Question: Mullins Corp. reported the following items on

> Candelabra Limited (CL) is a manufacturing company that is privately owned. The company’s production facilities produce a significant amount of carbon dioxide, and currently the town is suing CL for polluting the surrounding area. The company is enjoying

> Frangipani Ltd. (FL) is a new company that has just started up in January 2017. The company is the brainchild of Frank Frangi, who is working on developing a new process for a solar-powered car. To date, most of the year has been taken up with setting up

> Penron Limited is in the energy business, buying and selling gas and oil and related derivatives. It is a public company whose shares are widely held. It underwent a tremendous expansion over the past decade, and revenues quadrupled and continue to climb

> Tobita Limited, which follows IFRS, has adopted the policy of classifying interest paid as operating activities and dividends paid as financing activities. Condensed financial data for 2017 and 2016 follow (in thousands): Additional information: Durin

> Information from the statement of financial position and statement of income are given below for North Road Inc., a company following IFRS, for the year ended December 31. North Road has adopted the policy of classifying interest paid as operating activi

> Robbins Ltd. is a wholesale distributor of professional equipment and supplies. The company’s sales have averaged about $900,000 annually for the three-year period 2015–2017. The firm’s total assets a

> The following information (in $000) has been obtained from Patinka Limited’s financial statements for the fiscal years ended December 31. There are no preferred shares issued by Patinka. Instructions: (a) Calculate the following item

> Tarzwell Limited is preparing some analysis of past financial performance and positions to include in the management discussion and analysis (MD&A) portion of the annual report to shareholders. You have suggested that it would be useful for users o

> Brookfield Asset Management Inc.’s 2014 financial statements can be found at the end of this volume or on the company website. Brookfield owns and operates assets with a focus on property, renewable energy, infrastructure, and private equity. Instructio

> On January 1, 2017, Maleki Corp., which uses IFRS 16, signs a 10-year, non-cancellable lease agreement to lease a specialty lathe from Liu Inc. The following information concerns the lease agreement. 1. The agreement requires equal rental payments of $73

> The condensed statements of changes in financial position and detailed income statement information for Tran Consulting Ltd. follow. Tran contracts professionals in the electronic data management field and provides services to clients around the globe.

> The financial statements of Mackay Corporation show the following information: Instructions: (a) Using horizontal analysis, analyze Mackay Corporation’s change in liquidity, solvency, and profitability in 2017. (b) Using vertical anal

> Canadian law firms typically use a partnership structure. The Income Tax Act allows law firms the reporting of revenue when invoices are remitted to clients, as opposed to when the work is performed and the revenue is earned. This provision in the Act al

> Dedrisan Inc. has experienced an unusually large loss from which it is very unlikely to recover. It is in default on some debt covenants. The auditor of the company concludes that Dedrisan is no longer a going concern. Management has requested the audito

> The following are subsequent (post–statement of financial position) events. 1. Settlement of a federal tax case at a cost considerably higher than the amount expected at year end 2. Introduction of a new product line 3. Loss of an assembly plant due to f

> Jason Corporation completed, its board of directors authorized, and it issued its financial statements following IFRS for the year ended December 31, 2017 on March 10, 2018. The following events took place in early 2018. 1. On January 30, 19,000 common s

> Verez Limited owns 90% of Consior Inc. During 2017, Verez acquired a machine from Consior in exchange for its own used machine. Both companies are in the tool-making business. The agreed exchange amount is $1,000, although the transaction is nonmonetary.

> Maffin Corp. owns 75% of Grey Inc. Both companies are in the mining industry. During 2017, Maffin Corp. purchased a building from Grey Inc. for $1,000. The building’s original cost is $25,000 and its carrying amount in Grey Inc.â&

> LaGraca Inc. is involved in five separate industries. The following information is available for each of the five industries: Instructions: Determine which of the operating segments are reportable under IFRS based on each of the following: (a) Revenue

> Sharma Ltd., a private construction company following ASPE, is discussing with its auditor its accounting policy for the recognition of revenue in its year-end financial statements. Management’s main area of contention is the requirement to estimate prog

> The following defined benefit pension data of Dahl Corp. apply to the year 2017: The company applies ASPE and has made an accounting policy choice to base its actuarial valuation of the DBO on the funding basis. Instructions: (a) Prepare a continuity

> Laflamme Inc. follows IFRS and has adopted the policy of classifying interest paid as operating activities and dividends paid as financing activities. Comparative statement of financial position accounts of Laflamme Inc., and its statement of income for

> Access the financial statements of Loblaw Companies Limited for its 2014 year ended January 3, 2015 from SEDAR (www.sedar.com) or the company’s website. Instructions: Review the financial statements and the company’s note disclosures related to new acco

