc. has issued three types of debt on January 1, 2020, the start of the company's fiscal year: 1. $10 million, 10-year, 13% unsecured bonds, with interest payable quarterly, priced to yield 12% 2. $2.5 million par of 10-year, zero-coupon bond

> The following account balances are available from the ledger of Yutao Shui Corporation on December 31, 2019: On January 2, 2020, the corporation put into effect a shareholder-approved reorganization by agreeing to pass the common shares over to the cred

> The following amortization and interest schedule is for the issuance of 10-year bonds by Capulet Corporation on January 1, 2020, and the subsequent interest payments and charges. The company's yearend is December 31 and it prepares its financial statemen

> On June 30, 2013, Auburn Limited issued 12% bonds with a par value of $800,000 due in 20 years. They were issued at 98 and were callable at 104 at any date after June 30, 2020. Because of lower interest rates and a significant change in the company's cre

> Brubacher Corporation's post-closing trial balance at December 31, 2020, was as follows: At December 31, 2020, Brubacher had the following numbers for its common and preferred shares: The dividends on preferred shares are $5 cumulative. In addition, th

> On June 30, 2020, Mosca Limited issued $4 million of 20-year, 13% bonds for $4,300,920, which provides a yield of 12%. The company uses the effective interest method to amortize any bond premium or discount. The bonds pay semi-annual interest on June 30

> Radford Corporation's charter authorized 1 million $11 par value common shares, and 300,000 6% cumulative and non-participating preferred shares, with a par value of $100 per share. The corporation made the following share transactions through December 3

> On January 1, 2020, Copeland Ltd. (a public company) had the following shareholders' equity accounts: The following selected transactions occurred during 2020: Instructions a. Prepare journal entries to record the transactions above, as well as the c

> Miss M's Dance Studios Ltd. is a public company, and accordingly uses IFRS for financial reporting. The corporate charter authorizes the issuance of an unlimited number of common shares and 50,000 preferred shares with a $2 dividend. At the beginning of

> Falkon Corp. reported the following amounts in the shareholders' equity section of its December 31, 2019 SFP: During 2020, the company had the following transactions that affect shareholders' equity. 1. Paid the annual 2019 $8 per share dividend on pre

> Yang Inc. was organized on January 1, 2020. It is authorized to issue an unlimited number of common shares and 100,000 preferred shares with a $4 dividend. The following share transactions were completed during the first year: Instructions Prepare the

> Desrocher Ltd. issued an instalment note on January 1, 2020 (with a required yield of 9%) in exchange for land that it purchased from Safayeni Ltd. Safayeni's real estate agent had listed the land on the market for $120,000. The note calls for three equa

> Two independent situations follow. 1. On January 1, 2020, Spartan Inc. bought land that had an assessed value of $390,000 at the time of purchase. A $600,000, non–interest-bearing note due on January 1, 2023, was given in exchange. There was no establis

> Access the audited annual financial statements of Rogers Sugar Inc. for the year ended September 30, 2017, from SEDAR (www.sedar.com) or the company's website. Instructions a. Identify the components of the company's shareholders' equity, including the

> On January 1, 2020, Landlord Corporation acquired the following properties: 1. Investment property consisting of land and an apartment building in Toronto for $1.5 million. To finance this transaction, Landlord Corporation issued a five-year interest-fr

> Two independent situations follow: 1. On January 1, 2020, Divac Limited issued $300,000 of 10-year, 9% bonds at par. Interest is payable quarterly on April 1, July 1, October 1, and January 1. 2. On June 1, 2020, Verbitsky Inc. issued at par, plus accr

> Refer to E14.18 and Auburn Limited. Instructions Repeat the instructions of E14.18 assuming that Auburn Limited follows IFRS and uses the effective interest method. Provide an effective interest table for the bonds from the inception of the bond to the d

