Questions and Answers of Intermediate Accounting 11th

Ramirez Company has an investment in 6%, 10-year bonds of Soto Company. The investment was originally purchased at par for $100 in 2022, and it is accounted for at amortized cost. Early in 2023,
The following information relates to Cortez Corp. for 2023: net income of $672,683; unrealized loss of $20,830 related to investments accounted for at FV-OCI during the year; and accumulated other
You are a junior investment associate at Number One National Bank, a top-tier Canadian bank. It is your first day on the job and your manager asks you the following question regarding investments:
Environmental, social, and governance issues are becoming part of the core values of many companies. With corporate investments geared toward ESG, ESG bonds are increasing in popularity. Explain what
Information for 2023 follows for Rolling Thunder Corp.:Rolling Thunder decided to discontinue its entire wholesale division (a major line of business) and to keep its manufacturing division. On
Income statement information for Flett Tire Repair Corporation for the year 2023 follows:The effective tax rate on all income is 25%, and Flett follows ASPE.Instructions a. Prepare a multiple-step
The following information was taken from the records of Biscay Inc. for the year 2023:The following additional information was also available: income tax applicable to income from continuing
The trial balance follows for Thompson Corporation at December 31, 2023:A physical count of inventory on December 31 showed that there was $64,000 of inventory on hand.InstructionsPrepare a condensed
Two accountants, Yuan Tsui and Sergio Aragon, are arguing about the merits of presenting an income statement in the multiple-step versus the single-step format. The discussion involves the following
Stakeholders are increasingly concerned with environmental, social, and governance (ESG) issues. If you were given authority to develop financial reporting standards, what 3 ESG factors would you
During the audit of MBL Limited, a large manufacturing company, you come across a large piece of specialized equipment that is completely destroyed by fire. Upon further inquiry and investigation,
The following are selected ledger accounts of Holland Rose Corporation at December 31, 2023:Holland Rose’s effective tax rate on all items is 25%. A physical inventory shows that the ending
Given the legalization of cannabis in certain parts of North America, there has been growth in this business sector. CPAB inspected a total of 42 cannabis audit files over 2019–2020 and found
Videohound Video Company, a sole proprietorship, had the following information for 2023:InstructionsCalculate the net income for 2023. Cash balance, January 1 Accounts receivable, January
The equity accounts of Good Karma Corp. as at January 1, 2023, were as follows:During 2023, the following transactions took place:InstructionsPrepare a statement of changes in equity for the year
Explain the impact of digitization of information on the accounting profession.
What challenges does big data present to auditors providing an opinion on a company's financial statements?
Big data is becoming foundational to real-time business decision-making, thus increasing the reliance on data governance. What is data governance and how does it impact the integrity of data?
The following balances were taken from the books of Quality Fabrication Limited on December 31, 2023:InstructionsPrepare a multiple-step income statement showing expenses by function. Assume that
Assume that Elrond Inc. decided to sell DemandTV Ltd., a subsidiary, on September 30, 2023. There is a formal plan to dispose of the business component, and the sale qualifies for discontinued
Alex and Tim are having an argument about the meaning of prudence as it concerns the conceptual framework. Alex says it means being conservative, and Tim says it means being neutral. Who is right?
Data analytics has a subset of four types of analytics that were discussed in this chapter. Discuss and provide an example of each type of analytics. Rank them in order of basic value and insight to
Zambrano Corporation, a private company, began operations on January 1, 2020. During its first three years of operations, Zambrano reported net income and declared dividends as
Greenwell Corporation produces honey on a farm in Lincoln, Ontario, and distributes it across Canada. After its first year of operations in 2022, it recorded gross revenue of $2,608,731. Greenwell
Reach Out Card Company Limited reported the following for 2023: sales revenue, $1.2 million; cost of goods sold, $750,000; selling and administrative expenses, $320,000; gain on disposal of building,
Stock analysts interview management in order to assess if there is any bias in the way management views the way in which financial information is created and shared with potential users. Provide an
Kilian Group Ltd., a public company following IFRS, is performing an assessment as to whether or not goodwill is impaired. The majority of the goodwill was recorded following a merger in the previous
Sierra Corporation had sales revenue of $5,850,000 and investment revenue of $227,000 for the year ended December 31, 2023. Other items pertaining to 2023 were as follows:Sierra had 100,000 common
Two processes have resulted in very large amounts of data (big data) becoming available. Identify these two processes and discuss the difference between them.
