Sonia Corporation has historically followed ASPE, but is considering a change to IFRS. It has temporary differences at December 31, 2017 that result in the following statement of financial position future income tax accounts: Deferred tax liability, current……………………………………………$33,000 Deferred tax asset, current……………………………………………….$48,000 Deferred tax liability, non-current……………………………………..$91,000 Deferred tax asset, non-current…………………………………………$24,000 Indicate how these balances will be presented in Sonia’s December 31, 2017 statement of financial position, assuming (a) that Sonia reports under the ASPE future income taxes method, and (b) that Sonia follows IFRS for reporting purposes.
> Using the information from BE22-9 for Azure Ltd., (a) prepare the cash flows from operating activities section of Azure’s 2017 statement of cash flows using the indirect method and following IFRS. (b) How would the disclosure requirements differ under AS
> Alvarado Ltd., a private company, has reported increasing profit every year for the past fi ve years. Alvarado would like to expand operations by adding three new retail stores within the next three years, and is seeking a loan from its bank to help fund
> Instructions: Contact an automobile dealership and find out the full out-of-pocket cost of purchasing a specific model of car if you were to pay cash for it. Also find out the details of the costs that are associated with leasing the same model car. Answ
> Noland Corporation decided at the beginning of 2017 to change from the declining-balance method of depreciating its capital assets to the straight-line method because the straight-line method better represents the pattern of benefits provided by the capi
> At January 1, 2017, Baker Corp. reported retained earnings of $2 million. In 2017, Baker discovered that 2016 depreciation expense was understated in error by $500,000. In 2017, net income was $800,000 and dividends declared were $195,000. The tax rate i
> In 2017, Dody Corporation discovered that equipment purchased on January 1, 2015 for $145,000 was expensed in error at that time. The equipment should have been depreciated over five years, with no residual value. The tax rate is 30%. Prepare Dody’s 2017
> Chang Limited is in the development phase of creating a new form of medicine. In the past, the company has always capitalized development costs as long as the criteria under IFRS and ASPE were met. Chang would now like to expense these costs. Discuss the
> Refer to the information for Rebek Corporation in E19-3. Instructions: (a) Prepare a pension work sheet: insert the January 1, 2017 balances and show the December 31, 2017 balances. (b) Prepare all journal entries. (c) What is the amount of the plan’s s
> Talbert, Inc. changed from the weighted average cost formula to the FIFO cost formula in 2017. The increase in the prior year’s income before tax as a result of this change is $228,000. The tax rate is 30%. Prepare Talbert’s 2017 journal entry to record
> ASPE does not permit the correction of an error to be accounted for using partial retrospective restatement or prospective restatement. However, IAS 8 does allow partial retrospective restatement or even prospective treatment for error corrections. (a) W
> At the beginning of 2017, Armstead Corporation discovered that depreciation expense in the years prior to 2017 was incorrectly calculated and recorded. For the years before 2017, total depreciation expense of $165,000 was recorded, whereas correct total
> Palmer Corp. is evaluating the appropriate accounting for the following items under ASPE: 1. Management has decided to switch from the FIFO inventory cost formula to the weighted average cost formula for all inventories. 2. When the year-end physical inv
> On January 1, 2017, Clark Inc. sold a piece of equipment to Daye Ltd. for $200,000, and immediately leased the equipment back. At the time, the equipment was carried on Clark’s books at a cost of $300,000, less accumulated depreciation of $120,000. The l
> Use the information for Regina Corporation from BE20-16. Assume instead that the residual value is not guaranteed. Prepare Regina’s May 29, 2017 journal entries. Data from BE20-16: Regina Corporation, which uses ASPE, manufactures replicators. On May 2
> Chorus Aviation Inc. is a Canadian aviation holding company that provides, through Jazz Aviation LP, a “significant part of Air Canada’s domestic and trans border network.” Chorus indicates in Note 1 to its financial statements that it is both economical
> Regina Corporation, which uses ASPE, manufactures replicators. On May 29, 2017, it leased to Barnes Limited a replicator that cost $265,000 to manufacture and usually sells for $410,000. The lease agreement covers the replicator’s five-year useful life a
> Use the information for Lai Corporation from BE20-14. Assume that, instead of costing Lai $175,000, the equipment was manufactured by Lai at a cost of $137,500 and the equipment’s regular selling price is $175,000. Prepare Lai Corporation’s January 1, 20
> Lai Corporation, which uses ASPE, leased equipment it had specifically purchased at a cost of $175,000 for Swander, the lessee. The term of the lease is six years, beginning January 1, 2017, with equal rental payments of $33,574 at the beginning of each
> Rebek Corporation provides the following information about its defined benefit pension plan for the year 2017: Current service cost………………………………………………………………..$ 235,000 Contribution to the plan……………………………………………………………..262,500 Past service cost, effective
