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intermediate accounting
Intermediate Accounting Volume 1 12th Canadian edition Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy - Solutions
In early January 2019, Outkast Corporation applied for a trade name, incurring legal costs of $16,000. In January 2020, Outkast incurred $7,800 of legal fees in a successful defense of its trade name. Instructionsa. Compute 2019 amortization, 12/31/19 book value, 2020 amortization, and
Carter Company has provided information on intangible assets as follows.A patent was purchased from Ford Company for $2,000,000 on January 1, 2019. Carter estimated the remaining useful life of the patent to be 10 years. The patent was carried in Ford’s accounting records at a net book value of
Romo Company spent $190,000 developing a new process, $45,000 in legal fees to obtain a patent, and $91,000 to market the process that was patented, all in the year 2020. How should these costs be accounted for in 2020?
Nieland Industries had one patent recorded on its books as of January 1, 2020. This patent had a book value of $288,000 and a remaining useful life of 8 years. During 2020, Nieland incurred research and development costs of $96,000 and brought a patent infringement suit against a competitor. On
During 2016, Winston Corporation spent $170,000 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2016, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $18,000 related to the
Sinise Industries acquired two copyrights during 2020. One copyright related to a textbook that was developed internally at a cost of $9,900. This textbook is estimated to have a useful life of 3 years from September 1, 2020, the date it was published. The second copyright (a history research
Tones Industries has the following patents on its December 31, 2019, balance sheet. The following events occurred during the year ended December 31, 2020. 1. Research and development costs of $245,700 were incurred during the year. 2. Patent D was purchased on July 1 for $36,480. This patent has
Margaret Avery Company from time to time embarks on a research program when a special project seems to off er possibilities. In 2018, the company expends $325,000 on a research project, but by the end of 2018, it is impossible to determine whether any benefit will be derived from it.a. What account
Wilson Corporation commenced operations in early 2020. The corporation incurred $60,000 of costs such as fees to underwriters, legal fees, state fees, and promotional expenditures during its formation. Prepare journal entries to record the $60,000 expenditure and 2020 amortization, if any.
Fred Moss, owner of Moss Interiors, is negotiating for the purchase of Zweifel Galleries. The following balance sheet of Zweifel is given in an abbreviated form as follows. Moss and Zweifel agree that: 1. Land is undervalued by $30,000. 2. Equipment is overvalued by $5,000. Zweifel agrees to sell
Treasure Land Corporation incurred the following costs in 2020.Cost of laboratory research aimed at discovery of new knowledge...........$120,000Cost of testing in search for product alternatives...........................................100,000Cost of engineering activity required to advance the
On July 1, 2020, Brigham Corporation purchased Young Company by paying $250,000 cash and issuing a $100,000 note payable to Steve Young. At July 1, 2020, the balance sheet of Young Company was as follows. The recorded amounts all approximate current values except for land (fair value of
The financial statements of M&S are presented in Appendix E. 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. Does
Presented below is information related to a copyright owned by Mare Company at December 31, 2020.Cost.....................................................$8,600,000Carrying amount.................................4,300,000Expected future net cash flows.........4,000,000Fair
Presented below is net asset information related to the Carlos Division of Santana, Inc. Carlos Division Net Assets
Angelou Corporation was organized in 2019 and began operations at the beginning of 2020. The company is involved in interior design consulting services. The following costs were incurred prior to the start of operations.Attorney fees in connection with organization of the
Price Company from time to time embarks on a research program when a special project seems to off er possibilities. In 2019, the company expends $325,000 on a research project, but by the end of 2019 it is impossible to determine whether any benefit will be derived from it.Instructionsa. What
Simon Company determines that its goodwill is impaired. It finds that the book value of its reporting unit is $1,490,000, including recorded goodwill of $400,000. The fair value of the identifiable assets of the reporting unit is $1,450,000. What is the amount of goodwill impaired?
