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intermediate accounting ifrs 4th edition

Intermediate Accounting IFRS 4th Edition Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield - Solutions

Kennedy Company had a defined benefit obligation of $6,300,000 and plan assets of $4,900,000 at January 1, 2022. Kennedy has the following data related to the plan during 2022.Discount (interest) rate ....................................... 7%Service cost
Hanson Ltd. sponsors a defined benefit pension plan for its employees. On January 1, 2022, the following balances related to this plan.As a result of the operation of the plan during 2022, the actuary provided the following additional data on December 31, 2022.Service cost for 2022
Hemera SA had a defined benefit obligation of R$3,100,000 and plan assets of R$2,900,000 at January 1, 2022. Hemera’s discount rate is 6%. In 2022, actual return on plan assets is R$160,000. Hemera contributed R$200,000 to the pension fund and paid benefits of R$150,000. Service cost for 2022 is
Taveras Enterprises provides the following information related to its defined benefit pension plan. Balances or Values at December 31, 2022Defined benefit obligation .......................................................... €2,729,907Fair
Lemke SA sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the years 2022 and 2023.Instructionsa. Prepare a pension worksheet for both 2022 and 2023.b. Prepare the journal entries (from the worksheet) to reflect all pension plan
Tevez AG experienced an actuarial loss of €750 in its defined benefit plan in 2022. For 2022, Tevez’s revenues are €125,000, and expenses (excluding pension expense of €14,000) are €85,000. Prepare Tevez’s statement of comprehensive income for 2022.
Webb Corp. sponsors a defined benefit pension plan for its employees. On January 1, 2022, the following balances relate to this plan.Plan assets ......................................... $480,000Defined benefit obligation ................. 600,000Pension asset/liability .........................
Hobbs AG has the following defined benefit pension plan balances on January 1, 2022.Defined benefit obligation ................ €4,600,000Fair value of plan assets ...................... 4,600,000The discount (interest) rate applicable to the plan is 10%. On January 1, 2023, the company amends
At December 31, 2022, Conway SA had a defined benefit obligation of €510,000 and plan assets of €322,000. Prepare a pension reconciliation schedule for Conway.
Henning plc sponsors a defined benefit pension plan for its employees. The following data relate to the operation of the plan for the year 2022.1. The actuarial present value of future benefits earned by employees for services rendered in 2022 amounted to £56,000.2. The company’s funding policy
Kramer Co. has prepared the following pension worksheet (amounts in $). Unfortunately, several entries in the worksheet are not decipherable. The company has asked your assistance in completing both the worksheet and the accounting tasks related to the pension plan for 2022.Instructionsa. Determine
Caleb Corporation has the following information available concerning its postretirement medical benefit plan for 2022.Service cost ................................... $40,000Interest expense ............................. 52,400Interest revenue ............................. 26,900Compute Caleb’s
Ferreri SpA received the following selected information from its pension plan trustee concerning the operation of the company’s defined benefit pension plan for the year ended December 31, 2022.The service cost component of pension expense for employee services rendered in the current year
The following data relate to the operation of Kramer Co.’s pension plan in 2023. The pension worksheet for 2022 is provided in P20.10.Service cost ....................................... $59,000Actual return on plan assets ............ 32,000Annual contributions .........................
Chen Group sponsors a defined benefit pension plan for its employees. On January 1, 2022, the following balances related to this plan (amounts in thousands).As a result of the operation of the plan during 2022, the actuary provided the following additional data at December 31, 2022.Service cost for
Benjamin plc computed its annual postretirement expense as £240,900. Benjamin’s contribution to the plan during 2022 was £160,000. Prepare Benjamin’s 2022 entry to record postretirement expense.
