The 2017 income statement of Tanel Corporation showed net income of $860,000, which included a loss from discontinued operations of $140,000. Tanel had 25,000 common shares outstanding all year. (a) Calculate earnings per share for 2017 as it should be reported to shareholders. (b) Discuss why Tanel Corporation’s reporting of earnings per share is useful to financial statement users.
> At December 31, 2017, Watzman Inc. owned equipment that had a book value of $178,000 and a tax base of $136,000 due to the use of different depreciation methods for accounting and tax purposes. The enacted tax rate is 30%. Calculate the amount that Watzm
> Myers Corp. purchased depreciable assets costing $30,000 on January 2, 2017. For tax purposes, the company uses CCA in a class that has a 30% rate. For financial reporting purposes, the company uses straight-line depreciation over five years. The enacted
> Using the information from BE18-3, calculate the effective rate of income tax for Nilson Inc. for 2017. Also make a reconciliation from the statutory rate to the effective rate, using percentages. Data from BE18-3: Nilson Inc. had accounting income of
> Many business organizations have been concerned with providing for employee retirement since the late 1800s. During recent decades, a marked increase in this concern has resulted in the establishment of private pension and other post-retirement benefit p
> Mazur Corp. follows IFRS and began operations in 2017 and reported accounting income of $275,000 for the year. Mazur’s CCA exceeded its book depreciation by $40,000. Mazur’s tax rate for 2017 and years thereafter is 30%. In its December 31, 2017 statemen
> Potash Corporation of Saskatchewan Inc., Loblaw Companies Limited, and Air Canada are all Canadian companies with defined benefit plans. Visit www.sedar.com to access financial statements for their 2014 fiscal years ended December 31, 2014, January 3, 20
> The following information is available for Roginski Corporation for 2017. 1. CCA reported on the 2017 tax return exceeded depreciation reported on the income statement by $160,000. This difference is expected to reverse in equal amounts of $40,000 per ye
> Nilson Inc. had accounting income of $156,000 in 2017. Included in the calculation of that amount is the CEO’s life insurance expense of $5,000, which is not deductible for tax purposes. In addition, the undepreciated capital cost (UCC) for tax purposes
> In 2017, Noshy Corporation had accounting income of $234,000 and taxable income of $184,000. The difference is due to the use of different depreciation methods for tax and accounting purposes. The tax rate is 25%. Calculate the amount to be reported as i
> Use the information for Kyle Inc. given in BE18-16, but assume instead that it is more likely than not that the entire tax loss carryforward will not be realized in future years. Prepare all the journal entries that are necessary at the end of 2017 assum
> Kyle Inc. incurred a net operating loss of $580,000 in 2017. Combined income for 2014, 2015, and 2016 was $460,000. The tax rate for all years is 30%. Prepare the journal entries to record the benefits of the carryback and the carryforward, assuming it i
> Roper Corporation had the following tax information: In 2017, Roper suffered a net operating loss of $550,000, which it decided to carry back. The 2017 enacted tax rate is 25%. Prepare Roper’s entry to record the effect of the loss ca
> At December 31, 2016, Palden Corporation had a deferred tax asset of $800,000, resulting from future deductible amounts of $3.2 million and an enacted tax rate of 25%. In May 2017, new income tax legislation is signed into law that raises the tax rate to
> Powell Corporation has a taxable temporary difference related to net book value versus UCC of $715,000 at December 31, 2017. This difference will reverse as follows: 2018, $53,000; 2019, $310,000; and 2020, $352,000. Enacted tax rates are 25% for 2018 an
> Khan Limited is a publicly traded company on the Toronto Stock Exchange. The company sponsors a defined benefit pension plan for all of its employees, and the controller provides you with the following data that relate to the plan for fiscal 2017: 1. The
> At December 31, 2016, Ambuir Corporation had a deferred tax liability of $35,000. At December 31, 2017, the deferred tax liability is $52,000. The corporation’s 2017 current tax expense is $53,000. What amount should Ambuir report as total 2017 income ta
> At December 31, 2016, Chai Inc. had a deferred tax asset of $40,000. At December 31, 2017, the deferred tax asset is $62,000. The corporation’s 2017 current tax expense is $70,000. What amount should Chai report as total 2017 income tax expense? Prepare
