One of the weaknesses or limitations of the statement of financial position is that it leaves out financial statement elements if they cannot be objectively recorded. Name three examples of items that are omitted because of this limitation.
> A review of the financial statements of private and publicly accountable enterprises may result in finding the following measurement approaches used for their non-strategic investments: (1) cost/amortized cost, (2) FV-NI (or FVTPL), (3) FV-OCI (with recy
> Canadian Tire Corporation, Limited is one of Canada’s best-known retailers. The company operates 493 “hard-goods” retail stores through associate dealers, 383 corporate and franchise stores under its subsidiary Mark’s Work Wear house, 297 independently o
> The following information relates to Cortez Corp. for 2017: net income of $672,683; unrealized loss of 20,830 related to investments accounted for at FV-OCI during the year; and accumulated other comprehensive income of $37,273 on January 1, 2017. Determ
> Early in its 2017 fiscal year (December 31 yearend), Hayes Company purchased 10,000 shares of Kenyon Corporation common shares for $26.18 per share, plus $1,800 in brokerage commissions. These securities were accounted for at FV-OCI (with no recycling),
> Angus Enterprises Ltd. reported cost of goods sold for 2017 of $2.5 million and retained earnings of $4.0 million at December 31, 2017. Angus later discovered that its ending inventories at December 31, 2016 and 2017, were overstated by $150,000 and $50,
> Best Corp., a public company using IFRS, signed a long-term non-cancellable purchase commitment with a major supplier to purchase raw materials at an annual cost of $1 million. At December 31, 2016, the raw materials to be purchased in 2017 have a market
> Bali Corp. has $10,000 in surplus funds to invest and is considering investing in either Company A or Company B. Company A promises to return the $10,000 original amount invested in three years’ time and pay a 2% annual return on the principal amount. Co
> Boyko Company received an order from Lister Inc. on May 15, 2017, valued at $3,800. Boyko shipped the goods to Lister on May 31, 2017, with terms f.o.b. shipping point, and credit terms 2/10, n/30. Assuming Boyko uses the gross method of recording sales,
> Highfliers Inc. is a public company that purchases airplanes for sale to others. However, until the airplanes are sold, the company charters and services them. What is the proper way to report these airplanes in the company’s financial statements?
> IFRS requires greater disclosure for inventory than ASPE. List the additional requirements and explain what benefit each one might provide for the users of the financial statements. List some items that would specifically contribute to estimation uncerta
> Loza Corp. purchases inventory costing $4,000 on July 11 on terms 3/10, n/30, and pays the invoice in full on July 15. (a) Prepare the required entries to record the two transactions, assuming Loza uses (1) the gross method of recording purchases, and (2
> Oil Tankers Inc.’s April 30 inventory was destroyed by the explosion of an underground oil tank. January 1 inventory was $250,000 and purchases for January through April totaled $620,000. Sales for the same period were $1 million. Oil Tankers’ normal gro
> IFRS provides guidance on impairment testing—in particular, what is supportable evidence of impairment of loans and receivables. Instructions: Read IFRS 9, 5.5 “Impairment” and reference as appropriate IFRS 9’s Appendix A “Defined Terms” to answer the
> The financial statements of winery Andrew Peller Limited reported net sales of $297,824 thousand for its year ended March 31, 2014. Accounts receivable were $22,693 thousand at March 31, 2014, and $25,484 thousand at March 31, 2013. Calculate the company
> Farmer Brown Industries Inc. is in the business of producing organic foods for sale to restaurants and in local markets. The company uses IFRS and has a June 30 fiscal year end. As an experiment, the company has decided to attempt raising organic free-ra
> Consider a large dairy farming company that reports under IFRS. Beyond manufacturing, farm property, and equipment, the farm’s main assets are the dairy cows and the milk that they produce. Describe how these assets may be presented on the financial stat
> For each of the scenarios noted in BE6-17, when would revenue be recognized under the earnings approach? Data from BE6-17: What is the earnings process under ASPE for each of the following scenarios? (a) A manufacturer makes and sells farm equipment. T
> More & More Limited uses a periodic inventory system. On June 24, the company sold 600 units. The following additional information is available: (a) Calculate the June 30 inventory and the June cost of goods sold, using the weighted average cost fo
> Bluebell Enterprises Ltd.’s records reported an inventory cost of $55,600 and a net realizable value of $54,000 at December 31, 2015. At December 31, 2016, the records indicated a cost of $68,700 and a net realizable value of $61,625. All opening invento