Using the information in E20.12 about Erickson plc’s defined benefit pension plan, prepare a 2022 pension worksheet with supplementary schedules of computations. Prepare the journal entries at December 31, 2022, to record pension expense and related pension transactions. Also, indicate the
Erickson plc sponsors a defined benefit pension plan. The company’s actuary provides the following information about the plan.Instructionsa. Compute the actual return on the plan assets in 2022.b. Compute the amount of net gain or loss for 2022.c. Compute the amount of the other comprehensive
Hollenbeck Foods Inc. sponsors a postretirement medical and dental benefit plan for its employees. The following balances relate to this plan on January 1, 2022.Plan assets .............................................................. $200,000Defined postretirement benefit obligation ...........
Elton AG has the following postretirement benefit plan balances on January 1, 2022.Defined postretirement benefit obligation ........... €2,250,000Fair value of plan assets ............................................ 2,250,000The discount (interest) rate applicable to the plan is 10%. On January
Latoya Company provides the following selected information related to its defined benefit pension plan for 2022.Instructionsa. Compute pension expense and prepare the journal entry to record pension expense and the employer’s contribution to the pension plan in 2022. Preparation of a pension
Kreter Concepts provides the following information about its postretirement benefit plan for the year 2022.Service cost ................................................................... 45,000Contribution to the plan ............................................. 10,000Actual return on plan assets
What is a pension plan curtailment? Explain the accounting for pension plan curtailments.
Using the information in E20.16, prepare a worksheet inserting January 1, 2022, balances, and showing December 31, 2022, balances. Prepare the journal entry recording postretirement benefit expense.E20.16Kreter Concepts provides the following information about its postretirement benefit plan for
Garner Inc. provides the following information related to its postretirement benefits for the year 2022.Defined postretirement benefit obligation at January 1, 2022 ............... $710,000Actual return on plan assets (at 10%) .............................................................
Englehart AG provides the following information about its postretirement benefit plan for the year 2022.InstructionsCompute the postretirement benefit expense for 2022. Service cost € 90,000 Contribution to the plan 56,000 Actual return on plan assets Benefits paid 62,000 40,000 Plan assets at
Using the information in E20.19, prepare a worksheet inserting the January 1, 2022, and December 31, 2022, balances, and the journal entry recording postretirement benefit expense.E20.19Englehart AG provides the following information about its postretirement benefit plan for the year 2022. Service
The accounting staff of Holder Inc. has prepared the following postretirement benefit worksheet (amounts in €). Unfortunately, several entries in the worksheet are not decipherable. The company has asked your assistance in completing the worksheet and completing the accounting tasks related to
DU Journeys enters into an agreement with Traveler plc to lease a car on December 31, 2021. The following information relates to this agreement.1. The term of the non-cancelable lease is 3 years with no renewal or bargain purchase option. The remaining economic life of the car is 3 years, and it is
The following facts pertain to a noncancelable lease agreement between Faldo Leasing and Vance plc, a lessee.Commencement date .................................................................................... January 1, 2022 Annual lease payment due at the beginning of each year,
On January 1, 2022, Evans Company entered into a non-cancelable lease for a machine to be used in its manufacturing operations. The lease transfers control of the machine to Evans by the end of the lease term. The term of the lease is 8 years, which equals the useful life of the asset. The lease
The financial statements of M&S (GBR) are presented in Appendix A. The company’s complete annual report, including the notes to the financial statements, is available online.InstructionsRefer to M&S’s financial statements and the accompanying notes to answer the following questions.a.
