TEL US 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. The credit facilities contain certain covenants relating to the amount of debt the company is allowed to hold. The following are selected excerpts from the 2011 Annual Report: Note 18- SHORT-TERM BORROWINGS - Review of short-term borrowings and related disclosures On July 26, 2002, TEL US subsidiary TELUS Communications Inc. (see Note 23(a)) entered into an agreement with an arm's-length securitization trust associated with a major Schedule I bank under which TEL US Communications Inc. is able to sell an interest incensing of its trade receivables up to a maximum of $500 million (December 31, 2010 - $500 million; January 1, 2010-$500 million). This revolving-period securitization agreement's current term ends August 1, 2014. TELUS Communications Inc. is required to maintain at least a BBB (low) credit rating by Dominion Bond Rating Service or the securitization trust may require the sale program to be wound down prior to the end of the term. When the Company sells its trade receivables, it retains reserve accounts, which are retained interests in the securitized trade receivables, and servicing rights. As at December 31, 2011, the Company had transferred, but continued to recognize, trade receivables of $456 million (December 31, 2010-$465 million; January 1, 2010-$598 million). Short-term borrowings of $400 million (December 31, 2010-$400 million; January 1, 2010 - $500 million) are comprised of amounts loaned to the Company from the arm's-length securitization trust pursuant to the sale of trade receivables. The balance of short-term borrowings (if any) comprised amounts drawn on the Company’s; bilateral bank facilities. Note 25-EXPLANATION OF TRANSITION TO IFRS-11’SB Previously, Canadian GAAP de-recognized trade receivables sold to the arm’s-length securitization trust with which the Company transacts. IFRS-IASB does not de-recognize the trade receivables sold to the arm’s-length securitization trust with which the Company transacts and considers the sale proceeds to be short-term borrowings of the Company. Instructions Adopt the role of the controller of TELUS and discuss the differing accounting treatment regarding the securitization transactions under IFRS and pre-changeover GAAP. (Since ASPE is very similar to pre-changeover GAAP for securitizations, use ASPE for the analysis.)
> In an annual audit of Solaro Company Limited, you find that a physical inventory count on December 31, 2014, showed merchandise of $441,000. You also discover the following items were excluded from the $441,000. 1. Merchandise of $61,000 is held by Solar
> Transactions follow for Whitehall Limited: March 10 Purchased goods billed at $25,000, terms 3/10, n/60. 11 Purchased goods billed at $26,575, terms 1115, n/30. 19 Paid invoice of March 10. 24 Purchased goods billed at $11,500, terms 3/10, n/30. Instruc
> In fiscal 2014, lvanjoh Realty Corporation purchased unimproved land for $55,000. The land was improved and subdivided into building lots at an additional cost of $34,460. These building lots were all the same size but, because of differences in location
> Two or more items are omitted in each of the following tabulations of income statement data. Fill in the amounts that are missing. 2013 2014 2015 $290,000 6,000 $. 13,000 347,000 32,000 Sales $410,000 Sales returns Net sales Beginning inventory Endi
> Ruggers Corporation sells one product, with information for July as follows: Ruggers uses the FIFO cost formula. All purchases and sales are on account. Instructions (a) Assume Ruggers uses a periodic system. Prepare all necessary journal entries, incl
> There are a few primary sources of GAAP for inventory under both ASPE and IFRS. List the sources of guidance in the table below. Type of Inventory Primary Guidance under ASPE Primary Guidance under IFRS Equipment manufactured Financial derivatives he
> Nicholas's Christmas Tree Farm Ltd. grows pine, fir, and spruce trees. The farm cuts and sells trees during the Christmas season and exports most of the trees to the United States. The remaining trees are sold to local tree lot operators. It normally tak
> The records of Monde Menswear report the following data for the month of September: Instructions (a) Estimate the ending inventory using the conventional retail inventory method. (b) Assuming that a physical count of the inventory determined that the ac
> Iqbal Corporation uses the lower of FIFO cost and net realizable value method on an individual item basis, applying the direct method. The inventory at December 31, 2014, included product AG. Relevant per-unit data for product AG follow: There were 1,00
