formerly British Sky Broadcasting Group plc, is a pan-European pay television giant and multimedia content company whose common shares trade on the London Stock Exchange. The company produces financial statements in accordance with IFRS. Access the company’s annual report for the year ended June 30, 2015 from its website (http://corporate.sky.com). We know from the annual report (page 119) that the company’s shares traded at £8.93 per share at the beginning of its 2015 fiscal year and at £10.66 per share at June 30, 2015. Instructions: (a) Determine how the company has calculated the 2015 basic and diluted earnings per share and verify the calculations, where possible. That is, verify (by examining the relevant notes) the number of shares outstanding, adjustments made to the ordinary shares, and the dilutive shares added. Note any information that is missing in order for you to make this determination. Using the share prices disclosed in the question, determine why the company has concluded that there are no items that are antidilutive. (b) Assume that all conditions have been met for share option awards. Determine the number of shares that would be added for the dilution using the treasury stock method for 2015. (Note any assumptions you make.) (c) Sky has also disclosed other information on a per share basis. Explain this other per share data. Why has the company provided this information? If you were an investor, would you find it useful?
> BCE Inc., a well-known Canadian telecommunications and media company, has a December 31 year end. Access the company’s 2014 annual report from the company website or from www.sedar.com. Instructions: (a) What per share information has the company provid
> Travel In Style Limited issued $1,000,000 of 9% bonds on September 1, 2017 for $1,058,671. The term of the bonds is September 1, 2017 to September 1, 2025, with interest payable quarterly each December 1, March 1, June 1, and September 1. The company use
> Assume that the bonds in BE14-15 were issued for $644,632 and the effective interest rate was 6%. (a) Prepare the company’s journal entry for the January 1 issuance. (b) Prepare the company’s journal entry for the July 1 interest payment. (c) Prepare the
> On January 1, 2017, Quinton Corporation issued $600,000 of 7% bonds that are due in 10 years. The bonds were issued for $559,229 and pay interest each July 1 and January 1. The company uses the effective interest method. Assume an effective rate of 8%. (
> The City of Fram issued 100 bonds at their face value of $6,000 each plus accrued interest on June 1, 2017. The term of the bonds was January 1, 2017 to January 1, 2023, with interest payable semi-annually each January 1 and July 1 at 6%. Fram uses the e
> Assume that the bonds in BE14-11 were issued at 103. Assume also that Grenier Limited records the amortization using the straight-line method. Prepare the journal entries related to the bonds for (a) January 1, (b) July 1, and (c) December 31. Data from
> Assume that the bonds in BE14-11 were issued at 98. Assume also that Grenier Limited records the amortization using the straight-line method. Prepare the journal entries related to the bonds for (a) January 1, (b) July 1, and (c) December 31. Data from
> Grenier Limited issued $300,000 of 10% bonds on January 1, 2017. The bonds are due on January 1, 2022, with interest payable each July 1 and January 1. The bonds are issued at face value. Grenier uses the effective interest method. Prepare the company’s
> Griseta Limited sponsors a defined benefit pension plan for its employees, which it accounts for under ASPE. The following data relate to the operation of the plan for the year 2017: 1. The actuarial present value of future benefits earned by employees f
> Watson Corporation issued $500,000 of 8%, 10-year bonds on January 1, 2017 at face value. The bonds require annual interest payments each December 31. Costs associated with the bond issuance were $25,000. Watson follows ASPE and uses the straight-line me
> Lamanna Laundry Ltd. is a full-service laundry provider, focusing on high-end clientele. Lamanna Laundry has recently invested in new technology to improve efficiency. In order to finance the new technology, the company issued a 10-year bond on January 1
> Refer to the information for DeGroot Limited in BE13-8. Assume that the amounts include tax. Prepare the entries for DeGroot. Round amounts to the nearest cent. Data from BE13-8: DeGroot Limited conducts all of its business in a province with HST of 13
> Refer to the financial statements of Brookfield Asset Management Inc. for its year ended December 31, 2014, which are reproduced at the end of Volume 2 of this text, and for its year ended December 31, 2013 found at www.sedar.com or on the company’s webs
> DeGroot Limited conducts all of its business in a province with HST of 13%. Prepare the summary journal entry to record DeGroot’s sales for the month of July, during which customers purchased $37,500 of goods on account and a journal entry for the cash p
> Cartwright Springs Brewery Ltd. (CSB) operates a microbrewery and sells beer directly to customers, bars, and restaurants. CSB uses one-liter blue glass refillable bottles featuring a swing-top ceramic lid. The bottles cost CSB $4.90 each. CSB charges cu
> Takemoto Inc. borrowed $60,000 on November 1, 2017 by signing a $61,350, three-month, zero-interest-bearing note. (a) Using a financial calculator or Excel, calculate the effective interest charged on the note. (b) Prepare Takemoto’s November 1, 2017 ent
> Refer to the information for Upland Limited in BE13-4. Assume that Upland uses reversing entries. Prepare the 2018 journal entry(ies) for Upland. Data from BE13-4: Upland Limited borrowed $40,000 on November 1, 2017 by signing a $40,000, three-month, 9
> Upland Limited borrowed $40,000 on November 1, 2017 by signing a $40,000, three-month, 9% note. Prepare Upland’s November 1, 2017 entry; the December 31, 2017 annual adjusting entry; and the February 1, 2018 entry.