> The detection and reporting of illegal acts by management or other employees is a difficult task. To fulfill their responsibilities, auditors must have a good knowledge of the client’s business, including an understanding of the laws and regulations that

> Cambosa Ltd. operates in an industry where the prices of merchandise purchased for resale are continuously rising. Cambosa’s choice of accounting policy for inventory costing has a significant impact on its net income. Investors compare Cambosa’s policy

> How would the transaction in BE23-13 be recorded if it were arm’s length? Data from BE23-13: Textile manufacturer Fiber right Corp. exchanges robotic equipment with an original cost of $20,000 and a carrying amount of $11,000 with the

> Textile manufacturer Fiber right Corp. exchanges robotic equipment with an original cost of $20,000 and a carrying amount of $11,000 with the equipment rental company Frederick Corp. The equipment that is received in exchange from Frederick Corp. has an

> Nguyen Limited buys land from its president for $390,000 in cash, which is the land’s appraised value at the time of the purchase. The land was purchased by the president 15 years ago for $65,000. (a) Assume that Nguyen follows ASPE. Prepare the journal

> How does seasonality affect interim reporting and how should companies overcome the seasonality problem? Is there more of an effect on interim reporting for companies following IFRS or ASPE?

> What are the accounting problems related to the presentation of interim data?

> Assets for the seven industry segments of Penner Corp. are as follows: Based only on the assets test, which industry segments are reportable under IFRS? (thousands) (thousands) $500 550 400 $200 150 475 Gamma Suh Kennedy RGD Tsui Nuhn Red Moon 400

> Operating profits and losses for the seven industry segments of Penner Corp. are as follows: Based only on the operating profit (loss) test, which industry segments are reportable under IFRS? (thousands) (thousands) $90 (40) Gamma Suh $(20) Kennedy

> Refer to the information in E19-7 about Berstler Limited’s defined benefit pension plan. Instructions: (a) Prepare a 2017 pension work sheet with supplementary schedules of calculations. (b) Prepare the journal entries at December 31,

> Penner Corp. has seven industry segments with total revenues as follows: Based only on the revenues test, which industry segments are reportable under IFRS? Which industry segments are reportable under ASPE? (thousands) (thousands) $600 650 Gamma S

> The IASB regularly updates and publishes a project plan that outlines the timelines for the projects it is working on. Instructions: Using the IASB website (www.ifrs.org), identify new standards that have been recently released. Review the transitional

> Mahi Bai, a student of intermediate accounting, was heard to remark after a class discussion on segmented reporting: “All this is very confusing to me. First we are told that there is merit in presenting the consolidated results and now we are told that

> Uddin Industries Ltd. has had a long history of regular quarterly dividend payments to its common shareholders. The president wants Uddin’s dividend policy to be mentioned in the summary of significant accounting policies note to the financial statements

> An annual report of Ford Motor Company states: “Net income a share is computed based upon the average number of shares of capital stock of all classes outstanding. Additional shares of common stock may be issued or delivered in the future on conversion o

> An annual report of Maleki Enterprises Ltd. states: “The company and its subsidiaries have long-term leases expiring on various dates after December 31, 2017. Amounts payable under such commitments, without reduction for related rental income, are expect

> What type of disclosure or accounting is necessary for each of the following items? (a) Because of a general increase in the number of labor disputes and strikes, both within and outside the industry, there is more chance that a company will suffer a cos

> Discuss why full disclosure is essential to the proper functioning of capital markets, and why private companies following ASPE may be subject to fewer disclosure requirements.

> Azure Ltd. had the following 2017 income statement data Sales……………………………………………………………………………………$ 205,000 Cost of goods sold…………………………………………………………………….120,000 Gross profit……………………………………………………………………………….85,000 Operating expenses (includes depreciation of $2

> Wong Textiles Ltd. entered into a capital lease obligation during 2017 to acquire a cutting machine. The amount recorded to the Equipment under Lease account and the corresponding Obligations under Lease account was $85,000 at the date of signing the lea

> Berstler Limited sponsors a defined benefit pension plan, and follows ASPE. The corporation’s actuary provides the following information about the plan (in thousands of dollars): Instructions: (a) Calculate the actual return on the pl

> In 2017, Abbotsford Inc. issued 1,000 common shares for land with a fair market value of $149,000. (a) Prepare Abbotsford’s journal entry to record the transaction. (b) Indicate the effect that the transaction has on cash. (c) Indicate how the transactio

> Watson Corporation, which uses IFRS, is using the indirect method to prepare its 2017 statement of cash flows and chooses to classify dividends paid as financing activities and interest paid as operating activities on the statement of cash flows. A list

> Access the financial statements of Airbus Group NV for its year ended December 31, 2014 from the company’s website at www.airbusgroup.com. Note 1 to its financial statements indicates that Airbus Group’s core business involves “the manufacturing of comme

