Questions and Answers of Intermediate Accounting Volume 1

Respond to the specific questions in each of the two cases, below.Case A The following disclosure note appeared in the 31 December 20X5 financial statements of Dridell Corporation, a manufacturer of
The auditor has completed her work on the financial statements of Leslie Kwok Inc. (LKI) for the year ended 31 December 20X7. The auditor signed her audit opinion on 5 March 20X8; LKI’s board of
Northern Switching Ltd. (NSL) is a manufacturer of digital switching equipment and systems. The company has total assets of approximately $784 million. Each of the following events occurred after the
Hannam Co. decided to change from the declining balance method of depreciation to the straight line method effective 1 January 20X7. The following information was provided:The company has a 31
On 23 November 20X7, when engaged in preparing for the 20X7 fiscal year end, the chief accountant of Harper Ltd. discovered two accounting errors in the 20X5 statements:a. A government ministry had
Akerman Techonology Corp. is preparing its SFP at 31 December 20X5. The following items are under consideration:a. Rent received in advance for the first quarter of 20X6, $20,000.b. Note payable,
Consider each of the following separate situations that arose in 20X1:a. Corporation G invested $70,000 in corporate bonds as a short term investment. The year end 20X1 market value of the bonds is
Identify if the following related party transactions in ASPE would be measured at the exchange amount (EA) or the carrying value (CV). The company sells computer equipment and software. EA CV 1.
1. ASPE and IFRS both require note disclosure for related party transactions.2. Future accounting policy changes are required note disclosure in IFRS only.3. Both ASPE and IFRS require accrual of
Each of the following events occurred after year-end and before the financial statements were issued:Required:Identify whether each event is an adjusting or a nonadjusting subsequent event. Adjusting
Determine which segments are reportable segments. Segment Revenue Profit Assets $ 80,000 $ 7,000 $ 30,000 A. B 350,000 3,000 120,000 340,000 17,000 108,000 D 100,000 3,000 22,000 135,000 9,000 60,000
1. A contingent liability that is probable is accrued on the financial statements.2. All accounting policy changes are retrospective adjustments.3. All related party transactions are disclosed in the
A. Voluntary accounting policy changeB. Involuntary accounting policy changeC. Change in accounting estimateD. Correction of an errorE. None of the above_____ 1. This is the first year the company
Paint Inc. (PI) has been operating as a family owned private company for the past 30 years. It started as a company manufacturing paint for sale in its own retail stores in Ontario. PI is known as a
You have been asked to prepare the financial statements for Neema Corp., a private Canadian corporation, for the year ended 31 December 20X4. The company began operations in early 20X4. The following
The following transactions have been encountered in practice. Assume that all amounts are material.a. A company decided to put the assets of one product line up for sale (intended to be sold within
Marcella Ltd. (ML) is a Northern Ontario based manufacturer of building materials. In the fourth quarter of 20X1, ML’s board of directors agreed with senior management that the company needed to
Loschiavo Ltd. (LL) has a 31 December fiscal year end. LL disposed of its Computer Programming Group (CPG) on 31 July 20X3. CPG had a net loss (after taxes) of $18,850,000 in 20X3, to the date of
On 1 August 20X5, Graham Ltd. decided to discontinue the operations of its services division. The services division is not a separate corporation, but it is a major operating segment, financially and
Black Media Inc. owns and operates a large number of newspapers across Canada. On 1 October 20X5, the board of directors voted unanimously to dispose of one of those newspapers, The Daily Con. Black
Manufacturing Ltd. (ML) discontinued use of three assets during 20X2:a. A specialized piece of equipment that originally cost $200,000 when purchased was shut down and placed in the far corner of the
Golf Inc. is a public company that has been in business since the 1980s. It owns and operates over 40 golf courses across Canada. It also owns and operates pro shops and dining facilities. On 1
Excerpts from the statements of comprehensive income for Wild Adventures Ltd. for the years 20X2 through 20X4 are as follows:Required:1. Wild has experienced volatile earnings over the three year
Identify each of the following statements as true or false.1. ASPE and IFRS both require comprehensive income.2. Held-for-sale assets are classified as current assets in ASPE and noncurrent assets in