> Jupiter Corp. provides at no extra charge a two-year warranty with one of its products, which was first sold in 2017. In that year, Jupiter sold products for $2.5 million and spent $68,000 servicing warranty claims. At year end, Jupiter estimates that an
> The following information is available for Antoine Corporation’s pension plan for the 2017 fiscal year: Defined benefit obligation, 1/1/17, accounting basis, before plan amendment………….$255,000 Fair value of plan assets, 1/1/17………………………………………………………………………
> Cozy Home Inc. offers its customers two furnace maintenance services. One service is for a one-time cleaning and servicing of a home furnace at a cost of $100. Customers can earn a 5% discount from this price if they pay before Cozy’s calendar fiscal yea
> Refer to the information for Lu Corp. in BE13-20 and BE13-21. Assume that the increase in the asset retirement obligation in 2017 related to the production of oil in 2017 was $61,942. Prepare any necessary entries to record the increase in the asset reti
> Refer to the information for Lu Corp. in BE13-20. Prepare any necessary adjusting entries that are associated with the asset retirement obligation and related expenses at December 31, 2017, assuming that Lu follows (a) IFRS, and (b) ASPE. Ignore producti
> Lu Corp. erected and placed into service an offshore oil platform on January 1, 2017 at a cost of $10 million. Lu is legally required to dismantle and remove the platform at the end of its nine-year useful life. Lu estimates that it will cost $1 million
> IFRS allows per share amounts to be reported on items other than earnings. Instructions: (a) Adopt the role of the ethical accountant and write a short essay on the pros and cons of allowing companies to include alternate per share amounts in their annu
> Primeau Inc. pays its officers bonuses based on income. For 2017, the bonuses total $350,000 and are paid on February 15, 2018. Prepare Primeau’s December 31, 2017 adjusting entry and the February 15, 2018 entry. For the payment entry, ignore withholding
> Laurin Corporation offers parental benefits to its staff as a top-up on Employment Insurance benefits so that employees end up receiving 100% of their salary for 12 months of parental leave. Ruzbeh Awad, who earns $74,000 per year, announced that he will
> At December 31, 2017, 30 employees of Kasten Inc. have each earned one week of vacation time. The employees’ average salary is $1,000 per week. Prepare Kasten’s December 31, 2017 adjusting entry.
> Refer to the information for Whirled Inc. in BE13-15. Assume now that the employer is required to match every dollar of the CPP contributions of its employees and to contribute 1.4 times the EI withholdings. (a) Prepare the journal entry to record Whirle
> Whirled Inc.’s weekly payroll of $23,000 included employee income taxes withheld of $3,426, CPP withheld of $990, EI withheld of $420, and health insurance premiums withheld of $250. Prepare the journal entry to record Whirled’s weekly payroll.