> The net income per books of Lyondell Industries Limited was determined without any knowledge of the following errors. The 2008 year was Lyondell's first year in business. No dividends have been declared or paid. Instructions (a) Prepare a work sheet to
> Eureka Limited has a calendar-year accounting period. The following errors were discovered in 2014. 1. The December 31, 2012 merchandise inventory had been understated by $51,000. 2. Merchandise purchased on account in 2013 was recorded on the books for
> Salan1ander Limited makes the following errors during the current year. Each error is an independent case. l. Ending inventory is overstated by $1,020, but purchases are recorded correctly. 2. Both ending inventory and a purchase on account are understat
> The following is a list of items that may or may not be reported as inventory in Keesa Corp.'s December 31 balance sheet: l. Goods out on consignment at another company's store 2. Goods sold on an installment basis 3. Goods purchased FOB shipping point t
> Moorea Corp. 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 formula. (b) Cal
> Garners World buys 1,000 computer game CDs from a distributor that is discontinuing those games. The purchase price for the lot is $7,500. Garners' World will group the CDs into three price categories for resale, as follows: Determine the cost per CD for
> Angus Enterprises Ltd. reported cost of goods sold for 2014 of $2.4 million and retained earnings of $4.2 million at December 31, 2014. Angus later discovered that it’s ending inventories at December 31, 2013 and 2014 were overstated by $155,000 and $45,
> 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
> Mayhelm Ltd. took a physical inventory on December 31 and determined that goods costing $2,000 were on hand. This amount included $500 of goods held on consignment for Delhi Corporation. Not included in the physical count were $400 of goods purchased fro
> Partial information follows for a Canadian manufacturing company: Instructions (a) Enter the missing amounts where indicated for years 8, 9, and 10 in the above schedule. (b) Comment on the profitability and inventory management trends, and suggest poss
> Use the information from BE7-8, assuming Yoshi Corp. uses the net method to account for cash discounts. Prepare the required journal entries for Yoshi Corp. In BE7-8 Yoshi Corp. uses the gross method to record sales made on credit. On June 1, the compan
> Serafina 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 Serafina uses (1) The gross method of recording purchases,
> Betadyne Corp. is a public company that manufactures and sells medical equipment. What kind of information would be useful for users of the company's financial statements?
> Indicate whether the following would be considered inventory for a public company like Toyota Motor Corporation. If so, indicate the inventory category to which that item would belong. (a) Engines purchased to make the Toyota Corolla (b) Nuts and bolts p
> Farmer John 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-ran
> What are the primary sources of GAAP relating to inventory (a) Under IFRS? (b) Under ASPE?
> Walmart uses a just-in-time inventory system to reduce its costs, allowing it to sell goods at lower prices to its customers. What are the benefits of a good inventory management system? What are the risks associated with a very tight inventory control s
> Which of the following would be included in inventory? For any amount not included in inventory, explain where the amount would be recorded. (a) Raw materials costs of leather, to a manufacturer of leather furniture (b) Cost of cans of corn held on the s
> Feretti 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 cos
> Sunny Valley Limited produces wine. Certain vintage wines take more than one year to age. The company has borrowed funds to cover the costs of this aging process. The company meets the interest capitalization criteria under IFRS. Capitalizable interest u
> The financial statements of Trifolium Corporation for fiscal 2012 to fiscal 2014 are as follows (in thousands): Instructions (a) Calculate Trifolium's (1) Inventory turnover and (2) Average days to sell inventory for each of the two years ending in 20
> Great Balls of Fire Inc.'s April 30 inventory was destroyed by an explosion of an underground oil tank. January 1 inventory was $310,000 and purchases for January through April totalled $780,000. Sales for the same period were $ 1.1 million. Great Balls
> Yoshi Corp. uses the gross method to record sales made on credit. On June 1, the company made sales of $45,000 with terms 1/15, n/45. On June 12, Yoshi received full payment for the June I sale. Prepare the required journal entries for Yoshi Corp.
