Golf Inc. is a public company that has been in business since the 1980s. It owns and operates over 40 golf courses across Canada. It also owns and operates pro shops and dining facilities. On 1 November 20X4 GI announced it was going to sell three of its golf courses that were underperforming. They have had declining memberships over the past couple of years. GI is currently looking for a buyer. The asking prices are reasonable, and at the time of listing, the real estate agents expected that the courses will be sold before the spring of next year. On 1 November 20X4, the carrying amount of the land is $50,000 but the fair market value is $750,000. The equipment (that is, golf carts), has a carrying amount of $600,000 ($900,000 cost) and a fair market value of $450,000. There was no change to the estimated fair values on 31 December 20X4. The company accepted an offer on 15 January 20X5. The total proceeds for the sale were $1,075,000. The company has a 31 December year-end. Required: 1. How would GI account for the disposal of the three golf courses? Explain the impact on the financial statements. 2. Prepare the journal entries required on 1 November 20X4, 31 December 20X4, and 15 January 20X5.
> The accounting records of Wireless Digital Inc., a publicly listed company, showed the amounts below for the year ended 31 December 20X2: Required: Prepare a single-step statement of income and comprehensive income by: 1. Nature of the expense 2. Functio
> Dromeda Ltd. has prepared the following comparison (in thousands): The same information has been collected for Panel Corp.: Required: 1. Which of the companies above illustrates higher quality of earnings? Explain. 2. Suggest four factors that would make
> The accounting records of Laurent Co. reflect the following data: Additional information: 1. Paid a $24,000 long-term note payable by issuing common shares. 2. Purchased capital assets that cost $99,000; gave a $72,000 long-term note payable and paid $27
> The following financial information is available for Suza Inc. for the 20X3 fiscal yea: Additional information: 1. Marketable securities were sold at their carrying value. The marketable securities are not cash equivalents. 2. A partially depreciated bui
> The records of Neon Corp. provided the following data: 1. Purchased a capital asset for $340,000; paid cash. 2. Depreciation expense is $134,000. 3. Sold a capital asset for $68,000 cash; original cost was $180,000, accumulated depreciation is $140,000.
> The Atlantic Refinery Corp. (ARC) is a public company headquartered in St. John’s, Newfoundland. On 31 December 20X5, the post-closing trial balance included the following accounts (in thousands of Canadian dollars): The following trans
> On 31 December 20X2, the balances of Argon Enterprises Inc.’s shareholders’ equity accounts were as follows (all are credit balances): Capital stock $303,000 Contributed surplus 6,000 Retained earnings 121,000 Currency
> Listed below are some financial statement classifications coded with letters and, below them, selected transactions and/or account titles. A Earnings/loss from continuing operations B Earnings/loss from discontinued operations C Other comprehensive inco
> Akerman Techonology Corp. is preparing its SFP at 31 December 20X5. The following items are under consideration: 1. Rent received in advance for the first quarter of 20X6, $20,000. 2. Note payable, long-term, $100,000. This note was issued on 1 July 20X5
> The consolidated SFP of Mutron Lock Inc. is shown below. MUTRON LOCK INC. Consolidated Statement of Financial Position As of 31 December 20X5 Required: For each of items (a) through (k) in the SFP above, calculate the amount that should appear.
> Refer to Exhibit 4-2 and 4-3 in Chapter 4. Review the exhibits and compare them. Required: 1. Differentiate between the two permissible methods under IFRS for classifying assets and liabilities on the SFP. 2. Refer again to Exhibit 4-2 and 4-3. Each enti
> Acrimony Ltd. has the following balances in its general ledger on 31 December 20X8 (in thousands of Canadian dollars): Required: Prepare, in good form, a statement of income and comprehensive income. Use a continuous format.