> The following information is available for Huntley Corporation’s pension plan for the year 2017: Plan assets, January 1, 2017………………………………………………………………………$400,000 Actual return on plan assets……………………………………………………………………………17,000 Benefits paid to retirees………
> At December 31, 2017, Parew Corporation has a long-term debt of $700,000 owing to its bank. The existing debt agreement imposes several covenants related to Parew’s liquidity and solvency. At December 31, 2017, Parew was not in compliance with the covena
> Refer to the information about Clausius Ltd. in BE13-11. Assume instead that the tax return indicated 2017 income tax of $10,200. (a) Prepare the adjusting year-end entry to recognize the 2017 income tax. (b) Identify any yearend statement of financial p
> Clausius Ltd. made four quarterly payments of $3,200 each to the CRA during 2017 as instalment payments on its estimated 2017 corporate tax liability. At year end, Clausius’s controller completed the company’s 2017 tax return, which showed income tax of
> Louise Inc. operates in Alberta, where it is subject to GST of 5%. In August, Louise purchased $29,400 of merchandise inventory, and had sales of $45,000 on account. Louise uses a periodic inventory system. Prepare (a) the summary entry to record the pur
> Wellson Ltd. has current assets, including cash, accounts receivable, and inventory, and current liabilities, including accounts payable and short-term notes payable. Wellson manages its working capital by focusing on management of current assets. Wellso
> Molson Coors Brewing Company has a December 31 year end. Access the company’s 2014 annual report from the company website (www.molsoncoors.com). Instructions: (a) What types of earnings per share information does the company provide? (b) Does the compa
> Access IAS 34 (Interim Financial Reporting), and the interim financial report for the six-month period ended June 30, 2015, for Nestlé SA from the company’s website (www.nestle.com). Instructions: (a) Identify what specific financial statements and the
> Yuen Corporation shows the following financial position and results for the three years ended December 31, 2017, 2018, and 2019 (in thousands): For each year, calculate the current ratio, quick ratio, and days payables outstanding ratio, and comment on
> Siddle Corp. was recently sued by a competitor for patent infringement. Lawyers have determined that it is probable (and very likely) that Siddle will lose the case, and that Siddle will have to pay between $100,000 and $250,000 in damages. Siddle follow
> At December 31, 2017, Lawton & Border Inc. (L&B) is involved in a lawsuit. Under existing standards in IAS 37, (a) prepare the December 31 entry assuming it is probable (and very likely) that L&B will be liable for $700,000 as a result of this suit. (b)
> Kea Limited provides a defined contribution pension plan for its employees. The plan requires the company to deduct 5% of each employee’s gross pay for each payroll period as the employee contribution. The company then contributes 7% of the gross pay for
> Wynn Corp. offers a set of building blocks to customers who send in three codes from Wynn cereal, along with $1. Wynn purchased 100,000 building block sets in 2017 for $2.50 each, and paid for them by cash. During 2017, Wynn sold one million boxes of cer
> In July 10, 2017, Nguyen Ltd. sold $1.7 million worth of compressors to retailers on account. Nguyen had paid $960,000 for these compressors. Nguyen grants the right to return compressors that do not sell in three months following delivery. Past experien
> Discuss whether and how financial instruments are disclosed under IFRS, and the reason for the disclosure requirement.
> Explain how options pricing models are useful in determining fair value. What are the inputs to such models?
> Penner Corp. is preparing the management discussion and analysis portion of the annual report to shareholders. It wishes to provide a visual depiction of the proportion of the total revenue each segment uses. Using Excel, graph the seven industry segment
> Yuen Corporation shows the following financial position and results for the three years ended December 31, 2017, 2018, and 2019 (in thousands): For each year, calculate the current ratio, quick ratio, and days payables outstanding ratio, and comment on
> Referring to the research study mentioned in this chapter (in the section “Limitations of Financial Statement Analysis”), discuss some limitations of the financial statement analysis done in BE23-21. Include in your an
> Condensed data from the comparative statement of financial position (SFP) of Legros Inc. follow: (a) Using vertical (common-size) analysis, calculate the various SFP categories as a percentage of total assets for Legros Inc. for each of 2015, 2016, and
> The income statements of Dwayne Corporation show the following amounts: Using vertical (common-size) analysis, analyze Dwayne Corporation’s declining profit before tax. 2017 2016 2015 $800 $770 530 $720 468 Net sales Cost of goods
> Refer to E18-7 for Sayaka Tar and Gravel Ltd., and assume the same facts as in E18-8 for the fiscal year ended December 31, 2018, except that the enacted tax rate for 2019 and subsequent years was reduced to 20% on September 15, 2018. Instructions: (a)
> What is the difference between an auditor’s unmodified opinion and a qualified opinion?