> Friedman Corporation had bonds outstanding with a maturity value of $500,000. On April 30, 2020, when these bonds had an unamortized discount of $10,000, they were called in at 104. To pay for these bonds, Friedman had issued other bonds a month earlier

> Sunshine Incorporated provides solar energy services to Toronto. Sunshine needed to buy additional solar energy panels to meet the demand for its energy product. The Government of Ontario offered an interest-free forgivable loan to Sunshine in the amount

> Four independent situations follow. 1. Wen Corporation incurred the following costs when it issued bonds: printing and engraving costs, $25,000; legal fees, $69,000; and commissions paid to underwriter, $70,000. 2. Griffith Inc. sold $3 million of 10-y

> Minor Inc. sells 10% bonds having a maturity value of $3 million for $2,783,713. The bonds are dated January 1, 2020, and mature on January 1, 2025. Interest is payable annually on January 1. Instructions a. Set up a schedule of interest expense and d

> Cinderella Shoes Inc., a private company following ASPE, is having difficulty meeting its working capital requirements. As a result, on January 1, 2020, the company sold bonds with a face value of $1 million, receiving $800,000 in cash. The bonds have an

> On January 1, 2020, Osborn Inc. sold 12% bonds having a maturity value of $800,000 for $860,652, which provides the bondholders with a 10% yield. The bonds are dated January 1, 2020, and mature on January 1, 2025, with interest payable on January 1 of ea

> On December 31, 2020, Zimmer Corporation has $7.9 million of short-term debt in the form of notes payable that are due in 2021 to Provincial Bank. On January 28, 2021, Zimmer enters into a refinancing agreement with the bank that permits it to refinance

> Access the audited annual financial statements of Goldcorp Inc. for its year ended December 31, 2017, from SEDAR (www.sedar.com) or the company's website. Instructions a. Describe the business that Goldcorp Inc. operates in. b. Identify the component

> On December 31, 2020, Hornsby Corporation had $1.2 million of short-term debt in the form of notes payable due on February 2, 2021. On January 21, 2021, in order to ensure that it had sufficient funds to pay for the short-term debt when it matured, Horns

> Shaddick Corp., a public company following IFRS, began its 2020 fiscal year with a debit balance of $11,250 in its Income Tax Receivable account. During the year, Shaddick made quarterly income tax instalment payments of $8,100 each. In early June, a che

> Harold Limited's condensed financial statements provide the following information: Instructions a. Determine the following: 1. Current ratio at December 31, 2020 2. Acid-test ratio at December 31, 2020 3. Accounts receivable turnover for 2020 4. I

> Four independent situations follow. Situation 1: During 2020, Sugarpost Inc. became involved in a tax dispute with the Canada Revenue Agency. Sugarpost's tax lawyers have told management that Sugarpost will likely lose this dispute. They also believe th

> Islim Limited manufactures faux fur coats of all types and sizes that are sold to specialty stores throughout Canada. Sales to retailers provide for payment within 60 days of delivery and the retailer may return a maximum of 25% of an order at the retail

> St. Thomas Auto Repairs is preparing the financial statements for the year ended November 30, 2020. As the accountant, you are looking over the information regarding short-term liabilities, and determining the amounts that should be reported on the balan

> Three independent situations follow. Situation 1: Marquart Stamp Corporation records stamp service revenue and provides for the cost of redemptions in the year stamps are sold to licensees. The stamps can be collected and then redeemed for discounts on

> Moleski Limited, a private company following ASPE, includes one coupon in each box of soap powder that it produces, and 10 coupons are redeemable for a premium (a kitchen utensil). In 2020, Moleski purchased 8,800 premiums at $0.90 each and sold 120,000

> To increase sales, Bélanger Inc., a public company following IFRS, implemented a customer loyalty program that rewards a customer with one loyalty point for every $10 of purchases on a select group of products. Each point is redeemable for a $1 discount

> Novack Machinery Co. manufactures equipment to a very high standard of quality; however, it must still provide a warranty for each unit sold, and there are instances where the machines do require repair after they have been put into use. Novack started i

> Corby Spirit and Wine Limited is a leading Canadian marketer and distributor of premium spirits and wine brands. Obtain a copy of the company's comparative financial statements for the year ended June 30, 2018, from the company's website (www.corby.ca).

