Questions and Answers of Intermediate Accounting

Q: During 2014, you were hired as the chief financial officer for MC Travel Inc., a fairly young travel company that is growing quickly. A key
Q: In late 2008, the U.S. Securities Exchange Commission (SEC) published its roadmap to IFRS that would look at adopting IFRS in the United States.Read
Q: Three independent situations follow.Situation 1A company offers a one-year warranty for the product that it manufactures. A history of warranty
Q: What is the difference between an auditor’s unqualified or “clean” opinion and a qualified opinion?
Q: How would the transaction in BE23-12 be recorded if the individual shareholder only owned 40% of the shares of each company? Assume that there is
Q: How would the transaction in BE23-12 be recorded if it were arm’s length?Data From BE23-12:Textile manufacturer Fibreright Corp. exchanges computer
Q: Durocher Guitar Corp. is in the business of manufacturing top-quality, steel-string folk guitars. Durocher is a private enterprise and follows ASPE.
Q: Earthcom Inc. is in the telecommunications industry. The company builds and maintains telecommunication lines that are buried in the ground. The
Q: Data for Ellis Corp. are presented in E22-12.InstructionsPrepare the operating activities section of the statement of cash flows using the indirect
Q: The IASB is working to update a major portion of the standards and has a put a project plan in place that outlines the timelines for these various
Q: Ali Reiners, a new controller of Luftsa Corp., is preparing the financial statements for the year ended December 31, 2014. Luftsa is a publicly
Q: Various types of accounting changes can affect the financial statements of a private business enterprise differently. Assume that each item on the
Q: It is December 2014 and Cranmore Inc. recently hired a new accountant, Jodie Larson. Although Cranmore is a private company, it follows IFRS. As part
Q: Sunlight Equipment Manufacturers (SEM) makes barbecue equipment. The company has historically been very profitable; however, in the last year and a
Q: Write a brief essay highlighting the differences between IFRS and ASPE and the contract-based approach noted in this chapter, discussing the
Q: Zhou Ltd. is a private corporation, which uses ASPE, and whose operations rely considerably on a group of technology companies that experienced
Q: The head office of North Central Ltd. has operated in the western provinces for almost 50 years. North Central uses IFRS. In 1998, new offices were
Q: Sanderson Inc., a pharmaceutical distribution firm, is providing a BMW car for its chief executive officer as part of a remuneration package.
Q: Your employer, Wagner Inc., is a large Canadian public company that uses IFRS. You are working on a project to determine the effect of the proposed
Q: Mulholland Corp., a lessee, entered into a non-cancellable lease agreement with Galt Manufacturing Ltd., a lessor, to lease special purpose equipment
Q: Fram Fibreglass Corp. (FFC) is a private New Brunswick company, using ASPE, that manufactures a variety of fibreglass products for the fishing and
Q: Lanier Dairy Ltd. leases its milk cooling equipment from Green Finance Corporation. Both companies use IFRS. The lease has the following terms.1. The
Q: CHL Corporation manufactures specialty equipment with an estimated economic life of 12 years and leases it to Provincial Airlines Corp. for a period
Q: Lee Industries and Lor Inc. enter into an agreement that requires Lor Inc. to build three diesel-electric engines to Lee’s specifications. Both Lee
Q: In 2011, Yin Trucking Corporation, which follows ASPE, negotiated and closed a long-term lease contract for newly constructed truck terminals and
Q: Synergetics Inc. leased a new crane to Gumowski Construction under a six-year, non-cancellable contract starting February 1, 2014. The lease terms
Q: LePage Manufacturing Ltd. agrees to lease equipment to Labonté Corporation on July 15, 2014. Both LePage and Labonté use ASPE. The following
Q: Use the information for Lai Corporation from BE20-13. Assume that the direct financing lease was recorded at a present value of $175,000. Prepare
Q: Use the information for Lalonde and Costner from BE20-4. Explain, using numbers, how Costner determined the amount of the lease payment of
Q: At the time of writing this book, two approaches were available for private enterprises: the immediate recognition approach and the deferral and
Q: Shikkiah Corp. (which is a private enterprise) tries to attract the most knowledgeable and creative employees it can find. To help accomplish this,
Q: Refer to the information in E19-17.Instructions(a) Complete a post-retirement work sheet for 2013.(b) Prepare all required journal entries related to
Q: The following facts apply to the pension plan of Yorke Inc. for the year 2013:Plan assets, Jan. 1, 2013
Q: Queensland Importers provides the following pension plan information:Fair value of pension plan assets, Jan. 1, 2014
Q: Complete the following tables by indicating whether the following events increase (I), decrease (D), or have no effect (NE) on the employer’s
Q: Ad Venture Ltd. provides a defined contribution pension plan for its employees. Currently, the company has 40 full-time and 55 part-time employees.
