Question: Programming for Kids Ltd. decided that it

> During 2017, Darwin Corporation started a construction job with a contract price of $4.2 million. Darwin ran into severe technical difficulties during construction but managed to complete the job in 2019. The contract is non-cancellable. Under the terms

> Guillen Inc. began work on a $7,000,000 non-cancellable contract in 2017 to construct an office building. Guillen uses the completed-contract method under ASPE. At December 31, 2017, the balances in certain accounts were Contract Asset $1,715,000; Accoun

> The financial statements for Bombardier Inc. for the year ended December 31, 2014, can be found on the company’s website or from SEDAR (www.sedar.com). Instructions: (a) What form of presentation does the company use in preparing its balance sheet? (b)

> On April 1, 2017, 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

> Nate Beggs signs a one-year contract with BlueBox Video. The terms of the contract are that Nate is required to pay a non-refundable initiation fee of $100. After the first year, membership can be renewed by paying an annual membership fee of $5 per mont

> Lang Inc. had beginning inventory of $22,000 at cost and $30,000 at retail. Net purchases were $157,500 at cost and $215,000 at retail. Net markups were $10,000, net markdowns were $7,000, and sales were $184,500. Calculate the ending inventory at cost u

> Use the information for Brent Hill Company from BE10-23 and BE10-24. Calculate the company’s avoidable borrowing costs assuming Brent Hill Company follows IFRS. How would your answer change if the company followed ASPE? Data from BE10-23: Brent Hill Co

> Brent Hill Company borrowed $1 million on March 1 on a five-year, 12% note to help finance the building construction. In addition, the company had outstanding all year a $2-million, five-year, 13% note payable and a $3.5-million, four-year, 15% note paya

> On December 31, 2017, 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, 2017. Gr

> On May 31, 2017, 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, 2017, a report was received from the consignee, indicating th

> Using the data from BE12-19, assume that Pipeline Corporation is a private entity. Explain how goodwill will be tested for impairment. If the unit’s carrying amount (including goodwill) is $3,581,000 and its fair value is $3,474,000, determine the amount

> Using the data from BE12-19, assume that Pipeline Corporation is a public company and that the goodwill was allocated entirely to one cash-generating unit (CGU). Two years later, information about the CGU is as follows: carrying amount $3,740,000; value

> Instructions: (a) Explain the principles and criteria for revenue recognition under the earnings approach. (b) For each scenario noted in E6-1, discuss when revenue should be recognized under the earnings approach. Provide the journal entries that would

> The financial statements of Brookfield Asset Management Inc. for its year ended December 31, 2014, appear at the end of this book. Instructions: (a) What alternative formats could the company have used for its balance sheet? Which format did it adopt? (

> se the data provided in BE12-16, except assume that useful life is expected to be unlimited. How would your response change if Coffee Time reported under (a) ASPE or (b) IFRS? Data from BE12-16: Coffee Time Limited has a trademark with a carrying amoun

> Use the data provided in BE12-16. How would your response change if Coffee Time were a public company reporting under IFRS? Data from BE12-16: Coffee Time Limited has a trademark with a carrying amount of $83,750, and expected useful life of 15 years.

> 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 presently 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 sati

> Use the information in BE12-13 and assume that in January 2019, Lakeshore spends $26,000 successfully defending a patent suit. In addition, Lakeshore now feels the patent will be useful only for another seven years. Prepare the journal entries to record

> Lakeshore Corporation purchased a patent from MaFee Corp. on January 1, 2017, for $87,000. The patent had a remaining legal life of 16 years. Prepare Lakeshore’s journal entries to record the 2017 patent purchase and amortization.