> Obtain the financial statements of the Canadian National Railway Company for its year ended December 31, 2014 from SEDAR (sedar.com) or the company’s website. Instructions: Review the information contained in the “Additional Disclosures” section of Not
> At December 31, 2017, Camille Corporation had an estimated warranty liability of $256,000 for accounting purposes and $0 for tax purposes. (The warranty costs are not deductible until they are paid.) The tax rate is 25%. Calculate the amount that Camille
> Faber Corporation is a young start-up technology company with steadily increasing sales in its first six months of operations. Faber’s head office is located in a country in Eastern Europe, where the company would be subject to a corporate income tax rat
> Bantec Corporation had 500,000 common shares outstanding on January 1, 2017. On May 1, Bantec issued 50,000 shares. (a) Calculate the weighted average number of shares outstanding for the year ended December 31, 2017 if the 50,000 shares were issued for
> Assume the same information as in BE17-6 except that on October 1, 2017, Laurin declared a 1-for-2 reverse stock split instead of a 10% stock dividend. Data from BE17-6: Laurin Limited had 42,000 common shares outstanding on January 1, 2017. On March 1
> Assume the same information as in BE17-6 except that on October 1, 2017, Laurin declared a 3-for-1 stock split instead of a 10% stock dividend. Data from BE17-6: Laurin Limited had 42,000 common shares outstanding on January 1, 2017. On March 1, 2017,
> Laurin Limited had 42,000 common shares outstanding on January 1, 2017. On March 1, 2017, Laurin issued 20,000 shares in exchange for equipment. On July 1, Laurin repurchased and cancelled 10,000 shares. On October 1, 2017, Laurin declared and issued a 1
> Dencil Corporation had 600,000 common shares outstanding on January 1, 2017. On March 1, 2017, Dencil issued 150,000 shares. On September 1, Dencil repurchased and cancelled 50,000 shares. Calculate Dencil’s weighted average number of shares outstanding
> Josit Ltd. initiated a one-person pension plan in January 2012 that promises the employee a pension on retirement according to the following formula: pension benefit = 2.5% of final salary per year of service after the plan initiation. The employee began
> Assume the same information for Hedley Corporation as in BE17-2 except that the preferred shares are cumulative and the dividends have not yet been declared or paid. Data from BE17-2: Hedley Corporation had 2017 net income of $1.4 million. During 2017,
> Assume the same information for Hedley Corporation as in BE17-2 except that the preferred shares are non-cumulative and the dividend has not been declared or paid. Data from BE17-2: Hedley Corporation had 2017 net income of $1.4 million. During 2017, H
> Flory Corporation is a rapidly growing privately owned company that is considering changing from ASPE to IFRS in order to prepare for a future public offering of shares. As Flory’s financial advisor, what advice would you give to management regarding EPS
> BCE Inc.’s accounting policy note and its note disclosures relating to the company’s pension and other post-employment benefits for the year ended December 31, 2014 are set out in the chapter. Instructions: Review the disclosures from BCE’s 2014 financi
> Rhonda is considering investing in the shares of either East Corporation or West Ltd. Both companies are publicly traded. How would an analysis of each company’s EPS help Rhonda decide which company to add to her investment portfolio?
> Assume the same information as in BE17-20 except that the put options allow the holder to sell Redpath’s shares to Redpath at $6 each. How should these options be treated when calculating the diluted EPS? Data from BE17-20: Use the same information as
> Assume the same information as in BE17-19 except that Redpath purchased put options to give it the option of selling 25,000 of its own common shares for $5 each. How should the options be treated when calculating the diluted EPS? Data from BE17-19: Red
> Use the same information as in BE17-19 and assume that Redpath also wrote put options that allow the holder to sell 25,000 of Redpath’s shares to Redpath at $8 per share. Calculate the incremental shares outstanding for Redpath Limited. Data from BE17-1
> Hedley Corporation had 2017 net income of $1.4 million. During 2017, Hedley paid a dividend of $5 per share on 100,000 preferred shares. Hedley also had 220,000 common shares outstanding during the year. Calculate Hedley’s 2017 earnings per share.