> Doors Unlimited Ltd. purchases units of wood frames that have manufacturer’s rebates from Traders Inc. The rebate requires Doors Unlimited to purchase a minimum number of units in a calendar year. The initial unit cost of each wood frame is $2.50 before
> Newvo Ltd. shows on its statement of financial position a patent. At its year end of October 31, 2015, the caption read Patent (net) $66,000 and at its year end of October 31, 2016, the caption read Patent (net) $40,000. Newvo’s recorded amortization on
> Gamers’ World buys 1,000 computer game CDs from a distributor that is discontinuing those games. The purchase price for the lot is $7,500. Gamers’ World will group the CDs into three price categories for resale, as fol
> Creative Corporation is a manufacturer of children’s toys. Creative has signifi cant debt outstanding that has been used to purchase equipment and inventory used in its manufacturing process. Creative has positive cash from operating activities during th
> Access the annual financial statements for Maple Leaf Foods Inc. for the year ended December 31, 2014. These statements are available from the company’s website or from SEDAR (www.sedar. com). Instructions: (a) Explain the securitization that the compan
> Referring to the revenue arrangement in BE6-8, determine the transaction price for this contract, assuming (a) Nair is only able to estimate whether the building can be completed by August 1, 2017, or not (Nair estimates that there is a 70% chance that t
> Nair Corp. enters into a contract with a customer to build an apartment building for $1,000,000. The customer hopes to rent apartments at the beginning of the school year and offers a performance bonus of $150,000 to be paid if the building is ready for
> Use the information for Melon Company in BE7-6, but assume instead that Melon uses the net method of recording sales. Prepare the journal entries for the transactions. Data from BE7-6: Melon Company made sales of $40,000 with terms 1/10, n/30. Within t
> Melon Company made sales of $40,000 with terms 1/10, n/30. Within the discount period, it received a cash payment on $35,000 of the sales from customers. After the discount period, it received $5,000 in payments from customers. Assuming Melon uses the gr
> Staj Co., a clothing manufacturer, is preparing its statement of financial position at December 31, 2017. For each of the following amounts as at December 31, 2017, indicate whether the amount is (a) current or non-current; and (b) a trade receivable, a
> Insert the appropriate discount factor into the table below for each of the situations given. These factors have to be interpolated from Tables PV-1 and PV-2. PV of 1 PV of an Annuity of 1 (Table PV-1) (Table PV-2) (a) n = 4, i = 4%% (b) n = 6, i =
> Talarczyk Company sold 10,000 Super Spreaders on July 1, 2017, at a total price of $1,000,000, with a warranty guarantee that the product was free of any defects. The cost of the spreaders sold is $550,000. The assurance warranties extend for a two-year
> Use the information in BE7-23. Assume that Genesis decides (a) to increase the size of the petty cash fund to $600 immediately after the reimbursement, and (b) to reduce the size of the petty cash to $250 immediately after the reimbursement. Prepare the
> Genesis Ltd. designated Alexa Kidd as petty cash custodian and established a petty cash fund of $400. The fund is reimbursed when the cash in the fund is at $57. Petty cash receipts indicate that funds were disbursed for $174 of office supplies and $167
> The financial statements of BCE Inc. reported net sales of $21,042 million for its year ended December 31, 2014, and $20,400 million for its year ended December 31, 2013. Accounts receivable (net) were $2,999 million at December 31, 2014, $2,995 million
> In December 2014, the IASB issued an Exposure Draft (ED) called Disclosure Initiative: Proposed Amendments to IAS 7 concerning potential improvements to the statement of cash flows. The first proposed recommendation’s purpose is to improve the informatio
> On July 10, 2017, Amodt Music sold CDs to retailers on account for a selling price of $700,000 (cost $560,000). Amodt grants the right to return CDs that do not sell in three months following delivery. Past experience indicates that the normal return rat
> Explain the rights and obligations created in the following transactions. (a) A manufacturer sells goods with terms f.o.b. shipping point. (b) A manufacturer sells goods with terms f.o.b. destination point. (c) A manufacturer sells goods with terms f.o.b
> On August 15, 2017, Japan Ideas consigned 500 electronic play systems, costing $100 each, to YoYo Toys Company. The cost of shipping the play systems amounted to $1,250 and was paid by Japan Ideas. On December 31, 2017, an account sales summary was recei