> Use the information for Merrill Corporation from BE20-11. Assume that for Moxey Corporation, the lessor, collectability is reasonably predictable, there are no important uncertainties concerning costs, and the equipment’s carrying amount is $121,000. Pre
> Indicate the effect—understated (U), overstated (O), or no effect (NE)—that each of the following errors has on 2016 net income and 2017 net income: 2016 2017 Wages payable were not recorded at Dec. 31, 2016. Equi
> Bailey Corp. changed depreciation methods in 2017 from straight-line to double-declining-balance because management gathered evidence that the assets were being used differently than previously thought. The assets involved were acquired early in 2014 for
> Quinlan Corporation purchased a computer system (accounted for as Office Equipment) for $60,000 on January 1, 2015. It was depreciated based on a seven-year life and an $18,000 residual value. On January 1, 2017, Quinlan revised these estimates to a tota
> Netson Manufacturing Corp. is preparing its year-end financial statements and is considering the accounting for the following items: 1. The vice president of sales had indicated that one product line has lost its customer appeal and will be phased out ov
> Use the information for McCormick Ltd. from BE20-8. Assume that at December 31, 2017, McCormick made an adjusting entry to accrue interest expense of $8,296 on the lease. Prepare McCormick’s May 1, 2018 journal entry to record the second lease payment of
> McCormick Ltd., a public company following IFRS 16, recorded a right-of-use asset and lease liability at $150,000 on May 1, 2017. The interest rate is 10%. McCormick made the first lease payment of $25,561 on May 1, 2017. The lease requires a total of ei
> The accounting for operating leases has been a controversial issue. Many observers argue that firms that use operating leases are using significantly more assets and are more highly leveraged than their financial statements indicate. As a result, analyst
> Use the information for Lalonde and Costner from BE20-6. Using tables, a financial calculator, or Excel functions, illustrate how Costner determined the amount of the lease payment of $25,173. Data from BE20-6: Lalonde Ltd., a public company following
> Lalonde Ltd., a public company following IFRS 16, recently signed a lease for equipment from Costner Ltd. The lease term is five years and requires equal rental payments of $25,173 at the beginning of each year. The equipment has a fair value at the leas
> Access the Bombardier Inc. financial statements for the year ended December 31, 2014, which can be found on SEDAR (www.sedar.com). Instructions: (a) The company has many different types of shares authorized, issued, and/or outstanding at the end of 2014
> Coa Corporation recently needed to find temporary inventory storage space when transitioning from an old factory to a newly built factory within the same city. Coa signed a 10-month lease on a warehouse requiring monthly payments in advance of $14,500. (
> Blane Inc. entered into a five-year lease of equipment from Zdrinka Inc. At the lease’s inception, it is estimated that the equipment has an economic life of eight years and fair value of $250,000. Present value of minimum lease payments amounts to $215,
> Lee Ltd. recently signed a lease for equipment from Photon Inc. The lease term is five years and requires equal rental payments of $32,000 at the beginning of each year. The equipment has a fair value at the lease’s inception of $140,000, an estimated us
> Turcotte Limited, a public company following IFRS 16, decided to upgrade the coffee machines in all of its office locations. Turcotte leased 50 machines from Coffee Tyme Ltd. on July 1, 2017 (to purchase the coffee machines instead would cost Turcotte $3
> Use the information for Merrill Corporation from BE20-11. Assume that a residual value of $17,000 is expected at the end of the lease, but that Merrill does not guarantee the residual value. Using tables, a financial calculator, or Excel functions, calcu
> Merrill Corporation, which uses ASPE, enters into a six-year lease of equipment on September 13, 2017 that requires six annual payments of $28,000 each, beginning September 13, 2017. In addition, Merrill guarantees the lessor a residual value of $17,000
> Langlois Services Inc. accounts for right-of-use assets under IFRS 16 for a lease of a truck. The lease includes a residual value guarantee at the end of the term of the lease of $16,000. Langlois estimates that the likelihood for the residual value of $
> Lagace Ltd. entered into a lease on June 1, 2017. The lease term is six years and requires annual rental payments of $30,000 at the beginning of each year. Lagace’s incremental borrowing rate is 8% and the rate implicit in the lease is 9%. (a) Calculate
> Access the annual financial statements, including the accompanying notes, of Loblaw Companies Limited for its 52 weeks ended January 2, 2016. These can be found on SEDAR (www.sedar.com) or the company’s website. Review the principal statements and the no
> Duster Corporation is a private company with a defined benefit pension plan. The following information is available for Duster Corporation for 2017: Opening balance, DBO……………………………………………………………….$210,000 Opening balance, plan assets……………………………………………………….
