1. Leon's Furniture Limited is one of Canada's largest home furnishing retailers, with a network of...
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1. Leon's Furniture Limited is one of Canada's largest home furnishing retailers, with a network of 75 stores selling a wide range of furniture, major appliances, and home electronics. Its annual report contained the following note: Unpaid warranty claims Warranty repairs related to warranty plans sold separately are recorded as claims expense at the time the customer reports a claim. For these warranties, a provision for unpaid warranty claims is established for unpaid reported claims. The provision for unpaid claims is based on estimates, and may differ from actual claims paid. The Company also provides a standard warranty for certain products. For these warranties, a provision for warranty claims is recognized when the underlying products are sold. The amount of the provision is estimated using historical experience and may differ from actual claims paid. Required: Assume that estimated warranty costs for 2016 were $1 million and that the warranty work was performed during 2017. Describe the financial statement effects for each year. (If there is no effect select "No impact" from the drop down menu.) Date 2016 2017 Assets Liabilities Shareholders' Equity 2. Walt Disney is a well-recognized brand in the entertainment industry, with products ranging from broadcast media to parks and resorts. The following note is from its annual report: Walt Disney Revenue Recognition Revenues from advance theme park ticket sales are recognized when the tickets are used. Revenues from expiring multi-use tickets are recognized ratably over the estimated usage period. For non-expiring, multi- day tickets, revenues are recognized over a five-year time period based on estimated usage. The estimated usage periods are derived from historical usage patterns. Required: Assume that Disney collected $100 million in 2016 for multi-year tickets that will be used in future years. For 2017, the company estimates that 70 percent of the tickets will be used, and the remaining 30 percent will be used in 2018. Describe the financial statement effects for each year. (Enter any decreases to account balances with a minus sign. Enter your answers in dollars not in millions.) Date 2016 2017 Asset Liabilities Shareholders' Equity 1. Leon's Furniture Limited is one of Canada's largest home furnishing retailers, with a network of 75 stores selling a wide range of furniture, major appliances, and home electronics. Its annual report contained the following note: Unpaid warranty claims Warranty repairs related to warranty plans sold separately are recorded as claims expense at the time the customer reports a claim. For these warranties, a provision for unpaid warranty claims is established for unpaid reported claims. The provision for unpaid claims is based on estimates, and may differ from actual claims paid. The Company also provides a standard warranty for certain products. For these warranties, a provision for warranty claims is recognized when the underlying products are sold. The amount of the provision is estimated using historical experience and may differ from actual claims paid. Required: Assume that estimated warranty costs for 2016 were $1 million and that the warranty work was performed during 2017. Describe the financial statement effects for each year. (If there is no effect select "No impact" from the drop down menu.) Date 2016 2017 Assets Liabilities Shareholders' Equity 2. Walt Disney is a well-recognized brand in the entertainment industry, with products ranging from broadcast media to parks and resorts. The following note is from its annual report: Walt Disney Revenue Recognition Revenues from advance theme park ticket sales are recognized when the tickets are used. Revenues from expiring multi-use tickets are recognized ratably over the estimated usage period. For non-expiring, multi- day tickets, revenues are recognized over a five-year time period based on estimated usage. The estimated usage periods are derived from historical usage patterns. Required: Assume that Disney collected $100 million in 2016 for multi-year tickets that will be used in future years. For 2017, the company estimates that 70 percent of the tickets will be used, and the remaining 30 percent will be used in 2018. Describe the financial statement effects for each year. (Enter any decreases to account balances with a minus sign. Enter your answers in dollars not in millions.) Date 2016 2017 Asset Liabilities Shareholders' Equity
Expert Answer:
Answer rating: 100% (QA)
1 Leon Furniture As per IAS 37 Provision for product warranties or o... View the full answer
Related Book For
Financial Accounting
ISBN: 978-1259105692
6th Canadian edition
Authors: Robert Libby, Patricia Libby, Daniel G Short, George Kanaan, Maureen Sterling
Posted Date:
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