Presented in Illustration 21.39 are the financial statement disclosures from the 2018 annual report of Air France (FRA).InstructionsAnswer the following questions related to these disclosures.a. What is the total obligation disclosed in the Lease Debt note at year-end 2018 for Air France?b. What is
On December 31, 2021, Burke Corporation signed a 5-year, non-cancelable lease for a machine. The terms of the lease called for Burke to make annual payments of $8,668 at the beginning of each year, starting December 31, 2021. The machine has an estimated useful life of 6 years and a $5,000
On January 1, 2022, Cage Company contracts to lease equipment for 5 years, agreeing to make a payment of $120,987 at the beginning of each year, starting January 1, 2022. The leased equipment is to be capitalized at $550,000. The asset is to be amortized on a double-declining-balance basis, and the
Ludwick Steel SA, as lessee, signed a lease agreement for equipment for 5 years, beginning December 31, 2022. Annual rental payments of €40,000 are to be made at the beginning of each lease year (December 31). The interest rate used by the lessor in setting the payment schedule is 6%; Ludwick’s
Waterworld Company leased equipment from Costner Company, beginning on December 31, 2021. The lease term is 4 years and requires equal rental payments of $41,933 at the beginning of each year of the lease, starting on the commencement date (December 31, 2021). The equipment has a fair value at the
Assume that on December 31, 2021, Stora Enso (FIN) signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage. The following information pertains to this lease agreement.1. The agreement requires equal rental payments of €71,830 beginning on December 31,
Rick Kleckner NV recorded a right-of-use asset for €300,000 as a result of a lease on December 31, 2021. Kleckner’s incremental borrowing rate is 8%, and the implicit rate of the lessor was not known at the commencement of the lease. Kleckner made the first lease payment of €48,337 on
Shapiro Inc. began operations in 2021 as a computer software service firm, with an accounting fiscal year ending August 31. Shapiro’s primary product is a sophisticated online inventory-control system; its customers pay a fixed fee plus a usage charge for using the system.Shapiro has leased a
Morgan Leasing Group signs an agreement on January 1, 2022, to lease equipment to Cole plc. The following information relates to this agreement.1. The term of the non-cancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years.2. The cost of the asset
In 2021, Grishell Trucking negotiated and closed a long-term lease contract for newly constructed truck terminals and freight storage facilities. The buildings were erected to the company’s specifications on land owned by the company. On January 1, 2022, Grishell Trucking took possession of the
You are auditing the December 31, 2022, financial statements of Hockney plc, manufacturer of novelties and party favors. During your inspection of the company garage, you discovered that a used automobile not listed in the equipment subsidiary ledger is parked there. You ask Stacy Reeder, plant
Debbink plc leased machinery from Young Ltd. on January 1, 2022. The lease term was for 8 years, with equal annual rental payments of £5,300 at the beginning of each year. In addition, the lease provides an option to purchase the machinery at the end of the lease term for £2,000, which Debbink is
Castle Leasing Company signs a lease agreement on January 1, 2022, to lease electronic equipment to Jan Way Company. The term of the non-cancelable lease is 2 years, and payments are required at the end of each year. The following information relates to this agreement.1. Jan Way has the option to
Glaus Leasing AG agrees to lease equipment to Jensen Furniture on January 1, 2022. The following information relates to the lease agreement.1. The term of the lease is 7 years with no renewal option, and the machinery has an estimated economic life of 9 years.2. The cost of the machinery is
On January 1, 2022, Perriman Company transferred equipment for cash and leased it back. As seller-lessee, Perriman retained the right to substantially all of the remaining use of the equipment. The term of the lease is 8 years.Instructionsa. What is the major issue related to sale-leaseback
Cardinal Ltd. is negotiating to lease a piece of equipment to MTBA plc. MTBA requests that the lease be for 9 years. The equipment has a useful life of 10 years. Cardinal wants a guarantee that the residual value of the equipment at the end of the lease is at least £5,000. MTBA agrees to guarantee
Macinski Leasing leases a new machine to Sharrer SA. The machine has a cost of €70,000 and fair value of €95,000. Under the 3-year, non-cancelable contract, Sharrer will receive title to the machine at the end of the lease. The machine has a 3-year useful life and no residual value. The lease
Crosley Company, a machinery dealer, leased a machine to Dexter Corporation on January 1, 2022. The lease is for an 8-year period and requires equal annual payments of $35,004 at the beginning of each year. The first payment is received on January 1, 2022. Crosley had purchased the machine during
Assume that IBM (USA) leased equipment that was carried at a cost of £120,000 to Swander plc. The term of the lease is 6 years beginning December 31, 2021, with equal rental payments of £30,044 beginning December 31, 2021. The fair value of the equipment at commencement of the lease is £150,001.