> Access the annual report, including the audited financial statements, of Thomson Reuters Corporation for the year ended December 31, 2014 from SEDAR (www.sedar.com) or from the company’s website (www.thomsonreuters.com). Instructions: (a) What related-p
> Jonquière Corporation provides the following information about its defined benefit pension plan (in hundreds of thousands of dollars) for 2017: At the end of the year, Jonquière revised the terms of its pension plan, which resul
> At December 31, 2017, Glover Corporation provided you with the following information: Defined benefit obligation, December 31, 2017……………………………………$3,400,000 Plan assets at fair value, December 31, 2017…………………………………………..2,420,000 Past service c
> Refer to the information for Maya Corp. in BE19-4, and provide a continuity schedule for the plan assets for the year. Is the plan in a surplus or a deficit position at the end of the year? Data from BE19-4: Maya Corp. reports the following information
> For Castor Corporation, year-end plan assets were $1,753,000. At the beginning of the year, plan assets were $1,359,000. During the year, contributions to the pension fund were $170,000, while benefits paid were $130,000. Calculate Castor’s actual return
> Maya Corp. reports the following information (in hundreds of thousands of dollars) to you about its defined benefit pension plan for 2017: Provide a continuity schedule for the DBO for the year. Maya follows IFRS. $ 32 Actual return on plan assets
> Tika Corp. has recently decided to implement a pension plan for its employees; however, it is unsure if it would like to structure the pension as a defined contribution plan or a defined benefit plan. As requested by management, prepare a short memo outl
> Explain what performance-type plans are and how they differ from other types of compensatory plans.
> Using the information from BE18-3, prepare Nilson’s journal entry to record 2017 income tax. Assume a tax rate of 25% and that Nilson uses the taxes payable method of accounting for income taxes under ASPE. Data from BE18-3: Nilson Inc. had accounting
> IAS 19 Employee Benefits requires companies that have a surplus in a defined benefit plan to perform a “ceiling test” on the net benefit asset account. Instructions: Explain what an asset ceiling test is, why it is required, and how it is applied.
> Alliance Inc. reports the following incomes (losses) for both book and tax purposes (assume the carryback provision is used where possible): The tax rates listed were all enacted by the beginning of 2014. Instructions: (a) Prepare the journal entries
> Weiss Inc. reported income from continuing operations of $87,000 and a loss from discontinued operations of $16,000 in 2017, all before income taxes. All items are fully taxable and deductible for tax purposes. Prepare the bottom of the income statement
> Sandeep Corporation had income before income tax of $230,000 in 2017. Sandeep’s current tax expense is $43,000, and deferred tax expense is $27,000. (a) Prepare Sandeep’s 2017 income statement, beginning with income before income tax. (b) Calculate Sande
> In 2017, Borovya Limited purchased shares of Gurvir Corp. at a cost of $52,000. This was the first time the company had ever acquired an investment to be accounted for at fair value through other comprehensive income (FV-OCI). At December 31, 2017, the G
> Ditek Corp. provides a defined contribution pension plan for its employees. The plan requires Ditek to contribute 5% of employees’ gross pay to a fund trustee each year. Ditek’s total payroll for 2017 was $2,735,864. At the start of 2017, Ditek revised t
> At December 31, 2017, Tapper Corporation has a deferred tax asset of $420,000. After a careful review of all available evidence, it is determined that it is more likely than not that $85,000 of this deferred tax asset will not be realized. Prepare the ne
> Use the information for Kyle Inc. given in BE18-16. Assume now that Kyle earns taxable income of $25,000 in 2018 and that at the end of 2018 there is still too much uncertainty to recognize a deferred tax asset. Prepare all the journal entries that are n
> Refer to BE19-16 and Saver Corporation’s single-person defined benefit pension plan. If the change in the January 1, 2017 defined benefit obligation had been the result of an actuarial revaluation instead of a plan amendment, (a) determine the effect tha
> Saver Corporation ended its previous fiscal year with a defined benefit obligation of $137,888 and plan assets of $140,000. On January 1, 2017, the company amended its one-person defined benefit pension plan, resulting in a revised defined benefit obliga
> Legacy Corporation has the following information available concerning its post-retirement benefit plan for 2017: Current service cost……………………………………………………………………$130,000 Interest cost on DBO, discount rate at 6%............................................
