Questions and Answers of Intermediate Accounting Volume 1

Cuomo Mining Corporation, a public company whose stock trades on the Toronto Stock Exchange, uses IFRS. The vice-president of finance has asked you, the assistant controller, to prepare the
McCormick Ltd., a public company following IFRS 16, recorded a right-of-use asset and lease liability at $150,000 on May 1, 2020. The interest rate is 10%. McCormick made the first lease payment of
Assume the same data as in E20.6 for LeBlanc Limited except that the $7,000 residual value is guaranteed. Instructions Answer the following, rounding all numbers to the nearest
Oakridge Leasing Corporation signs an agreement on January 1, 2020, to lease equipment to LeBlanc Limited. Oakridge and LeBlanc follow ASPE. The following information relates to the agreement.1. The
Synergetics Inc. leased a new crane to Gumo Construction Inc. under a six-year, non-cancellable contract starting February 1, 2020. The lease terms require payments of $21,500 each February 1,
On January 1, 2021, Xu Ltd., which uses IFRS 16, entered into an eight-year lease agreement for a conveyor machine. Annual lease payments are $28,500 at the beginning of each lease year, which ends
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
LePage Manufacturing Ltd. agrees to lease equipment to Labonté Ltée. on July 15, 2020. LePage follows ASPE and Labonté is a public company following IFRS 16. The following information relates to
Chorus Aviation Inc. is a Canadian aviation holding company that provides, through Jazz Aviation LP, a “significant part of Air Canada’s domestic and transborder network.” Chorus indicates in
Turcotte Limited, a public company following IFRS 16, decided to upgrade the coffee machines in all of its office locations. Turcotte leased 50 machines from Coffee Tyme Ltd. on July 1, 2020. (To
Lagace Ltd. entered into a lease on June 1, 2020. The lease term is six years and requires annual rental payments of $30,000 at the beginning of each year. Lagace’s incremental borrowing rate is 8%
Access the annual financial statements, including the accompanying notes, of Loblaw Companies Limited for its 52 weeks ended December 30, 2017. These can be found on SEDAR (www.sedar.com) or the
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
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
The following is partial information related to Siri Ltd.'s non-pension, post-retirement health-care benefit plan at December 31, 2020: Defined post-retirement benefit obligation, accounting
Refer to the information in E19.16 and assume Opsco Corp. applies IFRS. Instructions Complete a post-retirement work sheet for 2020, and prepare all required journal entries related to the
Refer to BE19.16 and Saver Corporation's one-person defined benefit pension plan. If the change in the January 1, 2020 defined benefit obligation had been the result of an actuarial revaluation
Opsco Corp. provides the following information about its post-retirement health-care benefit plan for the year 2020: Instructions a. Assuming Opsco follows IFRS, calculate the
Saver Corporation ended its previous fiscal year with a defined benefit obligation of $137,888 and plan assets of $140,000. On January 1, 2020, the company amended its one-person defined benefit
The following facts apply to the pension plan of Yorke Inc. for the year 2020. Yorke applies ASPE. Instructions a. Using a work sheet, calculate pension expense for the year 2020, and
Legacy Corporation has the following information available concerning its post-retirement benefit plan for 2020: Current service
Rosek Inc. provides the following information related to its post-retirement health-care benefits for the year 2020: Rosek Inc. follows IFRS. Instructions a. Calculate the
Petra Ltd. is preparing its financial statements for its year ended December 31, 2020, and has just obtained an actuarial pension valuation as at its year-end date. Prior to the actuarial valuation,
Monday Corporation sponsors a defined benefit pension plan and reports under IFRS. On January 1, 2020, the company reported plan assets of $1,000 and a defined benefit obligation of $1,100 (all
Griseta Limited sponsors a defined benefit pension plan for its employees, which it accounts for under ASPE. The following data relate to the operation of the plan for the year 2020: 1. The actuarial
Refer to the data provided about Rui Corporation's pension plan in BE19.11. Prepare a pension work sheet for Rui Corporation for 2020 assuming the company applies ASPE. Data From BE19.11.At
Etienne Inc., a Canadian company traded on the Venture Exchange of the Toronto Stock Exchange, has sponsored a non-contributory defined benefit pension plan for its employees since 1992. Relevant
The following information is available for Antoine Corporation's pension plan for the 2020 fiscal year: On January 1, 2020, Antoine Corp. amended its pension plan, resulting in past service
At January 1, 2020, Rui Corporation had plan assets of $250,000 and a defined benefit obligation of the same amount based on projected costs. During 2020, the current service cost was $27,500, the
Refer to the data in P19.9, except now assume Dela Corporation reports under IFRS. Depending on what your instructor assigns, do either parts (a), (b), (c), and (e) or parts (d) and (e). Data
The following information is available for Huntley Corporation's pension plan for the year 2020: Instructions a. Calculate pension expense for the year 2020, and provide the entries to
Refer to the data for Duster Corporation's defined benefit pension plan in BE19.9. Now assume that the company follows ASPE instead of IFRS. Determine the 2020 effect of the pension plan on pension
Dela Corporation initiated a defined benefit pension plan for its 50 employees on January 1, 2020. The insurance company that administers the pension plan provides the following information for the