> (a) Briefly explain the criteria that have to be met for inventory to be recorded at an amount greater than cost. (b) Briefly explain the accounting for the following inventory items under ASPE: 1. Sheep 2. Wool 3. Carpet (c) Briefly explain the accoun
> Beaver Corp., 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 $2 million. At December 31, 2013, the raw materials to be purchased in 2014 have a market
> Bluebell Enterprises Ltd.'s records reported an inventory cost of $55,600 and a net realizable value of $54,000 at December 31, 2012. At December 31, 2013, the records indicated a cost of $68,700 and a net realizable value of $61,625. All opening invento
> Antimatter Corporation has the following four items in its ending inventory: (a) Assume that Antimatter is a public company using IFRS. Determine the total value of ending inventory using the lower of cost and net realizable value model applied on an in
> Canali Corporation uses a perpetual inventory system. On November 19, the company sold 600 units. The following additional information is available: Calculate the November 30 inventory and the November cost of goods sold using (a) The moving average cost
> Instructions From SEDAR (www.sedar.com), or the company websites, access the financial statements of Loblaw Companies Limited for its year ended December 31, 2011, and of Empire Company Limited for its year ended May 5, 2012. Review the financial stateme
> Canadian Tire Corporation, Limited is one of Canada's best-known retailers. The company operates 488 "hard-goods" retail stores through associate dealers, and a total of 385 corporate and franchise stores under its subsidiary Mark's Work Wearhouse, and h
> The trial balance of Imotex Ltd. contains the following accounts: 1. Accounts receivable, trade 2. Accounts receivable, related company 3. Accounts receivable, to be exchanged for shares in another company 4. Note receivable, receivable in grams of a pre
> The trial balance before adjustment of Chloe Inc. shows the following balances: Instructions (a) Give the entry for bad debt expense for the current year assuming: 1. The allowance should be 4% of gross accounts receivable. 2. Historical records indicat
> Write a brief essay highlighting the differences between IFRS and ASPE noted in this chapter, discussing the conceptual justification for each.
> Who would have thought that musicians David Bowie and James Brown had anything to do with accounting? Asset- or artist-backed financing vehicles have been used by these performers and others as a means of securitizing royalties and rights to other intell
> Information on Janut Corp. follows: Instructions Prepare all necessary journal entries on Janut Corp.'s books. July 1 Janut Corp. sold to Harding Ltd. merchandise having a sales price of $9,000, terms 3/10, net/60. Janut records its sales and recei
> Rudolph Corp. is a subsidiary of Hundey Corp. The ethical accountant, working as Rudolph's controller, believes that the yearly charge for doubtful accounts for Rudolph should be 2% of net credit sales. The president, nervous that the parent company migh
> Soon after beginning the year-end audit work on March 10 for the 2014 year end at Arkin Corp., the auditor has the following conversation with the controller: Controller: The year ending March 31, 2014, should be our most profitable in history and, becau
> Creative Choice Corporation (CC) is a publicly traded company that has been providing traditional mortgage loans for the past 10 years. In an effort to grow its business, it has decided to build another 5 banking service locations across the country. The
> Bowearth Limited (BL) is in the lumber business. The company sells pulp and paper products as well as timber and lumber. It has over 500,000 hectares of timberland that it either owns or leases. The company's shares trade on the public stock exchange. Ne
> Fritz's Furniture (FF) is a mid-sized owner-operated business that was started 25 years ago by Fred Fritz. The retail furniture business is cyclical, with business dropping off in times of economic downturn, as is the case currently. In order to encourag
> Hanley Limited manufactures camera equipment. The company plans to list its shares on the Venture Exchange. To do so, it must meet all of the following initial listing requirements (among others): 1. Net tangible assets must be at least $500,000. 2. Pre-
> The following information relates to Shea Inc.'s Accounts Receivable for the 2014 fiscal year: 1. An aging schedule of the accounts receivable as at December 31, 2014, is as follows: 2. The Accounts Receivable control account has a debit balance of $372,
> Fortini Corporation had record sales in 2014. It began 2014 with an Accounts Receivable balance of $475,000 and an Allowance for Doubtful Accounts of $33,000. Fortini recognized credit sales during the year of $6,675,000 and made monthly adjusting entrie
> Civic 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 Civic uses the gr
> A series of unrelated situations follow: 1. Atlantic Inc.'s unadjusted trial balance at December 31, 2014, included the following accounts: 2. An analysis and aging of Central Corp.’s accounts receivable at December 31, 2014, disclosed
> Dev Equipment Corp. usually closes its books on December 31, but at the end of 2014 it held its cash book open so that a more favorable statement of financial position could be prepared for credit purposes. Cash receipts and disbursements for the first I