Q: Refer to the information for Cotter Corp. in BE19-4, and provide a continuity schedule for the plan assets for the year. Is the plan overfunded or
Q: Tyshynski Corp. has recently decided to implement a pension plan for its employees; however, it is unsure if it would like to structure the pension
Q: Henrietta Aguirre, the ethical accountant, is the newly hired Director of Corporate Taxation for Mesa Incorporated, which is a publicly traded
Q: Ayesha Corporation had the following tax information:
Q: At December 31, 2013, Palden Corporation had a deferred tax asset of $675,000, resulting from future deductible amounts of $2.7 million and an
Q: Using the information from BE18-4, and assuming that the $40,000 difference is the only difference between Anugraham’s accounting income and
Q: Using the information from BE18-3, calculate the effective rate of income tax for Nilson Inc. for 2014. Also make a reconciliation from the statutory
Q: In 2014, Shafali Corporation had accounting income of $248,000 and taxable income of $198,000. The difference is due to the use of different
Q: Homeland Corporation is a public company listed on the TSX with a December 31 year end. At the beginning of the current year, there were unlimited
Q: Hedley Corporation had 2014 net income of $1.4 million. During 2014, Hedley paid a dividend of $5 per share on 100,000 preferred shares. Hedley also
Q: The common shares of Hoover Inc. are currently selling at $143 per share. The directors want to reduce the share price and increase the share volume
Q: The following information is obtained from the 2014 records of Chef’s Spoon Incorporated, a company that produces high-quality kitchenware. The
Q: Write a brief essay highlighting the differences between IFRS and ASPE noted in this chapter, discussing the conceptual justification for each. As
Q: This spreadsheet assignment is an extension of the spreadsheet assignment given in Chapter 20, part (1). Refer back to the instructions given in
Q: This spreadsheet assignment is an extension of the spreadsheet assignment given in Chapter 13, part (1). Refer back to the instructions given in
Q: This assignment is an exercise in simple derivative valuation. Skywalker is considering using derivative contracts in 2012 to hedge interest rate
Q: To help you become familiar with the accounting standards, this case is designed to take you to the FASB’s Web site and have you access various
Q: This assignment is an exercise in computing diluted EPS. In prior years, Skywalker has had a simple capital structure. That may change in 2012;
Q: To help you become familiar with the accounting standards, this case is designed to take you to the FASB’s Web site and have you access various
Q: This assignment is a detailed examination of Skywalker’s pension-related items. As of December 31, 2011, the $253 in “Other long-term
Q: To help you become familiar with the accounting standards, this case is designed to take you to the FASB’s Web site and have you access various
Q: This assignment is based on the cumulative spreadsheet assignment for Chapter 13. Review that assignment for a summary of the assumptions made in
Q: This assignment is based on the spreadsheet prepared in (1) of the cumulative spreadsheet assignment for Chapter 13. Review that assignment for a
Q: This assignment is based on the spreadsheet prepared in (1) of the cumulative spreadsheet assignment for Chapter 13. Review that assignment for a
Q: This spreadsheet assignment is a continuation of the spreadsheet assignments given in earlier chapters. If you completed those assignments, you have
Q: This spreadsheet assignment is a continuation of the spreadsheet assignments given in earlier chapters. If you completed those assignments, you have
Q: To help you become familiar with the accounting standards, this case is designed to take you to the FASB’s Web site and have you access various
Q: This spreadsheet assignment is a continuation of the spreadsheet assignments given in earlier chapters. If you completed those assignments, you have
Q: This spreadsheet assignment is a continuation of the spreadsheet assignments given in earlier chapters. If you completed those assignments, you have
Q: To help you become familiar with the accounting standards, this case is designed to take you to the FASB’s Web site and have you access various
Q: This spreadsheet assignment is a continuation of the spreadsheet assignments given in earlier chapters. If you completed those assignments, you have
Q: The company reported the following information for the month: Sales for the month totaled
Q: The company reported the following inventory data for the year: Compute (1) cost