> Redpath Limited purchased 25,000 call options during the year. The options give the company the right to buy its own common shares for $4 each. The average market price during the year was $7 per share. Calculate the incremental shares outstanding for Re
> Ad Venture Ltd. provides a defined contribution pension plan for its employees. Currently, the company has 40 full-time and 55 part-time employees. The pension plan requires the company to make an annual contribution of $2,000 per full-time employee, and
> Next Generation Corporation (a private company) has preferred shares outstanding, which require Next Generation to redeem the shares for cash at an amount equal to the fair value of the company’s business assets at the time of issuance of the preferred s
> Strait Inc. has 300,000 common shares outstanding throughout the year. On June 30, Strait issued 10,000 convertible preferred shares that are convertible into two common shares each. Calculate the weighted average number of common shares to use in calcul
> Assume the same information as in BE17-15 except that Melanie reported net income of $350,000 in 2017. Calculate Melanie’s 2017 diluted earnings per share. Data from BE17-15: Melanie Corporation reported net income of $550,000 in 2017 and had 900,000 c
> Melanie Corporation reported net income of $550,000 in 2017 and had 900,000 common shares outstanding throughout the year. On May 1, 2017, Melanie issued 5% convertible bonds. Each $1,000 bond is convertible into 120 common shares. Total proceeds at par
> LGS Inc. is a private company. You have recently been hired as the CFO for the company and are currently finalizing the company year-end report for December 31, 2017. The company has an option to follow either IFRS or ASPE, and has not yet made the choic
> J. J. Kersee Corporation, a Canadian publicly traded company, is currently preparing the interim financial data that it will issue to its shareholders and the securities commission at the end of the first quarter of its December 31, 2017 fiscal year. Ker
> Assume the same information as in BE17-13 except that the 10% bonds are convertible into 10,000 common shares. Calculate Thiessen’s 2017 diluted earnings per share. Data from BE17-13: Thiessen Corporation earned net income of $300,000 in 2017 and had 1
> Thiessen Corporation earned net income of $300,000 in 2017 and had 100,000 common shares outstanding throughout the year. Also outstanding all year was $800,000 of 10% bonds that are convertible into 26,000 common shares. Thiessen’s tax rate is 25%. Calc
> Milliken Corporation reported net income of $700,000 in 2017 and had 115,000 common shares outstanding throughout the year. Also outstanding all year were 9,500 of cumulative preferred shares, with each being convertible into two common shares. The prefe
> Francine Limited was incorporated with share capital consisting of 100,000 common shares. In January 2017, it issued 20,000 mandatorily convertible preferred shares. The terms of the prospectus for the issuance of the preferred shares require the convert
> Mila Enterprises Ltd. provides the following information about its defined benefit pension plan: Instructions: (a) Calculate the January 1, 2017 balances for the pension-related accounts if Mila follows IFRS. (b) Prepare the required disclosures that w
> Ethan Corporation had 100,000 common shares outstanding on December 31, 2016. During 2017, the company issued 12,000 shares on March 1, retired 5,000 shares on July 1, issued a 20% stock dividend on October 1, and issued 18,000 shares on December 1. For
> Milano Ltd. issued 1,000 preferred shares for $10 per share. The preferred shares pay an annual, cumulative dividend of $0.50 per share, and become mandatorily redeemable if net income drops below $500,000 in any fiscal year. Discuss how Milano Ltd. shou
> Verhage Limited, a private company that complies with accounting standards for private enterprises (ASPE), has redeemable preferred shares outstanding that carry a dividend of 5%. If the shares are not redeemed within five years, the dividend will double
> Jamieson Limited, a publicly accountable enterprise, issued bonds that will not be due until 2114. The bonds carry interest at 5%. Explain how this instrument should be presented on the statement of financial position.
> On January 1, 2017, Wolfgang Ltd. paid $1,000 for the option to buy 5,000 of its common shares for $25 each. The contract stipulates that it may only be settled by exercising the option and buying the shares. How should this be accounted for in the finan
> Different countries have different statutory tax rates. Instructions: Choose an industry and select five companies that operate in different countries. Access these companies’ most recent annual financial statements and make note of their statutory and
> Refer to BE16-4. Assume the same facts except that the forward contract is a futures contract that trades on the Futures Exchange. Ginseng Inc. was required to deposit $30 with the stockbroker as a margin. Prepare the journal entries to update the books
> On January 1, 2017, Ginseng Inc. entered into a forward contract to purchase U.S. $6,000 for $6,336 Canadian in 30 days. On January 15, the fair value of the contract was $40 (reflecting the present value of the future cash flows under the contract). Ass
> On February 1, 2017, Daily Produce Ltd. entered into a purchase commitment contract to buy apples from Farmers Corporation. According to the contract, Daily Produce could settle the contact on a net basis; however, Daily Produce intends to take delivery
> The following is partial information related to Siri Ltd.’s non-pension, post-retirement health care benefit plan at December 31, 2017: Defined post-retirement benefit obligation, accounting basis………………..$185,000 Plan assets (at fair value)…………………………………
> Spencer Ltd. established a share appreciation rights (SARs) program on January 1, 2017, which entitles executives to receive cash at the date of exercise (anytime in the next three years) for the difference between the shares’ fair value and the pre-esta
> Applegate Inc. established a share appreciation rights (SARs) program on January 1, 2017, which entitles executives to receive cash at the date of exercise for the difference between the shares’ fair value and the pre-established price of $16 on 3,700 SA
> On January 1, 2017, Blaine Corporation granted 6,000 options to executives. Each option entitles the holder to purchase one share of Blaine’s common shares at $35 per share at any time after January 1, 2019. The shares’ market price is $50 per share on t
> Explain the differences between employee and compensatory option plans and other options.