> On October 1, 2017, Alpha Inc. assigns $3 million of its accounts receivable to Alberta Provincial Bank as collateral for a $2.6-million loan evidenced by a note. The bank’s charges are as follows: a finance charge of 4% of the assigned receivables and a
> Use the information for Aitocs Inc. in BE7-15 and assume instead that Aitocs follows ASPE. Prepare the entries to record (a) the sale of Aitocs’ equipment and receipt of the note, (b) the recognition of interest each year if Aitocs uses the straight-line
> Lin Du Corp. lent $30,053 to Prefax Ltd., accepting Prefax’s $40,000, three-year, zero-interest-bearing note. The implied interest is 10%. (a) Prepare Lin Du’s journal entries for the initial transaction, recognition of interest each year assuming use of
> Emil Family Importers sold goods to Acme Decorators for $20,000 on November 1, 2017, accepting Acme’s $20,000, six-month, 6% note. (a) Prepare Emil’s November 1 entry, December 31 annual adjusting entry, and May 1 entry for the collection of the note and
> Use the information for Battle Tank Limited in BE7-10 and assume instead that the unadjusted balance in Allowance for Doubtful Accounts is a debit balance of $3,000. Based on this, prepare the December 31, 2017 journal entry to record the adjustment to A
> Battle Tank Limited had net sales in 2017 of $2.3 million. At December 31, 2017, before adjusting entries, the balances in selected accounts were as follows: Accounts Receivable $350,000 debit; Allowance for Doubtful Accounts $4,600 credit. Assuming Batt
> Pine Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2017: Prepaid Rent $22,000; Goodwill $50,000; Franchise Fees Receivable $2,000; Intangible Assets—Franchises $47,000; Intangible Assets—Patents $33,000; and
> Coca-Cola Company and PepsiCo are two of the best known companies worldwide. Their 2014 financial statements can be found in the investor information sections of their company websites: www.coca-colacompany.com/investor and http:// origin-www.pepsico.com
> Lowell Corp.’s December 31, 2017 trial balance includes the following accounts: Inventory $120,000; Buildings $207,000; Accumulated Depreciation—Equipment $19,000; Equipment $190,000; Land Held for Speculation $46,000; Accumulated Depreciation—Buildings
> Ellicott Construction enters into a contract to design and build a hospital. Ellicott is responsible for the overall management of the project and identifies various goods and services to be provided, including engineering, site clearance, foundation, pr
> Kahnert Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2017: Cash $3,000; Treasury Bills (with original maturity of three months) $4,000; Land $60,000; Intangible Assets—Patents $12,500; Accounts Receivable $9
> Kilarny Company is considering investing in an annuity contract that will return $25,000 at the end of each year for 15 years. What amount should Kilarny Company pay for this investment if it earns a 6% return? Show calculations using three methods (tabl
> If Kerry Dahl invests $3,152 now, she will receive $10,000 at the end of 15 years. What annual rate of interest will Kerry earn on her investment? Round your answer to the nearest whole number. Show calculations using three methods (tables, financial cal
> Smolinski Company is considering an investment that will return a lump sum of $500,000 five years from now. What amount should Smolinski Company pay for this investment in order to earn a 4% return? Show calculations using all four methods (formulas, tab
> In 2017, Renato Corp. had cash receipts from customers of $152,000 and cash payments for operating expenses of $97,000. At January 1, 2017, accounts receivable were $13,000 and total prepaid expenses were $17,500. At December 31, 2017, accounts receivabl
> What is the earnings process under ASPE for each of the following scenarios? (a) A manufacturer makes and sells farm equipment. The customer picks up the equipment upon purchase. In addition, there is a one-year warranty that will be honoured by another
> Miller Ltd. engaged in the following cash transactions during 2017: Sale of land and building………………………………………..$176,000 Repurchase of company’s own shares……………….………..25,000 Purchase of land………………………………………….…………….44,000 Payment of cash dividend……………………………
> Access the financial statements of The Procter & Gamble Company for its year ended June 30, 2014, from the company’s website (www.pginvestor. com). Instructions: Refer to P&G’s financial statements and the accompanying notes to answer the following ques
> The Big and Rich Corporation had income from operations before tax for 2017 of $4.4 million. In addition, it suffered an unusual and infrequent loss of $1,060,000 from a tornado. Of this amount, $300,000 was insured. In addition, the company realized a l
> Mauer Company follows IFRS and licenses consumer-relationship software to Hedges Inc. for three years. In addition to providing the software, Mauer promises to provide consulting services over the life of the licence to maintain operability within Hedges