Martz Inc. has a customer loyalty program that rewards a customer with one customer loyalty point for every $100 of purchases. Each point is redeemable for a $3 discount on any future purchases. On July 2, 2020, customers purchase products for $300,000 (with a cost of $171,000) and earn 3,000
Celic Inc. manufactures and sells computers that include an assurancetype warranty for 90 days. Celic offers an optional extended coverage plan under which it will repair or replace any defective part for three years from the expiration of the assurance-type warranty. Because the optional extended
Coca-Cola Company and PepsiCo are two of the best-known companies worldwide. Their 2017 financial statements can be found in the investor information sections of their company websites:www.coca-colacompany.com/investors/archives-annual-other-reports and www.pepsico.com/Investors/
Ritt Ranch & Farm is a distributor of ranch and farm equipment. Its products include small tools, power equipment for trench-digging and fencing, grain dryers, and barn winches. Most products are sold direct via its company Internet site. However, given some of its specialty products, select
Presented below are three independent revenue arrangements for Colbert Company. The company follows IFRS. Instructions Respond to the requirements related to each revenue arrangement. a. Colbert sells 3-D printer systems. Recently, Colbert provided a special promotion of zero-interest financing
On December 31, 2020, Grando Company sells production equipment to Fargo Inc. for $50,000. Grando includes a one-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2020. Grando estimates the prices to be $48,800 for
Access the financial statements of The Procter & Gamble Company (P&G) for its year ended June 30, 2017, from the company’s website (www.pginvestor.com).InstructionsRefer to P&G’s financial statements and the accompanying notes to answer the following questions.a. What business is
On May 10, 2020, Cosmo Co. enters into a contract to deliver a product to Greig Inc. on June 15, 2020. Greig agrees to pay the full price of $2,000 on July 15, 2020. The cost of goods is $1,300. Cosmo delivers the product to Greig on June 15, 2020, and receives payment on July 15, 2020. Prepare the
To increase sales, Letourneau Inc., a public company following IFRS, implemented a customer loyalty program that rewards a customer with one loyalty point for every $30 of merchandise purchased. Each point is redeemable for a $2.50 discount on any purchases of Letourneau merchandise in the next
Airbus SE, previously known as European Aeronautic Defence and Space Company or EADS NV, is incorporated in the Netherlands and its shares are traded in France, Germany, and Spain. Access the financial statements of Airbus SE for its year ended December 31, 2017, from the company’s website
Towers Inc. (TI) is a leader in delivering communications technology that powers global commerce and secures the world’s most critical information. Its shares trade on the Canadian and U.S. national stock exchanges. The company had been experiencing unprecedented growth, but then, in 2018,
Economy Appliance Co. manufactures low-price, no-frills appliances that are in great demand for rental units. Pricing and cost information on Economy’s main products are as follows.Item ........................................... Stand-Alone Selling Price (Cost)Refrigerator
Best Lawn Care Inc. (BLC) offers its customers two lawn maintenance services. One service is for a one-year maintenance plan at a cost of $200. Customers can earn a 5% discount from this price if they pay before BLC’s calendar fiscal year for maintenance services to be performed in the following
Access the financial statements of both BCE Inc. and TELUS Corporation for their years ended December 31, 2017, from either the companies’ websites or SEDAR (www.sedar.com). InstructionsUsing the financial statements for BCE and TELUS, answer the following.a. What types of revenue does BCE
Rouge Valley Golf and Health Club (RVGH) is a public company that operates eight clubs in a large city and offers one-year memberships. Membership gives members access to golf and the fitness centre including fitness classes. The members may use any of the eight facilities but must reserve golf
BBQ Master Company sells total outdoor barbecue solutions, providing gas and charcoal barbecues, accessories, and installation services for custom patio barbecue stations.InstructionsRespond to the requirements related to the following independent revenue arrangements for BBQ Master products and