Companies can leverage big data in business decision-making. While this may provide opportunities to companies, there are many challenges as well. Identify the five Vs of big data and discuss the
The financial records of Geneva Inc. were destroyed by fire at the end of 2023. Fortunately, the controller had kept the following statistical data related to the income statement: 1. The
A framework for analysis and decision-making can be used to make any decision. The framework introduced in the Case Primer includes three steps. Discuss each step and identify various software that
The shareholders’ equity section of Cadmium Corporation as at December 31, 2023, follows:Net income of $24 million for 2023 reflects a total effective tax rate of 25%. Included in the net income
Dr. Emma Armstrong, M.D., maintains the accounting records of the Blood Sugar Clinic on a cash basis. During 2023, Dr. Armstrong collected $146,000 in revenues and paid $55,470 in expenses. At
At December 31, 2023, Tres Hombres Corporation had the following shares outstanding:InstructionsCalculate earnings per share information as it should appear in the financial statements of Tres
Rainy Day Umbrella Corporation had the following balances at December 31, 2022 (all amounts in thousands): preferred shares, $3,375; common shares, $8,903; contributed surplus, $3,744; retained
Delray Inc. follows IFRS and has the following amounts for the year ended December 31, 2023: gain on disposal of FV-NI investments (before tax), $15,000; loss from operation of discontinued division
The Blue Collar Corporation had income from continuing operations of $12.6 million in 2023. During 2023, it disposed of its restaurant division at a loss of $89,000 (net of tax of $38,000). Before
Mega Inc.’s manufacturing division lost $100,000 (net of tax) for the year ended December 31, 2023, and Mega estimates that it can sell the division at a loss of $200,000 (net of tax). The division
Big and Rich Corporation had income from operations before tax for 2023 of $4.4 million. In addition, it suffered an unusual and infrequent loss of $1,060,000 from a tornado. Of this amount, $300,000
The comparative statement of financial position of Sensify Corporation as at December 31, 2023, follows:Net income of $37,000 was reported and dividends of $13,000 were declared and paid in 2023. New
Parfait Limited reported the following for 2023: sales revenue, $900,000; cost of sales, $750,000; operating expenses, $100,000; and unrealized gain on FV-OCI investments, $60,000. The company had
In its first year of operations, 2023, Strats Corp. invoiced $172,000 in service revenue. Of that amount, $18,000 was still owing from customers at the end of year. In 2023, Strats incurred various
In 2023, Renato Corp. had cash receipts from customers of $152,000 and cash payments for operating expenses of $97,000. At January 1, 2023, accounts receivable were $13,000 and total prepaid expenses
Global Corporation prepares financial statements in accordance with ASPE. At January 1, 2023, the company had retained earnings of $1,038,000. In 2023, net income was $335,000, and cash dividends of
Miller Ltd. engaged in the following cash transactions during 2023:Miller prepares financial statements in accordance with ASPE. Calculate the net cash provided (used) by investing activities.