> Appliance Centre is an experienced home appliance dealer. Appliance Centre also offers a number of services together with the home appliances that it sells. Assume that Appliance Centre sells ovens on a stand-alone basis. Appliance Centre also sells inst

> Seymour Ltd. traded a used welding machine (cost $9,000, accumulated depreciation $2,000, fair value $3,000) for office equipment with an estimated fair value of $8,000. Seymour also paid $4,000 cash in the transaction. Prepare the journal entry to recor

> Chuckwalla Limited purchased a computer for $7,000 on January 1, 2017. Straight-line depreciation is used for the computer, based on a five-year life and a $1,000 residual value. In 2019, the estimates are revised. Chuckwalla now expects the computer wil

> Budget Vacations is a monthly magazine that has been on the market for 18 months. It is owned by a private company and has a circulation of 1.4 million copies. The company is thinking of going public to raise funds for expansion. However, currently, nego

> An excerpt from Section 10.2 of the Management Discussion and Analysis in the 2014 annual report of BCE Inc. is shown below. The excerpt shows summarized financial information, including calculations of earnings before interest, tax, depreciation, and am

> Sanchez Co. enters into a contact to sell Product A and Product B on January 2, 2017, for an upfront cash payment of $150,000. Product A will be delivered in two years (January 2, 2019) and Product B will be delivered in five years (January 2, 2022). San

> TELUS Corporation is one of Canada’s largest telecommunications companies and provides both products and services. Its shares are traded on the Toronto and New York stock exchanges, and its credit facilities contain certain covenants relating to the amou

> On June 3, 2017, Hunt Company sold to Ann Mount merchandise having a sales price of $8,000 (cost $5,600) with terms of 2/10, n/60, f.o.b. shipping point. Hunt estimates that merchandise with a sales value of $800 will be returned. An invoice totalling $1

> 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

> Sherry Chan has just started up a small corporation that produces jewellery. She has applied for and received a government grant. The grant will automatically be renewed as long as the business shows a profit at year end. Because she is trying to control

> Lots Lumber Limited is a private company that operates in the forestry sector and owns timber lots. The company produces specialty lumber and sells to distributors and retailers. Currently, Lots uses ASPE when preparing its financial statements. It has a

> Jupiter Company sells goods to Danone Inc. on account on January 1, 2017. The goods have a sales price of $610,000 (cost $500,000). The terms of the sale are net 30. If Danone pays within five days, it receives a cash discount of $10,000. Past history in

> The following are independent situations that require professional judgement for determining when to recognize revenue from the transactions. 1. Costco sells you a one-year membership with a single, one-time upfront payment. This non-refundable fee is pa

> Turner Inc. began work on a $7,000,000 non-cancellable contract in 2017 to construct an office building. During 2017, Turner Inc. incurred costs of $1,700,000, billed its customers for $1,200,000 (non-refundable), and collected $960,000. At December 31,

> Brent Hill Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1.5 million on March 1, $1.2 million on June 1, and $3 million on December 31. Calculate Brent Hill’s weighted-average ac

> Access the Investor Perspectives article written by Steve Cooper, a member of the IASB, in June 2015, entitled “A tale of ‘prudence’?” (www.ifrs.org). Mr. Cooper states that two different meanings have been attributed to the term “prudence” when it is us

> Shipper Inc. has acquired a large transport truck at a cost of $90,000 (with no breakdown of the component parts). The truck’s estimated useful life is 10 years. At the end of the seventh year, the powertrain requires replacement. It is determined that i

> On September 1, 2017, Pipeline Corporation acquired Tunneling Limited for a cash payment of $954,000. At the time of purchase, Tunneling’s statement of financial position showed assets of $780,000, liabilities of $420,000, and owners’ equity of $360,000.