Hudson’s Bay Company’s financial statements for its year ended February 3, 2018 (fiscal 2017) can be found at the end of this book.InstructionsRefer to the company’s financial statements and accompanying notes to answer these questions.a. What business is Hudson’s Bay Company in?b. What
Use the information in E5.17 for Dropafix Inc.Instructionsa. Calculate the current and acid-test ratios for 2019 and 2020.b. Calculate Dropafix’s current cash debt coverage ratio for 2020.c. Calculate Dropafix’s cash debt coverage ratio for 2020.d. Calculate Dropafix’s times interest earned
Use the information in E5.14 for Carmichael Industries. Instructions a. Calculate the current and acid-test ratios for 2019 and 2020. b. Calculate Carmichael?s current cash debt coverage ratio for 2020. c. Based on the analyses in parts (a) and (b), comment on Carmichael?s liquidity and financial
Use the information in E5.18 for Sensify Corporation. Instructions a. Calculate the current ratio and debt to total assets ratio as at December 31, 2019 and 2020. Calculate the free cash flow for December 31, 2020. b. Based on the analysis in part (a), comment on the company?s liquidity and
The comparative statement of financial position of Sensify Corporation as at December 31, 2020, follows: Net income of $37,000 was reported and dividends of $13,000 were declared and paid in 2020. New equipment was purchased, and equipment with a carrying value of $5,000 (cost of $12,000 and
Miller Ltd. engaged in the following cash transactions during 2020:Proceeds from sale of land and building ....................... $176,000Repurchase of company’s own shares ............................... 25,000Purchase of land ...................................................................
The comparative statement of financial position of Dropafix Inc. as at June 30, 2020, and a statement of comprehensive income for the 2020 fiscal year follow: ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?Dropafix Inc.? ? ? ? ? ? ? Statement of Comprehensive Income? ? ? ? ? ? ? ? ? ?For the Year Ended June
Assume that Ames Company’s net income of $151,000 in BE5.16 was based on sales of $600,000, cost of goods sold of $200,000, salaries and wages of $157,000, depreciation expense of $44,000, and income tax expense of $48,000. Prepare the cash flows from operating activities section of the statement
Ames Company reported 2020 net income of $151,000. During 2020, accounts receivable increased by $15,000 and accounts payable increased by $9,000. Depreciation expense was $44,000. Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.
Healey Corporation’s statement of financial position as at December 31, 2020, showed the following amounts: Cash $100; Accounts Receivable $600; Land $1,000; Accounts Payable $300; Bonds Payable $500; Common Shares $400; and Retained Earnings $500. Healey’s statement of financial position as
Newvo Ltd. shows on its statement of financial position a patent. At its year end of October 31, 2018, the caption read Patent (net) $66,000 and at its year end of October 31, 2019, the caption read Patent (net) $40,000. Newvo’s recorded amortization on the patent in the amount of $6,000 for the
Martineau Inc., a major retailer of high-end office furniture, operates several stores and is a publicly traded company. The company is currently preparing its statement of cash flows. The comparative statement of financial position and income statement for Martineau as at May 31, 2020, are as
It is February 2021 and Janix Corporation is preparing to issue financial statements for the year ended December 31, 2020. To prepare financial statements and related disclosures that are faithfully representative, Janix is reviewing the following events in 2020 and 2021:1. In August 2020, Maddux
Agnu Inc. shows on its statement of financial position its investments accounted for as FV-OCI investments. At its year end of May 31, 2018, the balance in the FV-OCI Investments account was $96,000 and at its year end of May 31, 2019, the balance was $120,000. Agnu’s statement of comprehensive
L&G Inc., a retailer of garden tools that follows ASPE, had the following statements prepared as of December 31, 2020: Additional information: 1. Dividends on common shares in the amount of $12,000 were declared and paid during 2020. 2. Depreciation expense of $24,000 is included in
How does a statement of cash flows prepared using the indirect method differ from one prepared using the direct method?