Neon Limited had 40,000 common shares on January 1, 2023. On April 1, 8,000 shares were repurchased. On August 31, 12,000 shares were issued. Calculate the number of shares outstanding at December
In 2023, I & T Corporation reported net income of $8.6 million, and declared and paid preferred share dividends of $3.2 million. During 2023, I & T had a weighted average of 900,000 common
In 2022, QSS Corporation reported net income of $7.5 million, and declared and paid preferred share dividends of $1.5 million. In 2023, it reported net income of $9 million, and declared and paid
Kahnert Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2023: Cash $3,000; Treasury Bills (part of cash equivalents with original maturity of three
The following accounts are in Tan Limited’s December 31, 2023 trial balance: Prepaid Rent $1,600; FV-OCI Investments $62,000; Unearned Revenue $7,000; Land Held for Speculation $119,000; and
Lowell Corp.’s December 31, 2023 trial balance includes the following accounts: Inventory $120,000; Buildings $207,000; Accumulated Depreciation—Equipment $19,000; Equipment $190,000; Land Held
Pine Corporation’s adjusted trial balance contained the following asset accounts at December 31, 2023: Prepaid Rent $22,000; Goodwill $50,000; Franchise Fees Receivable $2,000; Intangible
Southern Corporation’s adjusted trial balance contained the following accounts at December 31, 2023: Retained Earnings $120,000; Common Shares $700,000; Bonds Payable $100,000; Contributed Surplus
Agnu Inc. shows on its statement of financial position its investments accounted for as FV-OCI investments. At its year end of May 31, 2022, the balance in the FV OCI Investments account was $96,000
Newvo Ltd. shows a patent on its statement of financial position. At its year end of October 31, 2022, the caption read Patent (net) $66,000, and at its year end of October 31, 2023, the caption read
Healey Corporation’s statement of financial position as at December 31, 2023, showed the following amounts: Cash $100; Accounts Receivable $600; Land $1,000; Accounts Payable $300; Bonds Payable
Ames Company reported 2023 net income of $151,000. During 2023, accounts receivable increased by $15,000 and accounts payable increased by $9,000. Depreciation expense was $44,000. Prepare the cash
On July 10, 2023, Amodt Ltd. sold GPS systems to retailers on account for a selling price of $700,000 (cost $560,000). Amodt grants the right to return systems that do not sell in three months
On May 10, 2023, Cosmo Co. enters into a contract to deliver a product to Greig Inc. on June 15, 2023. Greig agrees to pay the full price of $2,000 on July 15, 2023. The cost of goods is $1,300.
Talarczyk Company sold 10,000 heavy-duty spreaders on July 1, 2023, at a total price of $1 million, with a warranty guarantee that the product was free of any defects. The cost of the spreaders sold
How can big data be used to decrease measurement uncertainty within revenue recognition? Explain.
Explain, with examples, what type of big data can be used to decrease measurement uncertainty for (a) Product sales returns (b) Warranty expense
Stowe Enterprises owns the following assets at December 31, 2023:If Stowe follows ASPE and has adopted the policy to include all possible cash and cash equivalents, what amount should be reported as
Inexperienced construction company Martin Corp. signed a risky non-cancellable contract to build a research facility at a fixed contract amount of $2 million. The work began in early 2023 and Martin
Zehra Inc. had gift card sales in 2023 for $100,000. On December 31, 2023, its year end, $30,000 of these gift cards were not redeemed. Zehra does not expire gift cards. (a) Explain whether or
Telephone Sellers Inc. sells prepaid phone cards to customers. Telephone Sellers then pays the telecommunications company, TeleExpress, for the actual use of its telephone lines related to the
During February 2023, Master Massage Ltd. sells $10,000 of gift cards for Valentine’s Day gifts. From reliable past experience, management estimates that 10% of the gift cards sold will not be
On June 1, 2023, Mills Company sells $200,000 of shelving units to a local retailer, ShopBarb, which is planning to expand its stores in the area. Under the agreement, ShopBarb asks Mills to retain
On May 1, 2023, Mount Company enters into a contract to transfer a product to Eric Company on September 30, 2023. It is agreed that Eric will pay the full price of $25,000 in advance on June 15,
Turner Inc. began work on a $7-million non-cancellable contract in 2023 to construct an office building. During 2023, Turner incurred costs of $1.7 million, billed its customers for $1.2 million
Battle Tank Limited had net sales in 2023 of $2.3 million. At December 31, 2023, before adjusting entries, the balances in selected accounts were as follows: Accounts Receivable $350,000 debit;
The financial statements of winery Andrew Peller Limited reported net sales of $382,306 thousand for its year ended March 31, 2020. Accounts receivable were $34,096 thousand at March 31, 2020, and
On October 1, 2023, Alpha Inc. assigns $3 million of its accounts receivable to Alberta Provincial Bank as collateral for a $2.6-million loan evidenced by a note. The bank’s charges are as follows:
Angus Enterprises Ltd. reported cost of goods sold for 2023 of $2.5 million and retained earnings of $4.0 million at December 31, 2023. Angus later discovered that its ending inventories at December
You are an inventory finance analyst at a home improvement retailer, Renovators Corp. For the year ended December 31, 2023, you are responsible for determining the net realizable value of power
In November 2023, in an effort to be more sustainable, a corporate policy was implemented by a big-box retailer, Value Corp., banning plastic bags in all of its 545 store locations. Plastic Corp.,
Delicious Foods Inc. reported inventory of $5,706 million at the end of its 2023 fiscal year and $5,310 million at the end of its 2022 fiscal year. It reported cost of goods sold of $35,350 million
Samtech Manufacturing purchased land and a building for $4 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and
Refer to the information in BE 10–6. Now assume that instead of purchasing the patent, Advanced Technologies spent $1,200,000 to develop the patent internally, consisting of personnel ($800,000),
A company has the following information in its records. Certain data have been intentionally omitted ($ in thousands).Required:Determine the missing numbers. Show computations where appropriate.