> Petra Ltd. is preparing its financial statements for its year ended December 31, 2017 and has just obtained an actuarial pension valuation as at its year-end date. Prior to the actuarial valuation, Petra determined, based on the individual components of
> At the end of 2016, Valerie Corporation reported a deferred tax liability of $41,000. At the end of 2017, the company had $241,000 of temporary differences related to property, plant, and equipment. Depreciation expense on this property, plant, and equip
> The following is Mann Corp.’s comparative statement of financial position at December 31, 2017 and 2016, with a column showing the increase (decrease) from 2016 to 2017: Additional information: 1. On December 31, 2016, Mann acquired 2
> Instructions: Research what Canadian companies have been doing in recent years in response to rising post-employment health care costs and the risks that are associated with defined benefit pension plans. Write a short report on your findings.
> Monday Corporation sponsors a defined benefit pension plan and reports under IFRS. On January 1, 2017, the company reported plan assets of $1,000 and a defined benefit obligation of $1,100 (all amounts in thousands of dollars). During 2017, the current s
> Refer to the data provided about Rui Corporation’s pension plan in BE19-11. Prepare a pension work sheet for Rui Corporation for 2017 assuming the company applies ASPE. Data from BE19-11: At January 1, 2017, Rui Corporation had plan assets of $250,000
> At January 1, 2017, Rui Corporation had plan assets of $250,000 and a defined benefit obligation of the same amount based on projected costs. During 2017, the current service cost was $27,500, the discount rate on the DBO and plan assets was 10%, actual
> Refer to the data for Duster Corporation’s defined benefit pension plan in BE19-9. Now assume that the company follows ASPE instead of IFRS. Determine the 2017 effect of the pension plan on pension expense and the company’s shareholders’ equity. Data fr
> Scott Enterprises Inc. sponsors a defined benefit plan for its 500 employees. On December 31, 2017, the company’s actuary provided the following information related to the plan: defined benefit obligation $11.3 million, and fair value of plan assets $9 m
> Using the information from BE18-5, and assuming that the $40,000 difference is the only difference between Mazur’s accounting income and taxable income, prepare the journal entries to record the current tax expense, deferred tax expense, income tax payab
> At December 31, 2017, Watzman Inc. owned equipment that had a book value of $178,000 and a tax base of $136,000 due to the use of different depreciation methods for accounting and tax purposes. The enacted tax rate is 30%. Calculate the amount that Watzm
> Myers Corp. purchased depreciable assets costing $30,000 on January 2, 2017. For tax purposes, the company uses CCA in a class that has a 30% rate. For financial reporting purposes, the company uses straight-line depreciation over five years. The enacted
> Using the information from BE18-3, calculate the effective rate of income tax for Nilson Inc. for 2017. Also make a reconciliation from the statutory rate to the effective rate, using percentages. Data from BE18-3: Nilson Inc. had accounting income of
> Many business organizations have been concerned with providing for employee retirement since the late 1800s. During recent decades, a marked increase in this concern has resulted in the establishment of private pension and other post-retirement benefit p
> Mazur Corp. follows IFRS and began operations in 2017 and reported accounting income of $275,000 for the year. Mazur’s CCA exceeded its book depreciation by $40,000. Mazur’s tax rate for 2017 and years thereafter is 30%. In its December 31, 2017 statemen
> Potash Corporation of Saskatchewan Inc., Loblaw Companies Limited, and Air Canada are all Canadian companies with defined benefit plans. Visit www.sedar.com to access financial statements for their 2014 fiscal years ended December 31, 2014, January 3, 20
> The following information is available for Roginski Corporation for 2017. 1. CCA reported on the 2017 tax return exceeded depreciation reported on the income statement by $160,000. This difference is expected to reverse in equal amounts of $40,000 per ye
> Nilson Inc. had accounting income of $156,000 in 2017. Included in the calculation of that amount is the CEO’s life insurance expense of $5,000, which is not deductible for tax purposes. In addition, the undepreciated capital cost (UCC) for tax purposes
> In 2017, Noshy Corporation had accounting income of $234,000 and taxable income of $184,000. The difference is due to the use of different depreciation methods for tax and accounting purposes. The tax rate is 25%. Calculate the amount to be reported as i
> Use the information for Kyle Inc. given in BE18-16, but assume instead that it is more likely than not that the entire tax loss carryforward will not be realized in future years. Prepare all the journal entries that are necessary at the end of 2017 assum