The current assets and current liabilities sections of the statement of financial position of Agincourt Corp. are as follows: The following errors have been discovered in the corporation?s accounting: 1. January 2021 cash disbursements that were entered as at December 2020 included payments of
Selected accounts follow of Aramis Limited at December 31, 2020: The following additional information is available: 1. Inventory is valued at the lower of cost and net realizable value using FIFO.2. Equipment is recorded at cost. Accumulated depreciation, calculated on a straight-line basis, is
A comparative statement of financial position for Spencer Corporation follows: Additional information: 1. Net income for the fiscal year ending December 31, 2020, was $19,000. 2. In March 2020, a plot of land was purchased for future construction of a plant site. In November 2020, a different
The statement of income of Kneale Transport Inc. for the year ended December 31, 2020, reported the following condensed information: Kneale?s statement of financial position included the following comparative data at December 31: Additional information:Operating expenses include $70,000 in
A comparative statement of financial position for Carmichael Industries Inc. follows: Additional information: 1. Net income for the fiscal year ending December 31, 2020, was $129,000. 2. Cash dividends of $60,000 were declared and paid. Dividends paid are treated as financing activities. 3. Bonds
Uddin Corp.?s statement of financial position at the end of 2019 included the following items: The following information is available for the 2020 fiscal year: 1. Net income was $391,000. 2. Equipment (cost of $20,000 and accumulated depreciation of $8,000) was sold for $10,000. 3. Depreciation
Lujie Xie is the controller of Lincoln Corporation and is responsible for the preparation of the year-end financial statements on December 31, 2020. Lincoln prepares financial statements in accordance with ASPE. The following transactions occurred during the year:1. On December 20, 2020, an
The statement of financial position of Manion Corporation follows (in thousands): Instructions Evaluate the statement of financial position. Briefly describe the proper treatment of any item that you find incorrect. Assume the company follows IFRS. Manion Corporation Statement of Financial
The statement of financial position of Sargent Corporation follows for the current year, 2020: The following additional information is available:1. The Current Assets section includes the following: cash $150,000; accounts receivable $170,000, less $10,000 allowance for doubtful accounts;
Jia Inc. applies ASPE and had the following statement of financial position at the end of operations for 2019: During 2020, the following occurred: 1. Jia Inc. sold some of its trademarks. The trademarks had an unlimited useful life and a cost of $10,000. They were sold for proceeds of
The trial balance of Zhang Ltd. at December 31, 2020, follows: Instructions a. Prepare a classified statement of financial position as at December 31, 2020. Ignore income taxes. b. Digging Deeper Is there any situation where it would make more sense to have a statement of financial position that
Aero Inc. had the following statement of financial position at the end of operations for 2019: During 2020, the following occurred: 1. Aero liquidated its FV-NI investments portfolio at a loss of $5,000. 2. A parcel of land was purchased for $38,000. 3. An additional $30,000 worth of common
The partner in charge of the James Spencer Corporation audit comes by your desk and leaves a letter he has started to the CEO and a copy of the statement of cash flows for the year ended December 31, 2020. Because he must leave on an emergency, he asks you to finish the letter by explaining (1) the
In an examination of Garganta Limited as at December 31, 2020, you have learned about the following situations. No entries have been made in the accounting records for these items.1. The corporation erected its present factory building in 2004. Depreciation was calculated using the straight-line
Lydia Trottier has prepared baked goods for sale since 1998. She started a baking business in her home and has been operating in a rented building with a storefront since 2003. Trottier incorporated the business as MLT Inc. on January 1, 2020, with an initial share issue of 1,000 common shares for
The bookkeeper for Garfield Corp. has prepared the following statement of financial position as at July 31, 2020: The following additional information is provided: 1. Cash includes $1,200 in a petty cash fund and $12,000 in a bond sinking fund. 2. The net accounts receivable balance is composed