> List the types of stock compensation plans and discuss the objectives of effective stock compensation plans.
> Saver Rio Ltd. purchased options to acquire 1,000 common shares of Spender Limited for $20 per share within the next six months. The premium (cost) related to the options was $500. How should this be accounted for in the financial statements of Saver Rio
> In January 2017, Parker Inc. issued preferred shares that must be redeemed by Parker if the fair value of the company’s common shares exceeds $100 per share. At time of issuance of the preferred shares, Parker’s common shares had a fair value of $60 per
> Alimentation Couche-Tard Inc., Loblaw Companies Limited, and Empire Company Limited are three companies in the same industry. Because of this, the expectation is that their operations and financial positions are also similar. Instructions: Go to SEDAR (
> Davison Corporation has puttable common shares outstanding. These shares give the holder the option to require Davison to repurchase the shares for cash. In the event of liquidation, the holders of these shares are also entitled to a pro rata share of Da
> Trelawny Ltd. issued 13,000 common shares upon conversion of 10,000 preferred shares. The preferred shares were originally issued at $9 per share and the Contributed Surplus—Conversion Rights account for the preferred shares had a balance of $9,000. The
> Refer to the information in E19-16 and assume Opsco applies IFRS. Instructions: Complete a post-retirement work sheet for 2017, and prepare all required journal entries related to the plan made by Opsco in 2017. Data from E19-16: Opsco Corp. provides
> Refer to BE16-12. Assume that Bantry Capital Ltd. follows ASPE and valued the debt component of the instruments first, applying the residual to the equity component. On a date when the bonds had a carrying value of $489,100 and fair value of $492,370, Ba
> Refer to BE16-12. Assume that Bantry Capital Ltd. follows IFRS and recorded the issuance of the bonds and warrants accordingly. On a date when the bonds had a carrying value of $489,100, Bantry paid $14,000 to the bondholders to induce early conversion.
> Refer to BE16-12 but assume that the instruments are convertible bonds and that they have now been converted. Assume that Bantry Capital Ltd. follows ASPE, and that all of the proceeds were allocated to the debt component upon initial recognition. At the
> Bantry Capital Ltd. issued 500 $1,000 bonds at 103. Each bond was issued with 10 detachable stock warrants. After issuance, similar bonds were sold at 97, and the warrants had a fair value of $2.50. (a) Record the issuance of the bonds and warrants assum
> On January 1, 2017, MacGregor Ltd. issued 1,000 five-year, 10% convertible bonds at par of $1,000, with interest payable each December 31. Each bond is convertible into 100 common shares, and the current fair value of each common share is $6 per share. S
> During 2017, Genoa Limited issued retractable preferred shares. The shares may be presented to the company by the holder for redemption after 2020. Explain how these should be presented in the financial statements under IFRS and ASPE.
> Sometimes an entity issues financial instruments that require settlement using its own shares. Examples of these include purchased or written options to buy or sell its own shares, or forward contracts to buy or sell its own shares. Explain the accountin
> Abourawes Services Inc. issued 1,000 $2 convertible preferred shares at $75 and 5,000 common shares at $25 each in 2016. Each preferred share is convertible into three common shares. On March 15, 2017, preferred shareholders converted 200 preferred share
> Maple Leaf Foods Inc. is a Canadian company that produces food products such as prepared meats, ready-to-cook and ready-to-serve meals, and fresh pork and poultry. While most of Maple Leaf Foods’ business is conducted in Canada, it also generates revenue
> Spencer Limited has 50,000 common shares outstanding, with an average issue price per share of $8. On August 1, 2017, the company reacquired and cancelled 600 shares at $40 per share. There was contributed surplus of $0.25 per share at the time of the re
> Opsco Corp. provides the following information about its post-retirement health care benefit plan for the year 2017: Current service cost…………………………………………………………………………$ 202,500 Contribution to the plan………………………………………………………………………..47,250 Actual return on p
> Higgins Inc. has 52,000 common shares outstanding. The shares have an average cost of $21 per share. On July 1, 2017, Higgins reacquired 800 shares at $56 per share and retired them. Assume no contributed surplus balances exist from previous share repurc
> Platinum Corporation issued 4,000 of its common shares for $66,000. The company also incurred $1,700 of costs associated with issuing the shares. Prepare a single combined journal entry to record the issuance of the company’s shares.