> Agnu Inc. shows on its statement of financial position its investments accounted for as FV-OCI investments. At its year end of May 31, 2015, the balance in the FV-OCI Investments account was $96,000 and at its year end of May 31, 2016, the balance was $1
> Mega Inc.’s manufacturing division lost $100,000 (net of tax) for the year ended December 31, 2017, and Mega estimates that it can sell the division at a loss of $200,000 (net of tax). The division qualifies for treatment as a discontinued operation. (a)
> Southern Corporation’s adjusted trial balance contained the following accounts at December 31, 2017: Retained Earnings $120,000; Common Shares $700,000; Bonds Payable $100,000; Contributed Surplus $200,000; Preferred Shares $50,000; Goodwill $55,000; and
> Wong Corporation is a popular clothing retailer with 15 stores located across Canada. After fi ve consecutive years of increasing sales, Wong would like to expand operations by adding 10 stores within the next three years. To help fund the expansion, Won
> Use the information presented in BE5-8 for Cellin Limited to prepare the non-current liabilities section of the statement of financial position in accordance with (a) IFRS and (b) ASPE. Data from BE5-8: Included in Cellin Limited’s December 31, 2017 tr
> Included in Cellin Limited’s December 31, 2017 trial balance are the following accounts: Accounts Payable $251,000; Obligations under Lease $175,000; Unearned Revenue $141,000; Bonds Payable $480,000 (due Oct. 31, 2029); Salaries and Wages Payable $127,0
> The following accounts are in Tan Limited’s December 31, 2017 trial balance: Prepaid Rent $1,600; Fair Value—OCI Investments $62,000; Unearned Revenue $7,000; Land Held for Speculation $119,000; and Goodwill $45,000. Prepare the long-term investments sec
> Hung-Chao Yu Company issues a six-year, 8% mortgage note on January 1, 2017, to obtain financing for new equipment. The terms provide for semi-annual installment payments of $112,825. What were the cash proceeds received from the issue of the note? Show
> Airbus Group NV, previously known as European Aeronautic Defence and Space Company or EADS NV, is incorporated in the Netherlands and its shares are traded in France, Germany, and Spain. Access the financial statements of Airbus Group NV for its year end
> Caledonian Company receives a six-year, $50,000 note that bears interest at 8% (paid annually) from a customer at a time when the market interest rate is 6%. What is the present value of the note received by Caledonian? Show calculations using three meth
> Assume the same information as BE3-27, except that the market interest rate is 6% instead of 5%. In this case, how much can Cross Country expect to receive from the sale of these bonds? Show calculations using three methods (tables, financial calculator,
> Cross Country Railroad Co. is about to issue $100,000 of 10-year bonds that pay a 5.5% annual interest rate, with interest payable semi-annually. The market interest rate is 5%. How much can Cross Country expect to receive for the sale of these bonds? Sh
> For each of the following cases, indicate in the chart below the appropriate discount rate (i) and the appropriate number of periods (n) to be used in present value calculations. Show calculations. The first one has been completed as an example. Ann
> Melbourne Inc. reported a current ratio of 1.5:1 in the current year, which is higher than last year’s current ratio of 1.3:1. It also reported an acid-test ratio of 1:1, which is higher than last year’s acid-test ratio of 0.6:1. Is Melbourne’s liquidity
> Gator Printers Inc. is an on-line retailer of printing services, reaching thousands of customers across North America every year. The company was founded 15 years ago as a university campus copy shop and has reported consistent year-over-year sales growt
> Midwest Co. reported the following items in the most recent year: Net income……………………………………………………$40,000 Dividends paid…………………………………………………..5,000 Increase in accounts receivable…………………………10,000 Increase in accounts payable……………………………….7,000 Purchase of e
> Use the information from BE5-16 for Miller Ltd. Determine Miller’s free cash flow, assuming that it reported net cash provided by operating activities of $400,000. Data from BE5-16: Miller Ltd. engaged in the following cash transactions during 2017: S
> Use the information from BE5-16 for Miller Ltd. (a) Calculate the net cash provided (used) by financing activities, under ASPE. (b) Explain how your answer to part (a) would be different if Miller prepares financial statements in accordance with IFRS, if
> Healey Corporation’s statement of financial position as at December 31, 2017, showed the following amounts: Cash $100; Accounts Receivable $600; Land $1,000; Accounts Payable $300; Bonds Payable $500; Common Shares $400; and Retained Earnings $500. Heale
> Access the financial statements of both BCE Inc. and TELUS Corporation for their years ended December 31, 2014, from either the companies’ websites or SEDAR (www.sedar. com). Instructions: Using the financial statements for BCE Inc. and TELUS, answer th