> Information follows for Quartz Industries Ltd.: aBank service charges bBank debit memo for $1,050.00 for a customer's cheque returned and marked NSF was included with the June bank statement. Cash received on June 30 and put in the bank's night deposit b
> Information related to Banzai Books Ltd. is as follows: balance per books at October 31, $41,847.85; November receipts, $173,528.91; November disbursements, $166,193.54; balance per bank statement at November 30, $56,270.20. The following cheques were ou
> The cash account of Villa Corp. shows a ledger balance of $3,969.85 on June 30, 2014. The bank statement as at that date indicates a balance of $4,150. When the statement was compared with the cash records, the following facts were determined: 1. There
> Joseph Kiuvik is reviewing the cash accounting for Connolly Corporation, a local mailing service. Kiuvik's review will focus on the petty cash account and the bank reconciliation for the month ended May 31, 2014. He has collected the following informatio
> Furlana Company Limited uses the gross profit method to estimate inventory for monthly reports. Information follows for the month of May: Instructions (a) Calculate the estimated inventory at May 31, assuming that the gross profit is 25% of sales. (b) C
> Battle Tank Limited had net sales in 2014 of $1.1 million. At December 31, 2014, before adjusting entries, the balances in selected accounts were as follows: Accounts Receivable 5250,000 debit; Allowance for Doubtful Accounts 52,800 credit. Assuming B
> Creative Corporation is a manufacturer of children's toys. Creative has significant debt outstanding that has been used to purchase equipment and inventory used in its manufacturing process. Creative has positive cash from operating activities during the
> Brave Maven Inc. (BMI) operates in challenging economic times. It currently manufactures trucks and equipment used for construction as well as off-road automobiles and automotive parts. During the year, net losses from off-road automobiles and parts tota
> Before filing for bankruptcy protection, the company was able to buy a large shipment of snow tubes wholesale for a bargain price of $7 million from a supplier that was in financial trouble. The value of the inventory is approximately $10 million. The in
> As a reviewer for the Ontario Securities Commission, you are in the process of reviewing the financial statements of public companies. The following items have come to your attention: 1. A merchandising company overstated its ending inventory two years a
> The statement of financial position of Delacosta Corporation as of December 31, 2014, is as follows: Note 1: Buildings are stated at cost, except for one building that was recorded at its appraised value as management determined the building to be worth
> The following account balances were included in the trial balance of Reid Corporation at June 30, 2014: During 2014, Reid incurred production salary and wage costs of S71 0,000, consumed raw materials and other production supplies of $ 474,670, and had
> The following financial statement was prepared by employees of Klein Corporation: * 1: New styles and rapidly changing consumer preferences resulted in a $37,000 loss on the disposal of discontinued styles and related accessories. * 2: The corporation so
> Veselin Kamel, vice-president of finance for Hand Corp., has recently been asked to conduct a seminar for the company's division controllers. He would discuss the proper accounting for items that are large but do not typify normal business transactions (
> Hawthorn Corporation's adjusted trial balance contained the following accounts at December 31, 2014: Retained Earnings………………………………………………. $120,000 Common Shares…………………………………………………..$700,000 Bonds Payable…………………………………………………..$100,000 Contributed Surplus……
> 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. Information from BE5-8 Accounts Payable…...…………………………251,000 Oblig
> Included in Cellin Limited’s December 31, 2014 trial balance are the following accounts: Accounts Payable…………………………251,000 Obligations Under Capital Leases……$175,000 Discount on Bonds Payable………………$142,000 Unearned Revenue…………………………$141, 000 Bonds Payabl
> Pine Corporation's adjusted trial balance contained the following asset accounts at December 31, 2014: Prepaid Rent………………………$12,000 Goodwill……………………………$50,000 Franchise Fees Receivable……$2,000 Intangible Assets- Franchises…………$47,000 Intangible Assets- P
> 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
> Use the annual reports of Brookfield Asset Management Inc. for the year ended December 31, 2011, and Mainstreet Equity Corp. for the year ended September 30, 2011, to answer the following questions. These reports are available on SEDAR ('www.sedar.com) o
> Obtain the 2011 annual report for the Royal Bank of Canada from the company's website or from SEDAR (www.sedar.com). Financial reporting for Canadian banks is also constrained by the Bank Act and monitored by the Office of the Superintendent of Financial
> An excerpt from the annual report of BCE Inc. is shown below. The excerpt shows summarized financial information, including calculations of earnings before interest, tax, depreciation, and amortization (EBITDA); adjusted net earnings; and free cash flows
> The trial balance follows for McLean Corporation at December 3!, 2014: A physical count of inventory on December 31 showed that there was $124,000 of inventory on hand. Instructions Prepare a single-step income statement and a statement of retained ear