> Coffee Time Limited has a trademark with a carrying amount of $83,750, and expected useful life of 15 years. As part of an impairment test on December 31, 2017, due to a change in customer tastes, Coffee Time gathered the following data about the tradem

> On December 31, 2017, Convenient Cabs Incorporated was granted 10 taxi licences by the City of Somerdale, at a cost of $1,000 per licence. It is probable that Convenient Cabs will receive the expected future economic benefits of the taxi licences. There

> Green Earth Corp. has capitalized software costs of $450,000 on a product to be sold externally. During its first year, sales of this product totaled $195,000. Green Earth expects to earn $1,250,000 in additional future revenue from this product, which i

> In the late 1990s, CIBC helped Enron Corporation structure 34 “loans” that appeared in the financial statements as cash proceeds from sales of assets. Enron subsequently went bankrupt in 2001 and left many unhappy investors and creditors with billions of

> Rouge Valley Golf and Health Club (RVGH) is a public company that operates eight clubs in a large city and offers one-year memberships. Membership provides members with access to golf and the fitness centre including fitness classes. The members may use

> Save the Trees (STT) is a not-for-profit organization whose mandate is to keep our cities green by planting and looking after trees. STT is primarily funded by government grants and must comply with a significant number of criteria in order to obtain add

> Find it Gold Inc. (FGI) was created in 2008 and is 25% owned by Find it Mining Corporation (FMC). FGI’s shares trade on the local exchange and its objective is to become a substantial low-cost mineral producer in developing countries. FMC provided substa

> Real Estate Investment Trust (RE) was created to hold hotel properties. RE currently holds 15 luxury and first-class hotels in Europe. The entity is structured as an investment trust, which means that the trust does not pay income taxes because it distri

> Extensible business reporting language (XBRL) has been under development and promotion for many years. Because of its potential for effective and efficient analysis of financial and other reports, XBRL has received support from many jurisdictions around

> Sweet Tooth, Inc., a private company that applies ASPE, incurred $15,000 in materials and $12,000 in direct labour costs between January and March 2017 to develop a new product. In May 2017, the criteria required to capitalize development costs were met.

> Indicate whether the following items are capitalized or expensed in the current year, assuming IFRS was used to prepare financial statements. Assume that any items that may qualify for capitalization have met all six “development phase” criteria. (a) Th

> Bountiful Industries Ltd. had one patent recorded on its books as at January 1, 2017. This patent had a book value of $365,000 and a remaining useful life of eight years. During 2017, Bountiful incurred research costs of $140,000 and brought a patent inf

> Hubbub Company Ltd. acquired equipment at the beginning of Year 1. The asset has an estimated useful life of fi ve years. An employee has prepared depreciation schedules for this asset using two different methods, in order to compare the results of using

> Jiang Company Ltd. purchases equipment on January 1, 2017, for $387,000 cash. The asset is expected to have a useful life of 12 years and a residual value of $39,000. Jiang prepares financial statements under IFRS. Instructions: (a) Calculate the amount

> Jon Seceda Furnace Corp. purchased machinery for $315,000 on May 1, 2017. It is estimated that it will have a useful life of 10 years, salvage value of $15,000, production of 240,000 units, and working hours of 25,000. During 2018, Seceda Corp. uses the

> Deluxe Ezra Company purchases equipment on January 1, 2017, 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) Compute the amount of depreciation for each of 2017, 2018, and

> Jared Industries Ltd., a public company, presents you with the following information: Instructions: (a) Complete the table for the year ended December 31, 2021. The company depreciates all assets for a half year in the year of acquisition and the year

> Jupiter Wells Corp. purchased machinery for $315,000 on May 1, 2017. 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

> Use the annual reports and/or the audited annual financial statements of Brookfield Office Properties Inc. for the year ended December 31, 2014, and of Main street Equity Corp. for the year ended September 30, 2014, to answer the following questions. The

> Since 1996, Nike, Inc., has had endorsement contracts with Tiger Woods and some of the world’s best-known athletes. For example, Nike has been able to gain the rights to use top golfers’ names in advertising promotions and on Nike Golf apparel, footwear,

> Gambit Corporation purchased a new plant asset on April 1, 2017, 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

> Jamoka Corporation is a public company that manufactures farm implements, such as tractors, combines, and wagons. Jamoka uses the revaluation model per IAS 16, and records asset revaluations using the elimination method. (This means the balance in the ac