> On March 1, Kramers Inc. sells 1,000 common shares to its employees at $25 per share and lends the money to the employees to buy the new shares. The employees pay 50% of the price on the transaction date and pay the balance in one year. (a) Prepare the c
> Bonata Inc. sells 1,400 common shares on a subscription basis at $65 per share on June 1 and accepts a 45% down payment. On December 1, Bonata collects the remaining 55% and issues the shares. Prepare the company’s journal entries.
> Walter Corporation has three classes of shares: Series A, Series B, and Class A. How should Walter classify and present the different classes if the characteristics of each class are as follows? Series A shares The shares are mandatorily redeemable and c
> Henry Corporation sells home entertainment systems. The corporation also offers to sell its customers a two-year warranty contract as a separate service. During 2017, Henry sold 20,000 warranty contracts at $99 each. The corporation spent $180,000 servic
> Refer to the information for Jupiter Corp. in BE13-25. (a) Prepare entries for the warranty that recognize the sale as a multiple deliverable with the warranty as a separate service that Jupiter bundled with the selling price of the product. Sales in 201
> Sports International had total debt of $500,000 and $750,000 as at December 31, 2017 and December 31, 2016, respectively, of which $100,000 and $150,000 was current. In addition, the company had total assets of $900,000 and $700,000 as at December 31, 20
> Ambrosia Limited has the following balances as at December 31, 2017: accounts payable and accrued liabilities $20,000, wages payable $15,000, severance payable (due September 30, 2019) $15,000, and bonds payable of $140,000 due September 30, 2020 (curren
> Davida Limited started operations in 2013. Although it has grown steadily, the company reported accumulated operating losses of $450,000 in its first four years in business. In the most recent year (2017), Davida appears to have turned the corner and rep
> Access the annual financial statements of Empire Company Limited for its year ended May 2, 2015 at www.sedar.com or the company’s website. Instructions: Review Empire Company Limited’s consolidated financial statements and provide answers to the followi
> Tsui Corporation went through a financial reorganization by writing down its buildings by $107,000 and eliminating its deficit, which was $182,000 before the reorganization. As part of the reorganization, the creditors agreed to take back 55% of the comm
> Use the information for Hanover Corporation in BE15-21. Assume now that the company resells the 1,000 treasury shares at $55 per share. Prepare the journal entries for the repurchase and subsequent sale of the treasury shares. Data from BE15-21: Hanove
> Hanover Corporation has 750,000 shares outstanding. The shares have an average cost of $45 per share. On September 5, 2017, the company repurchases 1,500 of its own shares at $75 per share and does not cancel them. The shares are classified as treasury s
> Sullivan Limited issued 2,000 shares of no par value common shares for $79,000. Prepare Sullivan’s journal entry if (a) the shares have no par value, and (b) the shares have a par value of $11 per share.
> List the types of dividends. Why do companies or investors have a preference for one or the other?
> Khalid Inc. has the following selected financial data: There were no preferred dividends in arrears. (a) Calculate the following ratios for 2017: (1) rate of return on common shareholders’ equity, (2) payout ratio, (3) price earnings
> The Sawgrass Corporation, a public company, reported the following balances at January 1, 2017: Common Shares (32,000 shares issued, unlimited authorized)…………………$ 800,000 Retained Earnings…………………………………………………………………………………1,500,000 Contributed Surplus……………
> Lu Corporation has the following account balances at December 31, 2017: Common Shares Subscribed………………………………………………..$ 250,000 Common Shares…………………………………………………………………….310,000 Subscriptions Receivable…………………………………………………………80,000 Retained Earnings………………………
> Use the information for Kindey Corporation from BE15-15. Assume instead that Kindey declared a 1-for-5 reverse stock split, and answer the same questions. Data from BE15-15: Kindey Corporation has 185,000 common shares outstanding with a carrying value