> Quality of earnings analysis is a very important tool in assessing the value of a company and its shares. The chapter presents a framework for evaluating quality of earnings. Instructions Do an Internet search on the topic and write a critical essay di
> The IASB and FASB are currently studying the issue of reporting financial performance. Instructions Go to the IASB website (www.ifrs.org) and download the Discussion Paper: Preliminary Views on Financial Statement Presentation from October 2008. (a) Exp
> Lydia Trottier has prepared baked goods for sale since 1998. She started a baking business in her home and has been operating in a rented building with a storefront since 2003. Trottier incorporated the business as MLT Inc. on January I, 2014, with an in
> The Canadian Securities Administrators (CSA), an umbrella group of Canadian provincial securities commissions, accumulates and publishes all documents that public companies are required to file under securities law. This database may be accessed from the
> Under IFRS, items of income and expenses are not allowed to be presented as "extraordinary" in the income statement or notes. Under U.S. GAAP, this is allowed. Instructions Explain what reasons the IASB might have had to eliminate the separate reporting
> Other comprehensive income is a category of comprehensive income that is made up of specific gains and losses that are reported separately after net earnings under IFRS. Under ASPE, there is no such concept as comprehensive income or other comprehensive
> Anikan 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 S49 mil
> The ethical accountant is the manager and accountant for a small company that is privately owned by three individuals. He has always given the owners cash-based financial statements. The owners are not accountants and do not understand how financial stat
> On January 1, 2014, Rocket 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, 2014, Rocket paid 540,000 cash for equity securities that it designated as fai
> Information about a corporation's operations is presented in a statement of earnings or a statement of comprehensive income. Income statements are prepared on either a current operating performance basis or an all-inclusive basis. Users of these income s
> Lanestar Inc. reported income from continuing operations before tax of$1,790,000 during 2014. Additional transactions occurring in 2014 but not included in the $1,790,000 are as follows: 1. The corporation experienced an insured flood loss of $80,000 dur
> Information for 2014 follows for Rolling Thunder Corp. Rolling Thunder decided to discontinue its entire wholesale division (a major line of business) and to keep its manufacturing division. On September 15, it sold the wholesale division to Dylane Corp
> Delray Inc. follows IFRS and has the following amounts for the year ended December 31, 2014: gain on sale of FV-NI investments (before tax) $1,000; loss from operation of discontinued division (net of tax) $3,000; income from operations (before tax) 515,
> On November I, 2013, Campbell Corporation management decided to discontinue operation of its Rocketeer Division and approved a formal plan to dispose of the division. Campbell is a successful corporation with earnings of $150 million or more before tax f
> In recent years, Grace Inc. has reported steadily increasing income. The company reported income of $20,000 in 2011, $25,000 in 2012, and 530,000 in 2013. Several market analysts have recommended that investors buy Grace Inc. shares because they expect t
> Dr. John Gleason, M.D., maintains the accounting records of Bones Clinic on a cash basis. During 2014, Dr. Gleason collected 5146,000 in revenues and paid 555,470 in expenses. At January 1, 2014, and December 31, 2014, he had accounts receivable, unearne
> The trial balance of Eastwood Inc. and other related information for the year 2014 follows: Additional information: 1. The inventory has a net realizable value of $212,000. The FIFO method of inventory valuation is used. 2. The fair value- OCI investmen
> On January I, 2014, Caroline Lampron and Jenni Meno formed a computer sales and service enterprise in Montreal by investing $90,000 cash. The new company, Razorback Sales and Service, has the following transactions in January: l. Paid $6,000 in advance f
> The following is from a recent income statement for Baring Corp (a public company): It includes only five separate numbers, two subtotals, and the net earnings figure. Instructions (a) Indicate the deficiencies in the income statement. (b) What recommen
> The equity accounts of Feeling Alright Vitamin Limited as at January 1, 2014, were as follows: During 2014, the following transactions took place: Instructions Prepare a statement of changes in equity for the year ended December 31, 2014. The company fo
> Amos Corporation was incorporated and began business on January 1, 2014. It has been successful and now requires a bank loan for additional working capital to finance an expansion. The bank has requested an audited income statement for the year 2014 usin
> Faldo Corp. is a public company and has 100,000 common shares outstanding. In 2014, the company reported income from continuing operations before income tax of $2,710,000. Additional transactions not considered in the $2,710,000 are as follows: 1. In 201