Use the information for Crosley Company in E21.8. Assume that Dexter Corporation does not know the rate implicit in the lease used by Crosley, and Dexter’s incremental borrowing rate is 8%. In addition, assume that Dexter incurs initial direct costs of $15,000.Instructionsa. Compute the amount of
Use the information for IBM (USA) from BE21.9. Assume the sales-type lease was recorded at a present value of £150,001. Prepare IBM’s December 31, 2022, entry to record the lease transaction with Swander plc.BE21.9Assume that IBM (USA) leased equipment that was carried at a cost of £120,000 to
The following facts pertain to a non-cancelable lease agreement between Mooney Leasing and Choi Group, a lessee (amounts in thousands).Commencement date ................................................................................................... May 1, 2022Annual lease payment due at the
Geiberger AG manufactures drones. On December 31, 2021, it leased to Althaus SA a drone that had cost €120,000 to manufacture. The lease agreement covers the 5-year useful life of the drone and requires 5 equal annual rentals of €40,800 payable each December 31, beginning December 31, 2021. An
A lease agreement between Mooney Leasing and Choi Group is described in E21.10.InstructionsRefer to the data in E21.10 and do the following for the lessor. (Round all numbers to the nearest yen).a. Discuss the nature of this lease for Mooney and compute the amount of the lease receivable at
Goring Dairy leases its milking equipment from King Finance Company under the following lease terms.1. The lease term is 10 years, non-cancelable, and requires equal rental payments of $30,300 due at the beginning of each year starting January 1, 2022.2. The equipment has a fair value at the
Use the information for Geiberger AG from BE21.11, except assume the collectibility of the rentals is not probable. Prepare any journal entries for Geiberger on December 31, 2021.BE21.11Geiberger AG manufactures drones. On December 31, 2021, it leased to Althaus SA a drone that had cost €120,000
On January 1, 2022, Bensen Company leased equipment to Flynn Corporation. The following information pertains to this lease.1. The term of the non-cancelable lease is 6 years. At the end of the lease term, Flynn has the option to purchase the equipment for $1,000, while the expected residual value
Winston Industries and Ewing SA enter into an agreement that requires Ewing to build three dieselelectric engines to Winston’s specifications. Upon completion of the engines, Winston has agreed to lease them for a period of 10 years and to assume all costs and risks of ownership. The lease is
Kubby NV specializes in leasing large storage units to other businesses. Kubby entered a contract to lease a storage unit to Riskey Ltd. for 4 years when that particular storage unit had a remaining useful life of 5 years. The fair value of the unit was €10,000 at the commencement of the lease on
Phelps plc leases a building to Walsh Ltd. on January 1, 2022. The following facts pertain to the lease agreement.1. The lease term is 5 years, with equal annual rental payments of £4,703 at the beginning of each year.2. Ownership does not transfer at the end of the lease term, there is no bargain
The following facts pertain to a noncancelable lease agreement between Alschuler Leasing and McKee Electronics, a lessee, for a computer system.Commencement date ..................................................... October 1, 2022Lease term
Kingston plc leases equipment from Falls Ltd. on January 1, 2022. The lease agreement does not transfer ownership or contain a bargain purchase option, and it is not a specialized asset. It covers 3 years of the equipment’s 8-year useful life, and the present value of the lease payments is less
Lewis Machinery Works entered into a lease agreement on January 1, 2022, to provide Garcia SA with a piece of machinery. The terms of the lease agreement were as follows.1. The lease is to be for 3 years with rental payments of R$10,521 to be made at the beginning of each year.2. The machinery has
Describe the effect on the lessee of a “bargain purchase option” in accounting for a finance lease transaction.