> Kyle Inc. incurred a net operating loss of $580,000 in 2017. Combined income for 2014, 2015, and 2016 was $460,000. The tax rate for all years is 30%. Prepare the journal entries to record the benefits of the carryback and the carryforward, assuming it i
> Roper Corporation had the following tax information: In 2017, Roper suffered a net operating loss of $550,000, which it decided to carry back. The 2017 enacted tax rate is 25%. Prepare Roper’s entry to record the effect of the loss ca
> At December 31, 2016, Palden Corporation had a deferred tax asset of $800,000, resulting from future deductible amounts of $3.2 million and an enacted tax rate of 25%. In May 2017, new income tax legislation is signed into law that raises the tax rate to
> Powell Corporation has a taxable temporary difference related to net book value versus UCC of $715,000 at December 31, 2017. This difference will reverse as follows: 2018, $53,000; 2019, $310,000; and 2020, $352,000. Enacted tax rates are 25% for 2018 an
> Khan Limited is a publicly traded company on the Toronto Stock Exchange. The company sponsors a defined benefit pension plan for all of its employees, and the controller provides you with the following data that relate to the plan for fiscal 2017: 1. The
> At December 31, 2016, Ambuir Corporation had a deferred tax liability of $35,000. At December 31, 2017, the deferred tax liability is $52,000. The corporation’s 2017 current tax expense is $53,000. What amount should Ambuir report as total 2017 income ta
> At December 31, 2016, Chai Inc. had a deferred tax asset of $40,000. At December 31, 2017, the deferred tax asset is $62,000. The corporation’s 2017 current tax expense is $70,000. What amount should Chai report as total 2017 income tax expense? Prepare
> Obtain the financial statements of the Canadian National Railway Company for its year ended December 31, 2014 from SEDAR (sedar.com) or the company’s website. Instructions: Review the information contained in the “Additional Disclosures” section of Not
> At December 31, 2017, Camille Corporation had an estimated warranty liability of $256,000 for accounting purposes and $0 for tax purposes. (The warranty costs are not deductible until they are paid.) The tax rate is 25%. Calculate the amount that Camille
> Faber Corporation is a young start-up technology company with steadily increasing sales in its first six months of operations. Faber’s head office is located in a country in Eastern Europe, where the company would be subject to a corporate income tax rat
> Bantec Corporation had 500,000 common shares outstanding on January 1, 2017. On May 1, Bantec issued 50,000 shares. (a) Calculate the weighted average number of shares outstanding for the year ended December 31, 2017 if the 50,000 shares were issued for
> Assume the same information as in BE17-6 except that on October 1, 2017, Laurin declared a 1-for-2 reverse stock split instead of a 10% stock dividend. Data from BE17-6: Laurin Limited had 42,000 common shares outstanding on January 1, 2017. On March 1
> Assume the same information as in BE17-6 except that on October 1, 2017, Laurin declared a 3-for-1 stock split instead of a 10% stock dividend. Data from BE17-6: Laurin Limited had 42,000 common shares outstanding on January 1, 2017. On March 1, 2017,
> Laurin Limited had 42,000 common shares outstanding on January 1, 2017. On March 1, 2017, Laurin issued 20,000 shares in exchange for equipment. On July 1, Laurin repurchased and cancelled 10,000 shares. On October 1, 2017, Laurin declared and issued a 1
> Dencil Corporation had 600,000 common shares outstanding on January 1, 2017. On March 1, 2017, Dencil issued 150,000 shares. On September 1, Dencil repurchased and cancelled 50,000 shares. Calculate Dencil’s weighted average number of shares outstanding
> Josit Ltd. initiated a one-person pension plan in January 2012 that promises the employee a pension on retirement according to the following formula: pension benefit = 2.5% of final salary per year of service after the plan initiation. The employee began
> Assume the same information for Hedley Corporation as in BE17-2 except that the preferred shares are cumulative and the dividends have not yet been declared or paid. Data from BE17-2: Hedley Corporation had 2017 net income of $1.4 million. During 2017,
> Assume the same information for Hedley Corporation as in BE17-2 except that the preferred shares are non-cumulative and the dividend has not been declared or paid. Data from BE17-2: Hedley Corporation had 2017 net income of $1.4 million. During 2017, H
> Flory Corporation is a rapidly growing privately owned company that is considering changing from ASPE to IFRS in order to prepare for a future public offering of shares. As Flory’s financial advisor, what advice would you give to management regarding EPS
> BCE Inc.’s accounting policy note and its note disclosures relating to the company’s pension and other post-employment benefits for the year ended December 31, 2014 are set out in the chapter. Instructions: Review the disclosures from BCE’s 2014 financi