> Assume the same information as in E11-22, except that at December 31, 2017, Gaurav discontinues use of the equipment and intends to dispose of it in the coming year by selling it to a competitor. It is expected that the costs of disposal will total $50,0

> The information that follows relates to equipment owned by Gaurav Limited at December 31, 2017: Cost……………………………………………………………………………………..$10,000,000 Accumulated depreciation to date…………………………………………….2,000,000 Expected future net cash flows (undiscounted)……

> Green Thumb Landscaping Limited has determined that its lawn maintenance division is a cash-generating unit under IFRS. The carrying amounts of the division’s assets at December 31, 2017, are as follows: Land…………………………………………….$ 25,000 Building…………………………

> Perez Corp., a mining company, owns a significant mineral deposit in a northern territory. Perez prepares financial statements in accordance with IFRS. Included in the asset is a road system that was constructed to give company personnel access to the m

> Diderot Corp. acquired a property on September 15, 2017, 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

> The management of Luis Inc., a small private company that uses the cost recovery impairment model, was discussing whether certain equipment should be written down as a charge to current operations because of obsolescence. The assets had a cost of $900,00

> Finlay Limited constructed a building at a cost of $2.8 million and has occupied it since January 1997. It was estimated at that time that its life would be 40 years, with no residual value. In January 2017, a new roof was installed at a cost of $370,000

> In 1988, Lincoln Limited completed the construction of a building at a cost of $1.8 million; it occupied the building in January 1989. It was estimated that the building would have a useful life of 40 years and a residual value of $400,000. Early in 1999

> In 2012, Hans Hoogervorst, Chairman of the IASB, gave a speech at the FEE Conference on Corporate Reporting of the Future entitled “The Concept of Prudence: Dead or Alive?” This speech was in answer to many who opposed the elimination of “prudence” from

> Machinery purchased for $56,000 by Wong Corp. on January 1, 2012, was originally estimated to have an eight-year useful life with a residual value of $4,000. Depreciation has been entered for five years on this basis. In 2017, it is determined that the t

> At the beginning of 2017, Kao Company, a small private company, acquired a mine for $850,000. Of this amount, $100,000 was allocated to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists found that appro

> Information for Craig Ltd. follows: 1. On July 6, Craig acquired the plant assets of Desbury Company, which had discontinued operations. The property was appraised by a reliable, independent valuator on the date of acquisition as follows: Land…………………………

> Rachel Timber Inc., a small private company that follows ASPE, owns 9,000 hectares of timberland purchased in 2004 at a cost of $1,400 per hectare. At the time of purchase, the land without the timber was valued at $420 per hectare. In 2005, Rachel built

> Wettlauffer Company Ltd. shows the following entries in its Equipment account for 2017. All amounts are based on historical cost. Instructions: (a) Prepare any correcting entries that are necessary. (b) Assuming that depreciation is to be charged for a

> Gibbs Inc. purchased a machine on January 1, 2017, at a cost of $60,000. The machine is expected to have an estimated residual value of $5,000 at the end of its five-year useful life. The company capitalized the machine and depreciated it in 2017 using t

> On March 10, 2017, Lucas Limited sold equipment that it purchased for $192,000 on August 20, 2010. It was originally estimated that the equipment would have a useful life of 12 years and a residual value of $16,800 at the end of that time, and depreciati

> Glesen Corp. purchased land with two old buildings on it as a factory site for $460,000. The property tax assessment (that is, assessed value) on this property was $350,000: $250,000 for the land and the rest for the buildings. It took six months to tear

> The following expenditures and receipts are related to land, land improvements, and buildings that were acquired for use in a business enterprise. The receipts are in parentheses. 1. Money borrowed to pay a building contractor (signed a note), ($275,000)

> DAC Manufacturing Inc. is installing a new plant at its production facility. It has incurred these costs: Instructions: Determine which costs DAC Manufacturing Inc. can capitalize in accordance with IAS 16. $2,500,000 200,000 600,000 Cost of the ma