> Kolber Manufacturing Limited designs, manufactures, and distributes safety boots. In January 2017, Kolber purchased another business that manufactures and distributes safety shoes, to complement its existing business. The total purchase price was $10 mil
> Billy’s Burgers (BB) is a franchisor that operates several corporate-owned restaurants as well as several franchised restaurants. The franchisees pay 3% of their sales revenues to BB in return for advertising and support. During the year, BB sold its cor
> Delray Inc. follows IFRS and has the following amounts for the year ended December 31, 2017: gain on sale of FV-NI investments (before tax), $15,000; loss from operation of discontinued division (net of tax), $42,000; income from operations (before tax),
> On January 1, 2017, 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, 2017, Twist paid $40,000 cash for equity securities that it designated as fair
> Cyan Corporation is a manufacturer of paints and specialty coatings. In March 2017, Beck Inc. fi led a lawsuit against Cyan Corporation for alleged patent infringement, claiming $1.1 million in damages. Cyan’s lawyer disputed the claim, but in December 2
> Store-it-Here owns a warehouse. On September 1, it rented storage space to a lessee (tenant) for six months for a total cash payment of $12,000 received in advance. Prepare two sets of journal entries for Store-it-Here, with each set of journal entries r
> Several of Kimper Corporation’s major customers experienced cash flow problems in 2017, mainly due to their increasing labour and production costs in 2016 and 2017. As a result, Kimper’s accounts receivable turnover ratio (net sales revenue/average trade
> What is the purpose of a financial audit?
> In 2017, I & T Corporation reported net income of $8.6 million, and declared and paid preferred share dividends of $3.2 million. During 2017, I & T had a weighted average of 900,000 common shares outstanding. Calculate I & T’s 2017 earnings per share.
> Obtain the auditor’s reports for TELUS Corporation. Identify and read the opinion paragraph. Explain why it is important for auditors to understand the business model and business environment (including the nature of the industry) before they can render
> Neon Limited had 40,000 common shares on January 1, 2017. 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, 2017, and the weighted average number of shares for 2
> Brookfield Asset Management’s financial statements can be found at the end of this book Instructions: Refer to the company’s financial statements and accompanying notes to answer these questions. (a) What business is Brookfield Asset Management in? (b)
> Use the information in BE4-17 to prepare a statement of retained earnings for Global Corporation, assuming that in 2017, Global discovered that it had overstated 2014 depreciation by $40,000 (net of tax). Data from BE4-17: Global Corporation prepares f
> Global Corporation prepares financial statements in accordance with ASPE. At January 1, 2017, the company had retained earnings of $1,038,000. In 2017, net income was $335,000, and cash dividends of $70,000 were declared and paid. Prepare a 2017 statemen
> Parfait Limited reports the following for 2017: sales revenue, $900,000; cost of sales, $750,000; operating expenses, $100,000; and unrealized gain on FV-OCI investments, $60,000. The company had January 1, 2017 balances as follows: common shares, $600,0
> The Blue Collar Corporation had income from continuing operations of $12.6 million in 2017. During 2017, it disposed of its restaurant division at an after-tax loss of $89,000. Before the disposal, the division operated at a loss of $315,000 (net of tax)
> Use the information in BE4-12 to prepare a multiple-step income statement for Sierra Corporation, showing expenses by function. Data from BE4-12: Sierra Corporation had net sales revenue of $5,850,000 and investment revenue of $227,000 for the year end
> Sierra Corporation had net sales revenue of $5,850,000 and investment revenue of $227,000 for the year ended December 31, 2017. Other items pertaining to 2017 were as follows: Sierra has 100,000 common shares outstanding throughout the year. Prepare a
> Argon Noble Limited has approved a formal plan to sell its head office tower to an outside party. A detailed plan has been approved by the board of directors. The building is on the books at $50 million (net book value). The estimated selling price is $4
> Sunmart Inc. is a discount retailer with 1,000 stores located across North America. Sunmart purchases bulk quantities of groceries and household goods, and then sells the goods directly to retail customers at a markup. Pharmedical Inc. is a pharmaceutica
> What are the major objectives of financial reporting?
> Pelican Inc. made a December 31 adjusting entry to debit Salaries and Wages Expense and credit Salaries and Wages Payable for $2,700. On January 2, Pelican paid the weekly payroll of $5,000. Prepare Pelican’s (a) January 1 reversing entry, (b) January 2