> Tang Corporation, which follows IFRS and chooses to classify dividends paid as financing activities and interest paid as operating activities on the statement of cash flows, had the following activities in 2017. 1. Paid $870,000 of accounts payable. 2. P

> Maddox Corporation had the following activities in 2017. 1. Sold land for $180,000. 2. Purchased an FV-NI investment in common shares for $15,000. 3. Purchased inventory for $845,000 for cash. 4. Received $73,000 cash from bank borrowings. 5. Received i

> Lantaigne Inc. entered into a seven-year lease of equipment from Weingartner Inc. At the lease’s inception, it is estimated that the equipment has an economic life of 10 years and fair value of $450,000. Present value of minimum lease payments of $75,000

> Use the information for Wing Corporation and Sharda Inc. from BE20-23. Assume that Sharda, the lessor, has a June 30 year end. Prepare Sharda’s entry on August 15, 2017 and any adjusting entry needed on June 30, 2018. Data from BE20-23: Wing Corporatio

> Wing Corporation enters into a lease with Sharda Inc., a lessor, on August 15, 2017 that does not transfer ownership or contain a bargain purchase option, and it is not for specialized equipment. Both Wing and Sharda use IAS 17. The lease covers three ye

> On January 1, 2017, Quong Corporation (the lessee) entered into a four-year, non-cancellable equipment lease contract with Zareiga Inc. (the lessor). The present value of the minimum lease payments required was $116,025. Also at lease inception, it was e

> Qui Importers provides the following pension plan information: Fair value of pension plan assets, January 1, 2017…………………………$1,438,750 Fair value of pension plan assets, December 31, 2017………………………1,586,875 Contributions to the plan in 2017………………………………………

> Use the information provided in BE20-20 about Lessee Corp. Assume that title to the property will not be transferred to Lessee by the end of the lease term and that there is also no bargain purchase option, but that the lease does meet other criteria to

> Lessee Corp. agreed to lease property from Lessor Corp. effective January 1, 2017, for an annual payment of $30,877, beginning January 1, 2017. The property is made up of land with a fair value of $120,000 and a two-story office building with a fair valu

> As at December 31, 2017, Bajac Inc. has the following balances: cash in bank, $108,000; investment in preferred shares (retractable, purchased by Bajac within 90 days of maturity date), $120,000; investment in common shares (to be sold within 30 days), 9

> Refer to the specimen financial statements at the end of the book, which show excerpts from the 2014 year-end financial statements, including the accompanying notes, of Brookfield Asset Management Inc. The full financial statements are available on SEDAR

> The following statement is an excerpt from a document on interim financial reporting: Interim financial information is essential to provide investors and others with timely information about the progress of the enterprise. The usefulness of such informat

> On January 1, 2017, Animation Ltd., which uses ASPE, sold a truck to Letourneau Finance Corp. for $65,000 and immediately leased it back. The truck was carried on Animation’s books at $53,000, net of $26,000 of accumulated depreciation. The term of the l

> During 2017, Yang Inc., which reports under IFRS and has adopted the policy of classifying interest received as an investing activity, lent $30,000 to a key supplier in exchange for a two-year interest-bearing promissory note. Interest revenue earned on

> In 2017, Oswald Corporation reported a net loss of $56,000. Oswald’s only net income adjustments were depreciation expense of $67,000 and an increase in accounts receivable of $8,100. Calculate Oswald’s net cash provided (used) by operating activities us

> October Corporation reported net income of $46,000 in 2017. Depreciation expense was $17,000 and unrealized losses on FV-NI investments were $3,000. The following accounts changed as indicated in 2017: Accounts Receivable……………………………………………$ 11,000 increa

> Lupasco Ltd. had the following 2017 income statement data: Revenues……………………â€&brvb

> Instructions: Complete the following tables by indicating whether the following events increase (I), decrease (D), or have no effect (NE) on the employer’s defined benefit obligation, the pension plan assets, the pension planâ&#12

> Kamsky Inc., which follows IFRS, had the following balances and amounts appear on its comparative financial statements at year end: (a) Calculate income taxes paid in 2017 and discuss the related disclosure requirements under IFRS, if any. (b) If Kamsk

> Ciao Corporation had January 1 and December 31 balances as follows: For 2017, the cost of goods sold was $550,000. Calculate Ciao’s 2017 cash paid to suppliers of inventory. 1/1/17 12/31/17 Inventory Accounts payable $90,000 61,00

> At January 1, 2017, Apex Inc. had accounts receivable of $72,000. At December 31, 2017, the accounts receivable balance was $59,000. Sales revenue for 2017 was $420,000. Sales returns and allowances for the year were $10,000. Purchase discounts were in t

> 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,