> Cool Sound Ltd. manufactures a line of amplifiers that carry a three-year warranty against defects. Based on experience, the estimated warranty costs related to dollar sales are as follows: first year after sale—2% of sales; second year

> Cléroux Corporation sold 150 colour laser copiers in 2020 for $4,000 each, including a one-year warranty. Maintenance on each machine during the warranty period averages $300. Instructions a. Prepare entries to record the machine sales and the related

> On January 1, 2020, Schmitt Inc.'s general ledger had these liability accounts: In addition, Schmitt had a balance in HST Receivable of $4,260 at January 1, 2020. Schmitt uses a periodic inventory system, operates in the Province of Ontario where HST is

> Crude Oil Limited purchased an oil tanker depot on July 2, 2020 at a cost of $600,000 and expects to operate the depot for 10 years. After the 10 years, Crude Oil is legally required to dismantle the depot and remove the underground storage tanks. It is

> On January 1, 2020, Offshore Corporation erected a drilling platform at a cost of $5,460,000. Offshore is legally required to dismantle and remove the platform at the end of its six-year useful life, at an estimated cost of $950,000. Offshore estimates t

> The incomplete income statement of Justin Corp. follows. The employee profit-sharing plan requires that 20% of all profits remaining after the deduction of the bonus and income tax be distributed to the employees by the first day of the fourth month fol

> Goldwing Corporation offers enriched parental benefits to its staff. While the government provides compensation based on Employment Insurance legislation for a period of 12 months, Goldwing increases the amounts received and extends the period of compens

> As the new accountant for Carly's Pet Express Inc., a line of pet boutiques, you are developing the financial statement disclosures for the 2020 financial statement note on income taxes. The company uses ASPE, and has selected the taxes payable method. T

> Refer to the information in BE18.15 for Zdon Inc. Assume that the company follows the taxes payable method of accounting for income taxes under ASPE. During the year, Zdon Inc. made tax instalment payments of $42,000. Instructions a. Calculate the tax

> AltaGas Ltd. capitalizes on the supply and demand dynamic for natural gas and power by owning and operating assets in gas, power, and utilities in places that provide a strategic competitive advantage. Instructions Access the financial statements for

> Refer to the information in BE18.11 for Henry Limited. Assume that the company reports under ASPE and that the taxes payable method of accounting is used for income tax. Instructions a. Prepare the journal entry(ies) to record income tax at December 3

> Geoff Corp.'s operations in 2020 had mixed results. One division, Vincenti Group, again failed to earn income at a rate that was high enough to justify its continued operation, and management therefore decided to close the division. Vincenti Group earned

> Darrell Corporation reports under IFRS. At December 31, 2020, the company had a net deferred tax liability of $402,000. An explanation of the items that make up this balance follows: Instructions a. Indicate how deferred tax should be presented on Darr

> Refer to the information provided about Roux Corp. in E18.28. Instructions a. Assuming that it is more likely than not that $25,000 of the deferred tax asset will not be realized, prepare the journal entries to record income taxes for 2020. Roux uses

> Roux Corp. had a Deferred Tax Asset account with a balance of $81,000 at the end of 2019 due to a single temporary difference of $270,000 related to warranty liability accruals. At the end of 2020, this same temporary difference has increased to $300,000

> Refer to the information for Riley Inc. in E18.26. Instructions a. Assume that Riley Inc. uses a valuation allowance to account for deferred tax assets, and also that it is more likely than not that 25% of the carryforward benefits will not be realize

> Riley Inc. reports the following pre-tax incomes (losses) for both financial reporting purposes and tax purposes: The tax rates listed were all enacted by the beginning of 2018. Riley reports under the ASPE future/deferred income taxes method. Instruc