National Distributing Company uses a periodic inventory system to track its merchandise inventory and the gross profit method to estimate ending inventory and cost of goods sold for interim periods.
Bosco Company adopted the dollar-value LIFO retail method at the beginning of 2024. Information for 2024 and 2025 is as follows, with certain data intentionally omitted:Required:Determine the missing
On January 1, 2024, the general ledger of Big Blast Fireworks included the following account balances:The $30,000 beginning balance of inventory consists of 300 units, each costing $100. During
On March 1, 2024, Beldon Corporation purchased land as a factory site for $60,000. An old building on the property was demolished, and construction began on a new building that was completed on
On January 1, 2024, the Blackstone Corporation purchased a tract of land (site number 11) with a building for $600,000. Additionally, Blackstone paid a real estate broker’s commission of $36,000,
In 2024, the internal auditors of Development Technologies, Inc., discovered that a $4 million purchase of merchandise in 2024 was recorded in 2023 instead. The physical inventory count at the end of
In 2024, the controller of Sytec Corporation discovered that $42,000 of inventory purchases were incorrectly charged to advertising expense in 2023. In addition, the 2023 year-end inventory count
On October 6, 2024, the Elgin Corporation signed a purchase commitment to purchase inventory for $60,000 on or before March 31, 2025. The company’s fiscal year-end is December 31. The contract was
In March 2024, the Metal Tool Company signed two purchase commitments. The first commitment requires Metal to purchase inventory for $100,000 by June 15, 2024. The second commitment requires the
Target Corporation prepares its financial statements according to U.S. GAAP. Target’s financial statements and disclosure notes for the year ended February 1, 2020, are available in Connect. This
Your client, Hazelton Mining, recently entered into an agreement to obtain the rights to operate a copper mine in West Virginia for $15 million. Hazelton incurred development costs of $6 million in
Tristar Production Company began operations on September 1, 2024. Listed below are a number of transactions that occurred during its first four months of operations.1. On September 1, the company
The Horstmeyer Corporation commenced operations early in 2024. A number of expenditures were made during 2024 that were debited to one account called intangible asset. A recap of the $144,000 balance
Norfolk Southern Corporation, one of the nation’s premier transportation companies, reported the following amounts in the asset section of its balance sheets:In addition, information from the 2019
Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,000,000 in 2024 for the mining site and spent an additional $600,000 to prepare the mine for extraction of the
Air France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the
Darden Restaurants, Inc., is a full-service restaurant company, including brands such as Olive Garden, Long- Horn Steakhouse, and Bahama Breeze. The company’s fixed-asset turnover ratio, using the
Falcon Waste Management purchased land and a warehouse for $600,000. In addition to the purchase price, Falcon made the following expenditures related to the acquisition: broker’s commission,
Chilton Peripherals manufactures printers, scanners, and other computer peripheral equipment. In the past, the company purchased equipment used in manufacturing from an outside vendor. In March 2024,

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