Use the information for Kingston plc from BE21.14. Prepare all the necessary journal entries for Falls Ltd. (the lessor) for 2022, assuming the equipment is carried at a cost of £200,000.BE21.14Kingston plc leases equipment from Falls Ltd. on January 1, 2022. The lease agreement does not transfer
Laura Leasing SA signs an agreement on January 1, 2022, to lease equipment to Plote AG. The following information relates to this agreement.1. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years.2. The fair value of the
Cleveland Group leased a new crane to Abriendo Construction under a 5-year, non-cancelable contract starting January 1, 2022. Terms of the lease require payments of R$48,555 each January 1, starting January 1, 2022. The crane has an estimated life of 7 years, a fair value of R$240,000, and a cost
Rodgers Corporation agrees on January 1, 2022, to lease equipment from Packers, Inc. for 3 years. The lease calls for annual lease payments of $12,000 at the beginning of each year. The lease does not transfer ownership or contain a bargain purchase option, and it is not a specialized asset. In
Rauch AG leases a piece of equipment to Donahue SA on January 1, 2022. The lease agreement called for annual rental payments of €4,892 at the beginning of each year of the 4- year lease. The equipment has an economic useful life of 6 years, a fair value of €25,000, and a book value of
Use the information for Rodgers Corporation and Packers, Inc. from BE21.16. Assume that for Packers, Inc., the lessor, the collectibility of the lease payments is probable, and the fair value and cost of the equipment are $60,000. Prepare Packers’ 2022 journal entries, assuming the company uses
Use the information for Rauch AG and Donahue SA from E21.16.Instructionsa. Explain how Rauch arrived at the amount of the rental payments used in the lease agreement, and show calculations.b. Prepare the entries for Rauch for 2022.c. Suppose that instead of €8,250, Rauch expects the residual
On December 31, 2021, Escapee plc leased machinery from Terminator Group for an agreed-upon lease term of 3 years. Escapee agreed to make annual lease payments of £17,000, beginning on December 31, 2021. The expected residual value of the machinery at the end of the lease term is £9,000, though
Assume that on January 1, 2022, Humphrey’s Restaurants NV sells a computer system to Liquidity Finance for €680,000 and immediately leases back the computer system. The relevant information is as follows.1. The computer was carried on Humphrey’s books at a value of €600,000.2. The term of
Use the information for Escapee plc from BE21.18. Assume the same facts, except Escapee guarantees a residual value of £9,000 at the end of the lease term, which equals the expected residual value of the machinery. (a) Does this change your answer from BE21.17? (b) Does your answer
Respond to the requirements in each situation.Instructionsa. On January 1, 2022, Zarle Inc. sold computer equipment to Daniell Co. The sales price of the equipment was $520,000 and its carrying amount is $400,000. Record any journal entries necessary for Zarle from the sale of the computer
Indiana Jones NV enters into a 6-year lease of equipment on December 31, 2021, which requires 6 annual payments of €40,000 each, beginning December 31, 2021. In addition, Indiana Jones guarantees the lessor a residual value of €20,000 at the end of the lease. However, Indiana Jones believes it
Use the information for Indiana Jones NV from BE21.20. Assume that for Lost Ark AG, the lessor, collectibility of lease payments is probable and the carrying amount of the equipment is €180,000. Prepare Lost Ark’s 2021 and 2022 journal entries.BE21.20Indiana Jones NV enters into a 6-year lease
Bucky Corporation entered into a lease agreement to lease equipment from Badger, Inc. on January 1, 2022. The lease calls for annual lease payments of $30,000, beginning on January 1, for each of the 3 years of the lease. In addition, Badger will pay Bucky $5,000 as a cash incentive for entering
Homestead AG entered into a lease to lease equipment from Highlander SA on January 1, 2022. The lease calls for annual lease payments of €10,000, beginning on December 31, for each of the 5 years of the lease. In addition, Highlander will pay Homestead €2,000 as a cash incentive for entering
Brent SA owns equipment that cost €80,000 and has a useful life of 8 years with no residual value. On January 1, 2022, Brent leases the equipment to Havaci ASA for 1 year for one rental payment of €15,000 on January 1. Assuming Havaci (lessee) elects to use the short-term lease exception,
On January 1, 2022, Irwin Animation sold a truck to Peete Finance for €35,000 and immediately leased it back. The truck was carried on Irwin’s books at €28,000. The term of the lease is 3 years, there is no bargain purchase option, and title does not transfer to Irwin at lease-end. The lease
Assume the same facts as BE21.26, except the lease term is now 5 years and the 5 annual rental payments are €8,309, with no expected residual value at the end of the lease term. Prepare Irwin’s 2022 journal entries assuming these new facts.BE21.26On January 1, 2022, Irwin Animation sold a truck
What is the nature of a “sale-leaseback” transaction?