> Peter M. Dell Co. purchased equipment for $510,000, which was estimated to have a useful life of 10 years with a residual value of $10,000 at the end of that time. Depreciation has been entered for seven years on a straight-line basis. In 2020, it is det

> Rodriguez Corp. changed from the straight-line method of depreciation on its plant assets acquired in early 2018 to the double-declining-balance method in 2020 (before finalizing its 2020 financial statements) because of a change in the pattern of benefi

> The comparative SFP for Cosky Corporation follows: Additional information: 1. Dividends of $15,000 were declared and paid in 2020. 2. There were no unrealized gains or losses on the FV-NI investments. Instructions Based on the information, prepare

> Access the financial statements of Bombardier Inc. for the years ended December 31, 2017 and 2016, from the company's website or SEDAR (www.sedar.com). Instructions Changes in non-cash working capital items can have a significant impact on operating c

> The following transactions took place during the year 2020 for Mia Inc. 1. Convertible bonds payable with a carrying amount of $300,000 along with conversion rights of $9,000 were exchanged for common shares. 2. The net income for the year was $410,000

> Shen Limited reported net income of $32,000 for its latest year ended March 31, 2020. Instructions For each of the five different situations involving the SFP accounts that follow, calculate the cash flow from operating activities using the indirect m

> The following are transactions of Albert Sing, an interior design consultant, for the month of September 2020. At September 30, the following information is available. 1. The equipment has a useful life of five years and an estimated residual value of

> Huang Corp. uses the direct method to prepare its statement of cash flows and follows IFRS. Huang's trial balances at December 31, 2020 and 2019, were as follows: Huang Corp. uses the direct method to prepare its statement of cash flows and follows IFRS.

> Data for Malouin Corp. are presented in E22.12. Instructions Prepare the operating activities section of the statement of cash flows using the indirect method. From E22.12: Malouin Corp.'s income statement for the year ended December 31, 2020, had th

> Tobita Limited, which follows IFRS, has adopted the policy of classifying interest paid as operating activities and dividends paid as financing activities. Condensed financial data for 2020 and 2019 follow (in thousands): Additional information: Durin

> Information from the statement of financial position and statement of income is given below for North Road Inc., a company following IFRS, for the year ended December 31. North Road has adopted the policy of classifying interest paid as operating activit

> Robbins Ltd. is a wholesale distributor of professional equipment and supplies. The company's sales have averaged about $900,000 annually for the three-year period 2018 to 2020. The firm's total assets at the end of 2017 amounted to $850,000. The preside

> The following information (in $000) has been obtained from Patinka Limited's financial statements for the fiscal years ended December 31. There were no preferred shares issued by Patinka nor were there any dividends paid in any of the three years. Ins

> Tarzwell Limited is preparing some analysis of past financial performance and positions to include in the management discussion and analysis (MD&A) portion of the annual report to shareholders. You have suggested that it would be useful for users of

> Hudson's Bay Company's financial statements for its year ended February 3, 2018 (fiscal 2017) can be found at the end of this volume or on the company website. HBC is a global retailer with investments in real estate joint ventures. Instructions Revie

> The condensed statement of changes in financial position and detailed income statement information (in $000) for Tran Consulting Ltd. follow. Tran contracts professionals in the electronic data management field and provides services to clients around the

> The first audit of the books of Gomez Limited was recently carried out for the year ended December 31, 2020. Gomez follows IFRS. In examining the books, the auditor found that certain items had been overlooked or might have been incorrectly handled in th

> Pace Instrument Corp., a small company that follows ASPE, began operations on January 1, 2017, and uses a periodic inventory system. The following net income amounts were calculated for Pace under three different inventory cost formulas: Instructions A

> Wagner Inc. is a large Canadian public company that uses IFRS. A lease for a fleet of trucks has been capitalized and the lease amortization schedule for the first three lease payments appears below. The trucks have an economic life of eight years. The l