Q: For the purpose of this spreadsheet assignment, assume that Skywalker is in the long-term construction business. As of the end of 2011, Skywalker has
Q: To help you become familiar with the accounting standards, this case is designed to take you to the FASB’s Web site and have you access various
Q: This spreadsheet assignment is a continuation of those given in earlier chapters. If you completed those assignments, you have a headstart on this
Q: This spreadsheet assignment is a continuation of the spreadsheet assignments given in earlier chapters. If you completed those assignments, you have
Q: Using the following information, compute cash flow from operating activities, cash flow from investing activities, and cash flow from financing
Q: This spreadsheet assignment is a continuation of the spreadsheet assignment given in Chapter 3. If you completed that assignment, you have a head
Q: Beginning with Chapter 2, each chapter in this text will include a spreadsheet assignment based on the financial information of a fictitious company
Q: How are cash inflows from dividends and interest and cash outflows for dividends and interest classified in BA's cash flow statements? Is this
Q: What are the primary classifications into which BA's cash inflows and cash outflows are separated? Is this classification the same as or different
Q: What is the amount that BA reports in its income statement for its stock options and other share-based compensation plans for the year ended March
Q: Describe the apparent differences in the order of presentation of the components of liabilities and shareholders' equity between IFRS as applied by
Q: Locate Note 35 in BA's financial statements. What three items comprise “Other reserves” as reported in the balance sheet? If British Airways used
Q: British Airways lists four items in the shareholders' equity section of its balance sheet. If British Airways used U.S. GAAP, what would be the
Q: Locate Note 36: “Pension costs,” part c: “Amounts recognised in the income statement.” Which components of pension expense does BA actually
Q: U.S. GAAP requires that unrecognized actuarial gains and losses be included as part of Accumulated other comprehensive income (AOCI) in shareholders'
Q: The Employee Benefit section within Note 2: “Summary of significant accounting policies” in BA's financial statements states that:“The asset or
Q: Look at Note 36, part c. What amount of past service cost (called prior service cost under U.S. GAAP) did BA recognize in earnings for the year ended
Q: Here's an excerpt from one of BA's notes to its financial statements:Taxation (in part)Deferred income tax assets are recognised only to the extent
Q: Here's an excerpt from one of BA's notes to its financial statements:Taxation (in part)Current tax assets and liabilities are measured at the amount
Q: Where in its March 31, 2009 balance sheet does BA report deferred taxes? How does this approach differ from the way deferred taxes are reported using
Q: Look at BA's Note 28: Long-term borrowings and Note 29: Operating lease commitments. Does BA obtain use of its aircraft more using operating leases
Q: In Note 2: Summary of significant accounting policies, part d: Leased and hire purchase assets, BA states that “Where assets are financed through
Q: Is IFRS or U.S. GAAP more restrictive for determining when firms are allowed to elect the fair value option for financial assets and liabilities?
Q: BA does not elect the fair value option (FVO) to report its financial liabilities. Examine Note 32: “Financial Instruments.” If the company had
Q: Examine the long-term borrowings in BA's balance sheet and the related note. What, if any, convertible securities does the company have outstanding?
Q: Sealy Corporation reported the following line items in its statement of cash flows for the nine months ended August 30, 2009:Amortization of discount
Q: BA's note 37 lists contingent liabilities. Explain how the use of that term differs between IFRS and U.S. GAAP.
Q: Note 30 lists “provisions for liabilities and charges.” Is the threshold for recognizing a liability associated with these items any different
Q: BA has an account entitled “sales in advance of carriage.” Explain the purpose of that account. Would transactions of this type be handled
Q: BA has an account entitled “sales in advance of carriage.” Explain the purpose of that account. Would transactions of this type be handled
Q: BA recognized a £ 13 million impairment of their investment in Flybe for the year ended March 31, 2009. On what criteria did BA base their

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