Obtain the 2001 and 2017 annual reports of Goldcorp Inc. from SEDAR (www.sedar.com).InstructionsRead the annual report material leading up to the financial statement section and answer the following questions:a. Explain how the company’s business changed in the 16 years from 2001 to 2017. Did any
The statement of financial position of Delacosta Corporation as at December 31, 2020, is as follows:Delacosta CorporationStatement of Financial PositionDecember 31, 2020AssetsGoodwill (Note 1) .................................................... .................. $ 70,000Buildings (Note 2)
Bruno Corp. has decided to expand its operations. The bookkeeper recently completed the following statement of financial position in order to obtain additional funds for expansion:Bruno Corp.Statement of Financial PositionFor the Year Ended December 31, 2020Current assetsCash (net of bank overdraft
The audited annual financial statements of Maple Leaf Foods Inc. for the year ended December 31, 2017, can be found on the company’s website or from SEDAR (www.sedar.com).Instructionsa. Calculate the liquidity and coverage (solvency) ratios identified in Appendix 5A for both years that are
The trial balance of Eastwood Inc. and other related information for the year 2020 follows: Additional information: 1. The inventory has a net realizable value of $212,000. The FIFO method of inventory valuation is used. 2. The FV-OCI investments? fair value is $378,000. 3. The amount of the
The financial statements for Bombardier Inc. for the year ended December 31, 2017, can be found on the company’s website or from SEDAR (www.sedar.com).Instructionsa. What form of presentation does the company use in preparing its balance sheet?b. Calculate the ratios identified in Appendix 5A
Statement of financial position items for Montoya Inc. follow for the current year, 2020: Instructions a. Prepare a classified statement of financial position in good form. The numbers of authorized shares are as follows: unlimited common and 20,000 preferred. Assume that income tax accounts,
In 2020, Renato Corp. had cash receipts from customers of $152,000 and cash payments for operating expenses of $97,000. At January 1, 2020, accounts receivable were $13,000 and total prepaid expenses were $17,500. At December 31, 2020, accounts receivable were $18,600 and total prepaid expenses
In 2020, I & T Corporation reported net income of $8.6 million, and declared and paid preferred share dividends of $3.2 million. During 2020, I & T had a weighted average of 900,000 common shares outstanding. Calculate I & T’s 2020 earnings per share.
Canviar Corp. maintains its financial records using the cash basis of accounting. Because it would like to secure a long-term loan from its bank, the company asks you, as an independent CPA, to convert its cash basis income statement information to the accrual basis. You are provided with the
Neon Limited had 40,000 common shares on January 1, 2020. On April 1, 8,000 shares were repurchased. On August 31, 12,000 shares were issued. Calculate the number of shares outstanding at December 31, 2020, and the weighted average number of shares for 2020.
In its first year of operations, 2020, Strats Corp. invoiced $172,000 in service revenue. Of that amount, $18,000 was still owing from customers at the end of year. In 2020, Strats incurred various operating expenses totalling $81,000, of which $77,500 was paid in cash. Salaries and wages paid to
Dr. Emma Armstrong, M.D., maintains the accounting records of the Blood Sugar Clinic on a cash basis. During 2020, Dr. Armstrong collected $146,000 in revenues and paid $55,470 in expenses. At January 1, 2020, and December 31, 2020, she had accounts receivable, unearned revenue, accrued
Use the information in BE4.17 to prepare a statement of retained earnings for Global Corporation, assuming that in 2020, Global discovered that it had overstated 2017 depreciation by $40,000 (net of tax of $17,000).Data from BE4.17Global Corporation prepares financial statements in accordance with
At December 31, 2020, Tres Hombres Corporation had the following shares outstanding:10% cumulative preferred shares, 107,500 shares outstanding .................... $10,750,000Common shares, 4,000,000 shares outstanding ................................................. 20,000,000During 2020, the
On January 1, 2020, Caroline Lampron and Jenni Meno formed a computer sales and service enterprise in Montreal by investing $90,000 cash. The new company, Razorback Sales and Service, had the following transactions in January:1. Paid $6,000 in advance for three months’ rent of office, showroom,
Global Corporation prepares financial statements in accordance with ASPE. At January 1, 2020, the company had retained earnings of $1,038,000. In 2020, net income was $335,000, and cash dividends of $70,000 were declared and paid. Prepare a 2020 statement of retained earnings for Global