> Amana Cement Corp. is a private corporation controlled by Amin Amana. The company’s adjusted trial balance and other related data at 31 December 20X5 are given below. Although the company uses some obsolete terminology, the amounts are
> The most recent SFP of Blackstone Tire Corp., a private corporation, appears below: BLACKSTONE TIRE CORPORATION Statement of Financial Position For the year ended 31 December 20X5 Asset Current Cash $ 23,000 Short-term investments 10,000 Accounts receiva
> Prime Essentials Ltd. is a small private corporation. The owner plans to approach the bank for an additional loan or a line of credit to facilitate expansion. The company bookkeeper, after discussion with the owner of the company, has prepared the follow
> Rutgers e-Terminal Ltd. is a private corporation wholly owned by Mr. Adonis Rutgers. Mr. Rutgers also personally owns 40% of the common shares of a company named Princeton Corp. A further 20% of the Princeton common shares are held by Rutgers e-Terminal
> The following trial balance was prepared by Vantage Electronics Corp., a Canadian private enterprise, as of 31 December 20X5. The adjusting entries for 20X5 have been made, except for any related to the specific information noted below. Other information
> Below are select account names and balances from Junior Corp.’s general ledger: Required: 1. Calculate Junior Corp.’s current ratio. 2. Calculate Junior Corp.’s quick ratio. 3. Calculate Junior Corp.&
> Juncture Corp. uses the following accounts in its general ledger and all currently have balances: Juncture Corp.—Select Accounts from the General Ledger Cash in bank Petty cash Treasury bills J. Patent J. Patent—accumulated amortization M. Patent M. Pate
> The chapter provides various examples of SFPs, such as in Exhibit 4-2 and 4-3, which you should review carefully to understand what an SFP prepared in good form looks like. Required: 1. Provide three explanations on how the SFP is useful from the perspec
> The SFP of a junior Canadian gold-mining company reports the following amounts (in $thousands): Assets Current Assets Cash and cash equivalents $ 8,260 Accounts receivable, less allowance for doubtful accounts 20,338 Taxes recoverable 200 Inventori
> The SFP of Karmax Ltd. discloses the following assets: The following information has been established in relation to market values (amounts in thousands of dollars): Note 1 The long-term investment is an investment in the common shares of a company owned
> Identify whether the following items in comprehensive income will be reclassified to net income or not reclassified.
> Abriel Ltd., a public company, has the following accounts in its year-end 20X5 trial balance: 1. Dividends payable. 2. Restricted cash balance in Abriel’s bank, being held by the bank for a bank loan that will come due in early 20X7. 3. Loss on repurchas
> The following disclosure note appeared in the 31 December 20X5 financial statements of Dridell Corporation, a manufacturer of electronic equipment: Dridell is exposed to liabilities and compliance costs arising from its past and current generation, manag
> The following disclosure note is from the 31 October 20X2 financial statements of GreenWorld Ltd., a mining company: The preparation of the financial statements, in conformity with generally accepted accounting principles, requires management to make est
> The following disclosure note is from the 31 December 20X4 financial statements of Riconda Ltd.: The company operates one operating segment, that being the design, manufacture, and sale of graphics and multimedia products for personal computers and consu
> Union Carbolics Inc. has five operating segments. Segment operating data (in millions of Canadian dollars) for the year 20X6 are as follows: Required: Identify which of these five segments are reportable segments under IFRS. Indicate the grounds on which
> The auditor has completed her work on the financial statements of Leslie Kwok Inc. (LKI) for the year ended 31 December 20X7. The auditor signed her audit opinion on 5 March 20X8; LKI’s board of directors has not yet approved the statements. The followin
> Northern Switching Ltd. (NSL) is a manufacturer of digital switching equipment and systems. The company has total assets of approximately $784 million. Each of the following events occurred after the end of NSL’s 20X8 fiscal year, but before the statemen
> Zero Growth Ltd. has completed financial statements for the year ended 31 December 20X6. The financial statements have yet to be finalized or issued. The following events and transactions have occurred: 1. The office building housing administrative staff
> Unlimited Possibilities Ltd. (UPL) is finalizing the financial statements for 20X5. The company’s managers are uncertain how each of the following events and situations should be reported: 1. UPL is the guarantor on a $10 million bank loan that was obtai
> Note disclosures provide the following information: 1. Explain the accounting policies that the company is using. 2. Provide additional detail for financial statement components. 3. Identify major underlying assumptions and estimates. 4. Provide informat
> Identify whether the following items belong in comprehensive income or net income.