The following defined benefit pension data of Dahl Corp. apply to the year 2020: The company applies ASPE and has made an accounting policy choice to base its actuarial valuation of the DBO on
Duster Corporation is a private company with a defined benefit pension plan. The following information is available for Duster Corporation for 2020: Opening balance,
Bouter Corporation Limited (BCL) began operations in 1996 and in 2006 adopted a defined benefit pension plan for its employees. By January 1, 2020, the defined benefit obligation was
Jonquière Corporation provides the following information about its defined benefit pension plan (in hundreds of thousands of dollars) for 2020: At the end of the year, Jonquière revised the
Manon Corporation applies ASPE and sponsors a defined benefit pension plan. The following pension plan information is available for 2020 and 2021: The pension fund paid out benefits in each
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
At December 31, 2020, Glover Corporation provided you with the following information: Defined benefit obligation, December 31, 2020........................................$3,400,000 Plan
Qui Importers provides the following pension plan information: Fair value of pension plan assets, January 1, 2020........$1,438,750 Fair value of pension plan assets, December 31, 2020
Refer to the information for Maya Corp. in BE19.4, and provide a continuity schedule for the plan assets for the year. Is the plan in a surplus or a deficit position at the end of the year? Data
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
For Castor Corporation, year-end plan assets were $1,753,000. At the beginning of the year, plan assets were $1,359,000. During the year, contributions to the pension fund were $170,000, while
Maya Corp. reports the following information (in hundreds of thousands of dollars) to you about its defined benefit pension plan for 2020: Provide a continuity schedule for the DBO for the year.
Potash Corporation of Saskatchewan Inc., Loblaw Companies Limited, and Air Canada are all Canadian companies with defined benefit plans as at December 31, 2017. Visit www.sedar.com to access
Newfoundland University recently signed a contract with the bargaining unit that represents full-time professors. The contract agreement starts on April 1, 2019, the start of the university's fiscal
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
Ditek Corp. provides a defined contribution pension plan for its employees. The plan requires Ditek to contribute 5% of employees' gross pay to a fund trustee each year. Ditek's total payroll for
Scott Enterprises Inc. sponsors a defined benefit plan for its 500 employees. On December 31, 2020, the company's actuary provided the following information related to the plan: defined benefit
The Outdoor Life Ltd. (TOLL) manufactures outdoor furniture. Management is concerned about the cost of its employee benefits plans. Your manager has asked you to analyze the cost of compensation and
BCE Inc.'s accounting policy note and its note disclosures relating to the company's pension and other postemployment benefits for the year ended December 31, 2017 are set out in the
Delmar Manufacturing Inc. is a manufacturer of electronics. It has been in operation for over 25 years under ownership of the same two private shareholders. It has always offered its employees a very
RWL Limited provides a long-term disability program for its employees through an insurance company. For an annual premium of $20,000, the insurance company is responsible for providing long-term
Kea Limited provides a defined contribution pension plan for its employees. The plan requires the company to deduct 5% of each employee's gross pay for each payroll period as the employee
As the new accountant for Carly's Pet Express Inc., a line of pet boutiques, you are developing the financial statement disclosures for the 2020 financial statement note on income taxes. The company
Refer to the information in BE18.15 for Zdon Inc. Assume that the company follows the taxes payable method of accounting for income taxes under ASPE. During the year, Zdon Inc. made tax instalment
Refer to the information in BE18.11 for Henry Limited. Assume that the company reports under ASPE and that the taxes payable method of accounting is used for income tax. Instructionsa. Prepare
Geoff Corp.'s operations in 2020 had mixed results. One division, Vincenti Group, again failed to earn income at a rate that was high enough to justify its continued operation, and management
Refer to the information provided about Roux Corp. in E18.28. Instructions a. Assuming that it is more likely than not that $25,000 of the deferred tax asset will not be realized, prepare
Roux Corp. had a Deferred Tax Asset account with a balance of $81,000 at the end of 2019 due to a single temporary difference of $270,000 related to warranty liability accruals. At the end of 2020,
Refer to the information for Riley Inc. in E18.26. Instructions a. Assume that Riley Inc. uses a valuation allowance to account for deferred tax assets, and also that it is more likely than
Riley Inc. reports the following pre-tax incomes (losses) for both financial reporting purposes and tax purposes: The tax rates listed were all enacted by the beginning of 2018. Riley reports
The accounting income (loss) figures for Farah Corporation are as
Alliance Inc. reports the following incomes (losses) for both book and tax purposes (assume the carryback provision is used where possible): The tax rates listed were all enacted by the
Sonia Corporation has historically followed ASPE, but is considering a change to IFRS. It has temporary differences at December 31, 2020, that result in the following SFP future income tax
At the end of 2019, Valerie Corporation reported a deferred tax liability of $41,000. At the end of 2020, the company had $241,000 of temporary differences related to property, plant, and equipment.