The shareholders’ equity section of Cadmium Corporation as at December 31, 2020, follows:8% cumulative preferred shares, 100,000 sharesauthorized, 80,000 shares outstanding ...................................... $ 4,500,000Common shares, 10 million shares authorizedand issued
Parfait Limited reported the following for 2020: 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 January 1, 2020 balances as follows: common shares, $600,000; accumulated other comprehensive income,
Rainy Day Umbrella Corporation had the following balances at December 31, 2019 (all amounts in thousands): preferred shares, $3,375; common shares, $8,903; contributed surplus, $3,744; retained earnings, $23,040; and accumulated other comprehensive income, $2,568.During the year ended December 31,
The equity accounts of Good Karma Corp. as at January 1, 2020, were as follows:Retained earnings, January 1, 2020 ............................ $257,600Common shares ............................................................. 600,000Preferred shares
The Big and Rich Corporation had income from operations before tax for 2020 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 was insured. In addition, the company realized a loss from the disposal of a building amounting
Eddie Zambrano Corporation, a private company, began operations on January 1, 2017. During its first three years of operations, Zambrano reported net income and declared dividends as follows: The following information is for 2020:Income before income tax
Amos Corporation was incorporated and began business on January 1, 2020. It has been successful and now requires a bank loan for additional capital to finance an expansion. The bank has requested an audited income statement for the year 2020 using IFRS. The accountant for Amos Corporation provides
The Blue Collar Corporation had income from continuing operations of $12.6 million in 2020. During 2020, it disposed of its restaurant division at a loss of $89,000 (net of tax of $38,000). Before the disposal, the division operated at a loss of $315,000 (net of tax of $135,000) in 2020. Blue
The following balances were taken from the books of Quality Fabrication Limited on December 31, 2020: Assume the total effective tax rate on all items is 25%. Instructions Prepare a multiple-step income statement showing expenses by function. Assume that 150,000 common shares were outstanding
Faldo Corp. is a public company and has 100,000 common shares outstanding. In 2020, the company reported income from continuing operations before income tax of $2,710,000. Additional transactions not considered in the $2,710,000 are as follows:1. In 2020, Faldo Corp. sold equipment for $140,000.
(a) Use the information in BE4.12 to prepare a multiple-step income statement for Sierra Corporation, showing expenses by function. (b) Assume the average market price for the common shares is $66. What is Sierra’s price-earnings ratio?Data from BE4.12Sierra Corporation had sales revenue of
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 2020 information for P. Bride Company (in thousands): Common shares outstanding for 2020 total
Joe Schreiner, controller for On Time Clock Company Inc., recently prepared the company?s income statement and statement of changes in equity for 2020. Schreiner believes that the statements are a fair presentation of the company?s financial progress during the current period, but he also admits
Sierra Corporation had sales revenue of $5,850,000 and investment revenue of $227,000 for the year ended December 31, 2020. Other items pertaining to 2020 were as follows:Cost of goods sold ....................................................... $4,610,000Salaries and wages expense (sales)
The financial records of Geneva Inc. were destroyed by fire at the end of 2020. Fortunately, the controller had kept the following statistical data related to the income statement:1. The beginning inventory was $84,000 and it decreased by 20% during the current year.2. There were 15,000 common
Zephyr Corporation began operations on January 1, 2017. Recently the corporation has had several unusual accounting problems related to the presentation of its income statement for financial reporting purposes. The company follows ASPE. You are the CPA for Zephyr and have been asked to examine the
An excerpt from Section 10.2 of the Management Discussion and Analysis in the 2017 annual report of BCE Inc. is shown below. The excerpt shows summarized financial information, including calculations of earnings before interest, tax, depreciation, and amortization (EBITDA), and adjusted net
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