> The following selected account balances are taken from the financial statements of Mandrich Inc. at its calendar year end prepared using IFRS: At December 31, 2020, the following information is available: 1. Mandrich Inc. repurchased 2,000 common share

> Jason Corporation completed, its board of directors authorized, and it issued its financial statements following IFRS for the year ended December 31, 2020, on March 10, 2021. The following events took place in early 2021. 1. On January 30, 19,000 common

> Sunlight Equipment Manufacturers (SEM) makes barbecue equipment. The company has historically been very profitable; however, in the last year and a half, things have taken a turn for the worse due to higher consumer interest rates and a slowdown in the e

> Wind and Solar Inc. (WSI) is in the business of providing electricity. The company started up in 2019. Currently, it is owned by Winifred Wind and Winston Chang. Both Winston and Winifred own 50% of the WSI common shares. Under the terms of the sharehold

> Big Bath Emporium (BBE), a private company based in Toronto, is the city's largest manufacturer and vendor of bathtubs, showers, and sinks. The company sells products direct to consumers, and also sells wholesale to other retailers. BBE is owned by Bob B

> RTL is a family-owned and operated business that prints flyers and banners. It has been in operation for over 20 years and is being passed on to the next generation. Profits from the past two years have been significantly declining. This is a direct resu

> Access the financial statements of WestJet Airlines Limited for its year ended December 31, 2017, from SEDAR (www.sedar.com) or the company's website. Instructions Review the financial statements and the company's note disclosures related to new accounti

> J. J. Kersee Corporation, a Canadian publicly traded company, is currently preparing the interim financial data that it will issue to its shareholders and the securities commission at the end of the first quarter of its December 31, 2020 fiscal year. Ker

> Frangipani Ltd. (FL) is a new company that has just started up in January 2020. The company is the brainchild of Frank Frangi, who is working on developing a new process for a solar-powered car. To date, most of the year has been taken up with setting up

> Cauchy Inc. (CI) has just had a planning meeting with its auditors. There were several concerns raised during the meeting regarding the draft financial statements for the December 31, 2020 year end. CI is a public company whose shares are listed on the T

> Verez Limited owns 90% of Consior Inc. During 2020, Verez acquired a machine from Consior in exchange for its own used machine. Both companies are in the tool-making business. The agreed exchange amount is $1,000, although the transaction is nonmonetary.

> Maffin Corp. owns 75% of Grey Inc. Both companies are in the mining industry. During 2020, Maffin Corp. purchased a building from Grey Inc. for $1,000. The building's original cost is $25,000 and its carrying amount in Grey Inc.'s financial statements is

> The following selected account balances were taken from the financial statements of Blumberg Inc. concerning its long-term investment in shares of Black Inc. over which it has had significant influence since 2017: At December 31, 2020, the following inf

> Angus Farms Ltd., which follows ASPE, had the following transactions during the fiscal year ended December 31, 2020. 1. On May 1, a used tractor was sold at auction. The information concerning this transaction included: 2. After the seeding season, on

> The following are selected statement of financial position accounts of Pavicevic Ltd. at December 31, 2019 and 2020, and the increases or decreases in each account from 2019 to 2020. Also presented is the selected income statement and other information f

> Strong House Inc. had the following condensed statement of financial position at December 31, 2019: Strong House Inc. follows IFRS and chooses to classify dividends paid as financing activities and interest paid as operating activities on the statement

> Wong Textiles Ltd. entered into a lease obligation during 2020 to acquire a cutting machine. The amount recorded to the Right-of-Use Asset account and the corresponding Lease Liability account was $85,000 at the date of signing the lease. Wong made the f

> In 2020, Abbotsford Inc. issued 1,000 common shares for land with a fair market value of $149,000. a. Prepare Abbotsford's journal entry to record the transaction. b. Indicate the effect that the transaction has on cash. c. Indicate how the transactio