> Indicate whether each statement is true or false. If the statement is false, provide a brief explanation of why it is false. 1. A disclosed basis of accounting is GAAP. 2. An audit opinion can be provided on a disclosed basis of accounting. 3. A disclose
> Ruan Corp. discovered in 20X9 that it had been overestimating the number of products that would be received for warranty service in Product Line A. Product Line A had been introduced in 20X7 and even though quality assurance checks had been conducted ext
> Dashall Ltd. has the following accounts in its year-end 20X7 trial balance: 1. Retained earnings. 2. Investment in shares of another company as a temporary use of cash to earn a return. 3. Deferred income tax asset. 4. Note payable for equipment, payable
> 1. Rela Corp. changes its estimate of the useful life of one of its pieces of machinery. Using the previous estimate, the depreciation expense in the current year would have been $15,000 and in applying the revised estimated useful life, the current year
> Mellie Inc. has never recorded an allowance for doubtful accounts. Due to worsening economic conditions, credit losses are determined to be material in the current year. Mellie Inc. sets up an allowance for doubtful accounts for outstanding receivables o
> Moncton Developments Ltd. was established in early 20X2. During the first three years, the company followed the policy of expensing its development costs rather than capitalizing and amortizing them. It did so because in the early stages of the company&a
> Hannam Co. decided to change from the declining-balance method of depreciation to the straight-line method effective 1 January 20X7. The following information was provided: The company has a 31 December year-end. The tax rate is 20%. No dividends were de
> In May 20X5, the newly appointed controller of Butch Baking Corp. conducted a thorough review of past accounting, particularly of transactions that exceeded the company’s normal level of materiality. As a result of his review, he instru
> On 23 November 20X7, when engaged in preparing for the 20X7 fiscal year-end, the chief accountant of Harper Ltd. discovered two accounting errors in the 20X5 statements: 1. A government ministry had paid $4.5 million in partial settlement of an amount du
> Po-Yen Devices Inc. and Kejia Computer Ltd. are competing businesses. Selected data from the financial statements for the two companies for the year ended 31 December 20X2 are shown below. Required: 1. Compute the following ratios for both companies (for
> Refer to the data in A4-8. Assume that the assets of Argon Enterprises Inc. totalled $1,980,000 at the end of 20X1, $1,750,000 at year-end 20X2, and $2,120,000 at year-end 20X3. Required: 1. Assume you are analyst for a private equity firm. Determine th
> Identify each of the following statements as true or false. 1. ASPE and IFRS both require comprehensive income. 2. Held-for-sale assets are classified as current assets in ASPE and noncurrent assets in IFRS. 3. Both ASPE and IFRS may have non-controlling
> The following information is available for three independent companies: Required: 1. Solve the missing numbers in the table. 2. Prepare a statement of retained earnings in good form for Company Carole. 3. If Company Carole is a public enterprise, is it a
> The following is select information provided for Penvin Corporation for the year ended December 31, 20X2: Penvin Corporation’s income tax rate is 35%. Required: 1. Prepare a partial statement of changes in equity for Penvin Corporation.
> Consider each of the following separate situations that arose in 20X1: 1. Corporation G invested $70,000 in corporate bonds as a short-term investment. The year-end 20X1 market value of the bonds is $63,000. The bonds are measured at fair value every rep
> Haliteck Corp. is based in Halifax. At the end of 20X4, the company’s accounting records show the following items: 1. A $100,000 loss from hurricane damage. 2. Total sales revenue of $2,600,000, including $400,000 in the Decolite division, for which the
> The following information pertains to Junction Ltd. Corporation: - Income from continuing operations: $1,203,000 - Loss from discontinued operations: $126,000 - Gain on sale from discontinued operations: $24,400 - Net foreign exchange gain (loss) on tran
> 1. Using the information contained in A3-5, prepare: 1.A continuous SCI 2.A separate statement of income and statement of comprehensive income Data from A3-5: Quebecor Inc. is a major provider of cable services and also the owner of many newspapers. The
> Quebecor Inc. is a major provider of cable services and also the owner of many newspapers. The company reported the following items in its 20X1 financial statements (in millions of Canadian dollars, except per-share amounts): a. Revenues $4,206.6 b. Cost
> The information below pertains to the operations of Montreal Retail Corporation for the year ended 31 December 20X6: Cost of merchandise sold $102,000 Inventory warehousing cost 20,000 Accounts payable 120,000 Sales revenue 525,000 Accumulated depreciati
> The following items were taken from the adjusted trial balance of the Bremeur Corp. on 31 December 20X5. Assume an average 20% income tax on all items (including the divestiture loss). The accounting period ends 31 December. All amounts given are pre-tax
> Identify each of the following statements as true or false. 1. All companies are required to provide basic and diluted EPS calculations. 2. Public companies are required to provide EPS calculations before and after a discontinued operation. 3. Basic EPS
> Ceti Co. sells environmentally friendly coffee cups through an online store. The company is owned by Ceti Kadi. The following transactions took place over the first two years of operations: 20X1 Purchased 8,000 units for resale at $9 each 20X1 Purchased