Weiss Inc. reported income from continuing operations of $87,000 and a loss from discontinued operations of $16,000 in 2020, all before income taxes. All items are fully taxable and deductible for
Adelphi Corp. in its first year of operations has the following differences between its carrying amounts and the tax bases of its assets and liabilities at the end of 2020. It is estimated that
Sandeep Corporation had income before income tax of $230,000 in 2020. Sandeep's current tax expense is $43,000, and deferred tax expense is $27,000.(a) Prepare Sandeep's 2020 income statement,
Four independent situations follow: 1. On March 1, 2020, Wilkie Inc. issued $4 million of 9% bonds at 103 plus accrued interest. The bonds are dated January 1, 2020, and pay interest
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
Yen Inc.'s only temporary difference at the beginning and end of 2020 is caused by a $4.8-million deferred gain for tax purposes on an instalment sale of a plant asset. The related receivable (only
In 2020, Borovya Limited purchased shares of Gurvir Corp. at a cost of $52,000. This was the first time the company had ever acquired an investment to be accounted for at fair value through other
At December 31, 2020, Tapper Corporation has a deferred tax asset of $420,000. After a careful review of all available evidence, it is determined that it is more likely than not that $85,000 of this
Use the information for Jenny Corporation in E18.16. Assume that the company reports accounting income of $155,000 in each of 2021 and 2022, and that there is no reversing difference other than the
Use the information for Kyle Inc. given in BE18.16. Assume now that Kyle earns taxable income of $25,000 in 2021 and that at the end of 2021 there is still too much uncertainty to recognize a
Refer to the information for Henry Limited in BE18.11. Following the year ended December 31, 2020, Henry continued to actively trade its securities investments until the end of its 2021 fiscal year,
Use the information for Jenny Corporation in E18.16. Assume that the company reports accounting income of $155,000 in each of 2021 and 2022 and that the warranty expenditures occurred as expected. No
Kyle Inc. incurred a net operating loss of $580,000 in 2020. Combined income for 2017, 2018, and 2019 was $460,000. The tax rate for all years is 30%. Prepare the journal entries to record the
Jenny Corporation recorded warranty accruals as at December 31, 2020, in the amount of $150,000. This reversing difference will cause deductible amounts of $50,000 in 2021, $35,000 in 2022, and
Roper Corporation had the following tax information: In 2020, Roper suffered a net operating loss of $550,000, which it decided to carry back. The 2020 enacted tax rate is 25%. Prepare Roper's
Zdon Inc. reports accounting income of $105,000 for 2020, its first year of operations. The following items cause taxable income to be different than income reported on the financial
At December 31, 2019, 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 2020, new income tax
Use the information for Sorpon Corporation in E18.12. Assume that the company reports accounting income of $180,000 in each of 2021 and 2022, and that there are no reversing differences other than
Powell Corporation has a taxable temporary difference related to net book value versus UCC of $715,000 at December 31, 2020. This difference will reverse as follows: 2021, $53,000; 2022, $310,000;
Use the information for Sorpon Corporation in E18.12. Assume that the company reports accounting income of $180,000 in each of 2021 and 2022, and that there are no temporary differences other than
At December 31, 2019, Ambuir Corporation had a deferred tax liability of $35,000. At December 31, 2020, the deferred tax liability is $52,000. The corporation's 2020 current tax expense is $53,000.
Sorpon Corporation purchased equipment very late in 2020. Based on generous capital cost allowance rates provided in the Income Tax Act, Sorpon Corporation claimed CCA on its 2020 tax return but did
At December 31, 2019, Chai Inc. had a deferred tax asset of $40,000. At December 31, 2020, the deferred tax asset is $62,000. The corporation's 2020 current tax expense is $70,000. What amount should
Henry Limited had investments in securities on its SFP for the first time at the end of its fiscal year ended December 31, 2020. Henry reports under IFRS and its investments in securities are to be
At December 31, 2020, 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.)
Christina Inc. follows IFRS. Christina holds a variety of investments, some of which are accounted for at fair value through net income and some of which are accounted for at fair value through other
Using the information from BE18.5, and assuming that the $40,000 difference is the only difference between Mazur's accounting income and taxable income, prepare the journal entry(ies) to record the
Refer to E18.7 for Sayaka Tar and Gravel Ltd., and assume the same facts as in E18.8 for the fiscal year ended December 31, 2021, except that the enacted tax rate for 2022 and subsequent years was
At December 31, 2020, 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
Refer to E18.7 for Sayaka Tar and Gravel Ltd., and assume the same facts for the fiscal year ended December 31, 2020. For the second year of operations, Sayaka made progress on the construction of
Myers Corp. purchased depreciable assets costing $30,000 on January 2, 2020. For tax purposes, the company uses CCA in a class that has a 30% rate. For financial reporting purposes, the company uses
Sayaka Tar and Gravel Ltd. operates a road construction business. In its first year of operations, the company won a contract to build a road for the municipality of Cochrane West. It is estimated
Using the information from BE18.3, calculate the effective rate of income tax for Nilson Inc. for 2020. Also make a reconciliation from the statutory rate to the effective rate, using percentages.

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