> Nortel Networks experienced one of the most notorious Canadian bankruptcies. Nortel’s financial statements contained misrepresentations resulting in top executives meeting bonus targets. Eventually there was a distribution of funds obtained from selling
> Indicate in general journal form how the following items would be entered in a work sheet to prepare the statement of cash flows where payments for dividends are classified as financing activities. Indicate within the journal entries any items that impac
> Tonoma Inc., a company that follows IFRS, is preparing its December 31, 2017 financial statements. The following two events occurred after December 31, 2017: (1) A flood loss of $80,000 occurred on March 1, 2018. (2) A liability, estimated at $140,000 at
> The following information was described in a note of Cruton Packing Co., a public company that follows IFRS: “During August, Bigelow Products Corporation purchased 212,450 shares of the Company’s common shares, which constitutes approximately 35% of the
> How would the transaction in BE23-13 be recorded if the individual shareholder owned only 40% of the shares of each company? Assume that there is independent evidence to support the value of the robotic equipment. Discuss and prepare journal entries. Use
> Papadopoulos Limited (PL) sells retail merchandise in Canada. The company was incorporated last year and is now in its second year of operations. PL is owned and operated by the Papadopoulos family, and Iris Papadopoulos, the company president, has decid
> Crown Inc. (CI) is a private company that manufactures a special type of cap that fits on a bottle. At present, it is the only manufacturer of this cap and therefore enjoys market security. The machinery that makes the cap has been in use for 20 years an
> Locate and review Brookfield Asset Management’s statement of changes in shareholders’ equity in its financial statements for the fiscal years ended December 31, 2014 and 2013, at the end of Volume 2 of this text. Instructions: (a) Identify the sharehold
> The executive officers of Coach Corporation have a performance-based compensation plan that links performance criteria to growth in earnings per share. When annual earnings per share (EPS) growth is 12%, the Coach executives earn 100% of a predetermined
> Refer to E18-7 for Sayaka Tar and Gravel Ltd., and assume the same facts for the fiscal year ended December 31, 2017. For the second year of operations, Sayaka made progress on the construction of the road for the municipality. The account balances at De
> Delmar Manufacturing Inc. is a provincial manufacturer of electronics. It has been in operation for over 25 years under ownership of the same two private shareholders. It has always offered its employees a very generous defined benefit (DB) pension plan
> Baker Company Limited (BCL) was founded in 2015. Its first year of operations turned out to be a good one, as start-up years go, because the company not only broke even but actually showed a very small profit. Just as the company was getting established
> Canton Products Inc. has been in business for quite a while. Its shares trade on a public exchange and it is thinking of expanding onto the New York and London Stock Exchanges. Recently, however, the company has run into cash flow difficulties. The CEO i
> Air Canada is Canada’s largest domestic and international airline, providing scheduled and charter air transportation for passengers and cargo. The airline industry has suffered many difficulties and financial setbacks in the past decade. The high costs
> Kitchener Mechanical Incorporated is looking to expand its manufacturing facilities and buy more equipment to meet raised customer demand. The company’s strategy is to build an add-on to the current facility, and bring in new equipment that will increase
> ABC Airlines carried more than 11.9 million passengers to over 160 destinations in 17 countries in 2017. ABC is the descendant of several predecessor companies, including AB Air and BC Airlines. The amalgamated company was created in 1999. In the years t
> “You can’t write up assets,” said Nick Toby, internal audit director of Nadir International Inc., to his boss, Jim Majewski, vice-president and chief financial officer. “Nonsense,” said Jim, “I can do this as part of a quasi-reorganization of our company
> Soron Limited is a private company that uses derivatives to mitigate a variety of risks. The ethical accountant, Leon Price, has just been hired as the new controller and has recently met with the CEO. The CEO has just explained to him the following deri
> CopMin Inc. is a private enterprise that is involved in copper mining operations. The company currently owns two operating mines. It is January 1, 2017, and CopMin has recently entered into two types of contracts. For its Papula Mine, it has entered into
> Locate and review Brookfield Asset Management’s financial statements, including selected notes to its financial statements for the year ended December 31, 2014, located at the end of Volume 2 of this text. Alternatively, the full set of its annual financ
> MFI Holdings Inc. follows IFRS and applies the FV-OCI model with recycling and has adopted the option to show dividends received as operating activities. MFI’s statement of financial position contained the following comparative data at
> Kelly’s Shoes Limited used to be a major store in Canada before it went bankrupt and was bought by Bears Shoes Limited. Many of the stores were anchor tenants in medium- to large-sized retail shopping malls. This space was primarily leased under non-canc
> In June 2018, the board of directors for Holtzman Enterprises Inc. authorized the sale of $10 million of corporate bonds. Michelle Collins, treasurer for Holtzman Enterprises Inc., is concerned about the date when the bonds are issued. The company really