> Mytel Corporation owns and operates a variety of restaurants, hotels, and budget lodging. In June 20X8, the management of Mytel Corporation decided to sell off its budget lodging operations, as the rate of return on the division’s assets was lower than m
> You have been asked to prepare the financial statements for Neema Corp., a private Canadian corporation, for the year ended 31 December 20X4. The company began operations in early 20X4. The following information is available about its business activities
> Return to A3-18 and assume instead that Mira Products is a private company reporting in accordance with ASPE. How would the reorganization affect Mira’s 20X4 financial reporting? Data from A3-18: Leos Janacek is CEO and controlling shareholder of Mira P
> Cayman Islands–based Harris Corp. is in the beauty industry. The company develops and produces a wide range of products for hair and skin care. The products are sold both at wholesale (through professional beauty supply stores) and retail (through variou
> The 31 December 20X2 year-end trial balance for Dynamics Ltd., a private company, showed the following account balances: The company pays income tax at a rate of 20%. Required: Prepare an income statement and a statement of retained earnings for the year
> You have been tasked with preparing the statement of income for Tulipe Company, a public company with 45,000 common shares outstanding. The board of directors has not yet determined whether they prefer the look of a “single-step” income statement, or a “
> The following transactions have been encountered in practice. Assume that all amounts are material. 1. A company decided to put the assets of one product line up for sale (intended to be sold within next year) because management had decided to outsource
> Leos Janacek is CEO and controlling shareholder of Mira Products Inc., a Vancouver-based company listed on the TSX. Mira’s principal business is the manufacture of furniture for small children. The company has two product lines: (1) home furniture and (2
> Marcella Ltd. (ML) is a Northern Ontario–based manufacturer of building materials. In the fourth quarter of 20X1, ML’s board of directors agreed with senior management that the company needed to restructure its operations so as to be more competitive, as
> On 2 October 20X4 a national hardware retailer, One Hardware Corporation, announced a formal plan to refocus its operations. As part of the plan, management decided to sell its portfolio of contractor-specific locations, which operated under the brand Co
> Play Cloth Company, a retailer of children’s clothing, decided to dispose of its European division. The company announced the plan to sell the division on 20 March 20X1. Once the announcement was made, management hired a professional services firm to as
> Loschiavo Ltd. (LL) has a 31 December fiscal year-end. LL disposed of its Computer Programming Group (CPG) on 31 July 20X3. CPG had a net loss (after taxes) of $18,800,000 in 20X3, to the date of disposal. The division was sold for $237,800,000 in cash p
> Salamander Inc. is a food processing company that operates divisions in three major lines of food products: cereals, frozen fish, and candy. On 13 September 20X1, the board of directors voted to put the candy division up for sale. The candy division&acir
> On 1 August 20X5, Graham Ltd. decided to discontinue the operations of its services division. The services division is not a separate corporation, but it is a major operating segment, financially and operationally. On 22 September 20X5, Graham closed a d
> Black Media Inc. owns and operates a large number of newspapers across Canada. On 1 October 20X5, the board of directors voted unanimously to dispose of one of those newspapers, The Daily Con. Black Media would continue to publish The Daily Con while a b
> Zhang Zinc Mines Ltd. decided on 1 April 20X8 to dispose of one of its mining properties in northern Ontario. The property consists of mineral rights (an intangible asset) and the on-site mining equipment. The mineral rights have a carrying value of $1,0
> Manufacturing Ltd. (ML) discontinued use of three assets during 20X2: 1. A specialized piece of equipment that originally cost $200,000 when purchased was shut down and placed in the far corner of the manufacturing facility on 30 June. It is being deprec
> Hoskins & Sells is a partnership that was established in March 20X6. If a partner decides to leave the partnership, the value of her or his partnership share will be determined by the net book value of the partnership’s net assets at the end of the last-
> For each of the following situations, give the letter item(s) indicating the accounting principle involved. Some letters may be used more than once, and some may not be used at all. 1. Continuity 2. Neutrality 3. Comparability 4. Cost/benefit effectivene
> Financial statement elements have specific definitions. To the right, some important aspects of the definitions are listed. Match the aspects with the elements by entering appropriate letters in the blanks. More than one letter can be placed in a blank.
> On 1 January 20X1, Tyler Trading Corp. was incorporated by Jim Tyler, who owned all the common shares. His original investment was $100,000. Transactions over the subsequent three years were as follows: 02 January 20X1: Purchased 20 units for resale at $
> In each of the following situations, identify the element or elements, if any, that would appear in financial statements. If no element is recognized, give the reason. 1. Unpaid gas bill. 2. A patent on a new invention for which the market is unknown. 3.