> Obtain the 2014 annual report for the Royal Bank of Canada from the company’s website or from SEDAR (www.sedar.com). Note that financial reporting for Canadian banks is also constrained by the Bank Act and monitored by the Office of the Superintendent of

> Lavoie Corporation acquired new equipment at a cost of $100,000 plus 7% provincial sales tax and 5% GST. (GST is a recoverable tax.) The company paid $1,700 to transport the equipment to its plant. The site where the equipment was to be placed was not ye

> Hayes Industries Corp. purchased the following assets and also constructed a building. All this was done during the current year using a variety of financing alternatives. Assets 1 and 2 These assets were purchased together for $100,000 cash. The followi

> Farrey Supply Ltd. is a newly formed public corporation that incurred the following costs related to land, buildings, and machinery: Instructions: (a) Determine the amounts that should be included in the cost of land, buildings, and machinery. Indicate

> In early February 2017, Huey Corp. began construction of an addition to its head offi ce building that is expected to take 18 months to complete. The following 2017 expenditures relate to the addition: On February 1, Huey issued a $100,000, three-year

> The following three situations involve the capitalization of borrowing costs for public companies following IFRS. Situation 1 On January 1, 2017, Oksana Inc. signed a fixed-price contract to have Builder Associates construct a major head office facility

> On December 31, 2016, Omega Inc., a public company, borrowed $3 million at 12% payable annually to finance the construction of a new building. In 2017, the company made the following expenditures related to this building structure (unless otherwise noted

> The following are transactions related to Producers Limited: 1. The City of Piedmont gives the company five hectares of land as a plant site. This land’s fair value is determined to be $92,000. 2. Producers issues 13,000 common shares i

> Plant assets often require expenditures subsequent to acquisition. It is important that they be accounted for properly. Any errors will affect both the statements of financial position and income statements for several years. Instructions: For each of t

> The following transactions occurred during 2017. Assume that depreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated residual value. Assume also that depreciation is charged for a

> On January 1, 2017, the accounting records of Sasseville Ltée included a debit balance of $15 million in the building account and of $12 million in the related accumulated depreciation account. The building was purchased in January 1977 for $15 million,

> From the IFRS website (www.ifrs.org), locate the “Update by the IASB and FASB” to the meeting of the G20 finance ministers and central bank governors on February 15 and 16, 2013, as well as the update on convergence included in the “Report of the Chair o

> On January 1, 2017, 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, 2016, showed the following property, plant, and equipment assets accounted for under the cost model (accumulated depreciation includes depreciation for 2016): Blue water uses

> Nevine Corporation owns and manages a small 10-store shopping centre and classifies the shopping centre as an investment property. Nevine has a May 31 year end and initially recognized the property at its acquisition cost of $10.8 million on June 2, 2016

> Plaza Holdings Inc., a publicly listed company in Canada, ventured into construction of a mega–shopping mall in Edmonton, which is rated as the largest shopping mall in North America. The company’s board of directors, after much market research, decided

> On March 1 2017, Russell Winery Ltd. purchased a five-hectare commercial vineyard for $1,050,000. The total purchase price was based on appraised market values of the building, grapevines, and equipment ($580,000, $260,000, and $210,000, respectively). R

> Light stone Equipment Ltd. wanted to expand into New Brunswick and was impressed by the provincial government’s grant program for new industry. Once it was sure that it would qualify for the grant program, it purchased property in downtown Saint John on

> Jamil Jonas is an accountant in public practice. Not long ago, Jamil struck a deal with his neighbor Ralph to prepare Ralph’s business income tax and GST returns for 2017 in exchange for Ralph’s services as a landscaper. Ralph provided labour and used hi

> 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

> Carver Inc. recently replaced a piece of automatic equipment at a net price of $4,000, f.o.b. factory. The replacement was necessary because one of Carver’s employees had accidentally backed his truck into Carver’s original equipment and made it inoperab