> Wagner Inc. is a large Canadian public company that uses IFRS. A lease for a fleet of trucks has been capitalized and the lease amortization schedule for the first three lease payments appears below. The trucks have an economic life of eight years. The l
> The following selected account balances are taken from the financial statements of Mandrich Inc. at its calendar year end prepared using IFRS: At December 31, 2017, the following information is available: 1. Mandrich Inc. repurchased 2,000 common share
> Each of the following items must be considered in preparing a statement of cash flows (indirect method) for Bastille Inc., which follows IFRS, for the year ended December 31, 2017. 1. Equipment that cost $40,000 six years before and was being depreciated
> MacAskill Mills Limited, which follows IFRS, and has a calendar year end, and adopted the policy of classifying interest paid as financing activities engaged in the following transactions in 2017. 1. The Land account increased by $58,000 over the year: L
> The following accounts appear in the ledger of Tanaka Limited, which uses IFRS, and has adopted the policy of classifying dividends paid as operating activities: Instructions: Show how the information posted in the accounts is reported on a statement o
> The following selected account balances were taken from the financial statements of Blumberg Inc. concerning its long-term investment in shares of Black Inc. over which it has had significant influence since 2014: At December 31, 2017, the following in
> Angus Farms Ltd., which follows ASPE, had the following transactions during the fiscal year ending December 31, 2017. 1. On May 1, a used tractor was sold at auction. The information concerning this transaction included: Original cost of the tractor…………
> The following are selected statement of financial position accounts of Pavicevic Ltd. at December 31, 2016 and 2017, and the increases or decreases in each account from 2016 to 2017. Also presented is the selected income statement and other information f
> There are many interesting company programs and circumstances that relate to the definition, recognition, and measurement of liabilities. Examples include customer loyalty programs, retail gift cards, corporate restructuring obligations, air miles progra
> The following accounts appear in the ledger of Samson Inc. Samson’s shares trade on the Toronto and New York stock exchanges and so the company uses IFRS. Samson has chosen to account for shares held in Anderson Corp. as FV-OCI and to r
> †P22-1 Jeopardy Inc.’s CFO has just left the office of the company president after a meeting about the draft statement of financial position at April 30, 2017, and income statement for the year ended. (Both are reprodu
> Conduit Corporation has 45 current employees: 5 managers and 40 non-managers. The average wage paid is $250 per day for non-managers. The company has just finished negotiating a new employee contract with the non-managers that would see this increase by
> Sharma Corporation has decided that, in preparing its 2017 financial statements under IFRS, two changes should be made from the methods used in prior years: 1. Depreciation. Sharma has used the tax basis (CCA) method of calculating depreciation for finan
> On December 31, 2017, before the books were closed, management and the accountant at Flanagan Inc. made the following determinations about three depreciable assets. 1. Depreciable asset A (building) was purchased on January 2, 2014. It originally cost $5
> The founder, president, and major shareholder of Dewitt Corp. recently sold his controlling interest in the company to a national distributor in the same line of business. The change in ownership was effective June 30, 2017, halfway through Dewittâ
> You are the auditor of Maglite Services Inc., a privately owned full-service cleaning company following ASPE that is undergoing its first audit for the period ending September 30, 2017. The bank has requested that Maglite have its statements audited this
> As at December 31, 2017, Kendrick Corporation is having its financial statements audited for the first time ever. The auditor has found the following items that might have an effect on previous years. 1. Kendrick purchased equipment on January 2, 2014 fo
> Holtzman Company is in the process of preparing its financial statements for 2017. Assume that no entries for depreciation have been recorded in 2017. The following information related to depreciation of fixed assets is provided to you. 1. Holtzman purch
> Leader Enterprises Ltd. follows IFRS and has provided the following information: 1. In 2016, Leader was sued in a patent infringement suit, and in 2017, Leader lost the court case. Leader must now pay a competitor $50,000 to settle the suit. No previous
> At a recent conference on financial accounting and reporting, three participants provided examples of similar accounting changes that they had encountered in the last few months. They all involved the current portion of long term debt. 1. The first parti
> On May 5, 2018, you were hired by Gavin Inc., a closely held company that follows ASPE, as a staff member of its newly created internal auditing department. While reviewing the company’s records for 2016 and 2017, you discover that no a
> You have been assigned to examine the financial statements of Picard Corporation for the year ended December 31, 2017, as prepared following IFRS. Picard uses a periodic inventory system. You discover the following situations: 1. The physical inventory c
> City Goods Limited (CG) is a sports clothing and equipment retailer that has a chain of 10 stores across Canada. You have just been hired as the new controller for the company. You are currently meeting with the CFO to discuss some accounting-related top
> It is December 2017 and Wagner Inc. recently hired a new accountant, Jodie Larson. Although Wagner is a private company, it follows IFRS. As part of her preparation of the 2017 financial statements for Wagner Inc., Jodie has proposed the following accoun