Identify each of the following statements as true or false.1. All companies are required to provide basic and diluted EPS calculations.2. Public companies are required to provide EPS calculations
On 1 April 2015 Ski Inc. (SI) announced that it was going to sell its two ski clubs that were in Western Canada. The western market is very competitive for many ski clubs. SI has decided to focus
Identify whether the following items in comprehensive income will be reclassified to net income or not reclassified. Reclassifled Not Reclassifled 1. FVOCI financial asset 2. Foreign currency
Identify whether the following items belong in comprehensive income or net income. Comprehenslve Income Net Income 1. Unrealized gain FVOCI financial asset 2. Loss on sale of machinery 3. Interest
Hospitality Inc. (HI) is a holding company with wholly owned interests in the travel and entertainment industry. It is listed on the Toronto Stock Exchange and is subject to the reporting
International Corp. (IC) is a large Canadian company that has operations around the world that are very diverse. In the past few years they have acquired a number of different companies in a variety
In ASPE if the contingent loss (lawsuit) is reasonably measurable and likely to be incurred, the amount is accrued in the financial statements. If the amount is not measurable or is not likely to be
The bookkeeper for Branford Ltd. has drawn up a financial statement on 31 December 20X1. Some of the items on the draft balance sheet are as follows:Upon further inquiry, you discover that at 31
Indicate if each of the following items would be recognized in TelCan Ltd.’s financial statements for 20X3 and, if so, what elements would be recognized. For any items that would not be recognized,
Identify the level in the hierarchy that would be most appropriate for measuring the following items using the fair value hierarchy:Required:Identify the most appropriate value of the hierarchy to
Identify the level in the hierarchy that would be most appropriate for measuring the following items using the fair-value hierarchy:Required:Identify the most appropriate value of the hierarchy to
Which measurement method would be most appropriate for the following items: historical cost, fair value, lower of cost and net realizable value, net realizable value, or present value?1. Inventory2.
Which measurement method would be most appropriate for the following items: historical cost, fair value, lower of cost and net realizable value, net realizable value, or present value?1. Inventory2.
You have recently being asked to participate in a symposium at an accounting conference. One of the sessions at the conference is discussing concerns with the conceptual framework. You have been
Entities may have a variety of corporate reporting objectives specific to their circumstances, such as:a. Assessing and predicting cash flows;b. Minimizing current income taxes;c. Complying with
The CPA Canada Handbook in both Part I and Part II sets out the objectives of general purpose financial statements, but companies and their managers have objectives that relate to their specific
A manager of a medium-sized private company recently asked for your advice on the following:I’m very confused about whether I should continue to use ASPE or change to IFRS. I need to make a
Indicate whether each statement is required in IFRS or in ASPE, or in both. IFRS ASPE Both 1. Statement of Financial Position 2. Statement of Comprehensive Income 3. Income Statement 4. Statement of
Match the user with the most likely objective.User1. Bank2. Small private company3. Not-for-profit organization4. Management5. Shareholders with agreementObjectiveA. StewardshipB. Income tax
Indicate whether each statement is true or false. If the statement is false, provide a brief explanation of why it is false.1. A disclosed basis of accounting is GAAP.2. An audit opinion can be
Indicate whether the use of IFRS or ASPE is required or more likely for the following entities: IFRS ASPE 1. Privateļbank 2. Private company many shareholders 3. Private company major competitor
Indicate whether the use of IFRS or ASPE is required or more likely for the following entities: IFRS ASPE 1. Bank 2. Private company two shareholders 3. Public company 4. Mutual fund 5. Private
The language of accounting is littered with acronyms, abbreviations for common organizations or phrases. Match the phrase or organization on the left with its abbreviation. Phrase or Organizatlon
James North and Leanne South have operated a small gardening centre and landscaping business for the past 10 years. Their business is incorporated as a private corporation. Since there is no market

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