> For each of the following transactions, indicate the point at which (1) the initial transaction is recognized and (2) the financial statement element is realized: 1. Inventory is purchased on credit on 1 August and is received on 14 August. It is paid fo
> The following list of statements poses conceptual issues: 1. The business entity is considered separate and apart from its owners for accounting purposes. 2. A transaction is always recorded in such a way as to reflect its legal form. 3. It is permissibl
> Indicate whether the following statements are true or false. For a false statement, write “false,” and briefly indicate why the statement is false. 1. Full disclosure involves telling financial statement users everything about the company’s transactions.
> For each of the following situations, indicate whether you agree or disagree with the practice described, list one accounting concept/assumption/qualitative criteria/measurement method that is related to the situation (either followed or violated), and i
> Accounting measurements are enhanced by the presence of the qualities of relevance (predictive and confirmatory value), comparability, verifiability, timeliness, and faithful representation. For each of the following, indicate the quality demonstrated: 1
> Xuan Corp., a private company, is assessing several transactions that occurred during the 20X3 financial year and is deciding how these items should be recorded. Management understands that judgement is required as well as the application of various key
> The independent auditor of Fluidity Inc. found the following situations: 1. The company uses the straight-line method of measuring depreciation on manufacturing machinery, even though it knows that a method based on actual usage would provide better matc
> Indicate if each of the following items would be recognized in TelCan Ltd.’s financial statements for 20X3 and, if so, what elements would be recognized. For any items that would not be recognized, explain the reason for nonrecognition. 1. TelCan issued
> Which of the following events would normally cause revenue recognition, assuming use of accrual accounting and transfer of title on delivery? 1. Collection of cash from a customer 30 days after the product is delivered. 2. Collection of cash from a custo
> Identify the level in the hierarchy that would be most appropriate for measuring the following items using the fair-value hierarchy: Required: Identify the most appropriate value of the hierarchy to measure each item.
> In each of the following cases, indicate the principle(s) that appears to have been violated: Case A: For its factory equipment, Unrequited Love Inc. used accelerated depreciation in 20X2; straight-line in 20X3; and accelerated in 20X4. Case B: Aaronist
> Tannino Ltd. is a private investment company that manages investments for a group of about 30 wealthy individuals. The company is owned and managed by two experienced investment managers, each of whom owns 50% of the shares. The company merges all of its
> Review each of the independent scenarios provided. For each one, state which stage of the accounting policy choice process the scenario would likely occur at. 1. Management acknowledges there is no active market for an asset it is considering purchasing.
> Johnny Rose is an accounting student learning about ASPE and IFRS. Johnny has heard that ASPE’s conceptual framework provides less detail and has a different focus. You, Wan Wu, have recently graduated from a four-year accounting program and feel you hav
> The financial statements of Raychem Corporation included the following note: During the current year, plant assets were written down by $8,000,000. This writedown will reduce future expenses. Depreciation and other expenses in future years will be lower,
> For each of the following independent transactions, apply the concepts of recognition and realization and state at what point each occurs. 1. Company Y issued 10,000 shares at $10,000 dollars for cash. 2. ABC Company estimates that it will incur $45,000
> For each of the following transactions, indicate the point at which (1) the initial transaction is recognized and (2) the financial statement element is realized: 1. A customer pays $3,000 relating to a deposit for work to be completed in the following f
> The value of Coca-Cola’s trademark has been estimated as billions of dollars. Yet, even though Coca-Cola reports over $12 billion of goodwill and other intangible assets, none of this reported value relates to the Coca-Cola trademark, which is unrecogniz
> In ASPE if a contingent loss (lawsuit) is reasonably measurable and likely to be incurred, the amount is accrued in the financial statements. If the amount is not measurable or is not likely to be incurred, then the potential loss is disclosed but not re
> The bookkeeper for Branford Ltd. has drawn up a financial statement on 31 December 20X1. Some of the items on the draft balance sheet are as follows: Cash $400,000 Consists of 300,000 Canadian dollars in the bank, plus 100,000 Hong Kong dollars held in
> Which measurement method would be most appropriate for the following items: historical cost or current value? For current value, specify which of the three measurement bases applies. 1. Inventory 2. Derivative 3. Building 4. Bond 5. Note receivable (2 ye