Wertz Construction decided at the beginning of 2022 to change from the costrecovery method to the percentage-of-completion method for financial reporting purposes. The company will continue to use the cost-recovery method for tax purposes. For years prior to 2022, pretax income under the two
Cherokee Construction Company changed from the cost-recovery to the percentage-of-completion method of accounting for long-term construction contracts during 2022. For tax purposes, the company employs the cost recovery method and will continue this approach in the future. The appropriate
Holtzman Company is in the process of preparing its financial statements for 2022. Assume that no entries for depreciation have been recorded in 2022. The following information related to depreciation of fixed assets is provided to you.1. Holtzman purchased equipment on January 2, 2019, for
Joblonsky Jewelry has recently hired a new independent auditor, Karen Ogleby, who says she wants “to get everything straightened out.” Consequently, she has proposed the following accounting changes in connection with Joblonsky’s 2022 financial statements.1. At December 31, 2021, the client
The financial statements of M&S (GBR) are presented in Appendix A. The complete annual report, including the notes to the financial statements, is available online.InstructionsRefer to M&S’s financial statements and the accompanying notes to answer the following questions.a. Were there
As part of the year-end accounting process and review of operating policies, Cullen Group is considering changing from the straight-line method to an accelerated method when accounting for its equipment. Your supervisor wonders how the company will report this change. It has been a few years since
Refer to the accounting change by Wertz Construction in BE22.1. Wertz has a profit sharing plan, which pays all employees a bonus at year-end based on 1% of pretax income. Compute the indirect effect of Wertz’s change in accounting policy that will be reported in the 2022 income statement,
Whitman SA began operations on January 1, 2019, and uses the average-cost method of pricing inventory. Management is contemplating a change in inventory methods for 2022. The following information is available for the years 2019–2021.Instructionsa. Prepare the journal entry necessary to record a
Botticelli SpA was organized in late 2019 to manufacture and sell hosiery. At the end of its fourth year of operation, the company has been fairly successful, as indicated by the following reported net incomes.The company has decided to expand operations and has applied for a sizable bank loan. The
Shannon AG, changed from the average-cost to the FIFO cost flow assumption in 2022. The increase in the prior year’s income before taxes is €1,200,000. The tax rate is 40%. Prepare Shannon’s 2022 journal entry to record the change in accounting policy.
Ramirez Co. decides at the beginning of 2022 to adopt the FIFO method of inventory valuation. Ramirez has used the average-cost method for financial reporting since its inception on January 1, 2020, and has maintained records adequate to apply the FIFO method retrospectively. Ramirez concluded that
Chen Group is in the process of adjusting and correcting its books at the end of 2022. In reviewing its records, the following information is compiled.1. Chen has failed to accrue sales commissions payable at the end of each of the last 2 years, as follows.December 31, 2021 .......
The following are three independent, unrelated sets of facts relating to accounting changes. Situation 1: Sanford Company is in the process of having its first audit. The company has used the cash basis of accounting for revenue recognition. Sanford president, B. J. Jimenez, is willing to
Tedesco Company changed depreciation methods in 2022 from doubledeclining balance to straight-line. Depreciation prior to 2022 under double-declining-balance was $90,000, whereas straight-line depreciation prior to 2022 would have been $50,000. Tedesco’s depreciable assets had a cost of $250,000,
Linden plc started operations on January 1, 2017, and has used the FIFO method of inventory valuation since its inception. In 2022, it decides to switch to the average-cost method. You are provided with the following information.Instructionsa. What is the beginning retained earnings balance at

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