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MULTIPLE CHOICE—CPA Adapted 39. Which of the following should be given retrospective treatment? 40. On January 1, 2012, Ravinder Ltd. changed its inventory valuation method to FIFO from weighted-average cost for financial statement and income tax purposes, to make their reporting as reliable and more relevant. The change resulted in a $600,000.
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Use the following information for questions 40 through 42. The balance sheet data of Bristol Corp at the ends of 2012 and 2011 follow: During 2012, land was acquired in exchange for common shares with a market value of $150,000. All equipment purchased was for cash. Equipment costing $15,000 was sold for.
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*Pr. 21-60—Error corrections and adjustments. The controller for Saigon Corporation is concerned about certain business transactions that the company experienced during 2012. The controller, after discussing these matters with various individuals, has come to you for advice. The transactions at issue are presented below. 1. The company has decided to switch from.
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6. Accounting for a retrospective change requires a. reissuing all prior financial statements affected by the change. b. adjusting the ending balance of retained earnings for the current year. c. reporting the “catch-up” adjustment on the current income statement. d. adjusting the opening balance of each affected component of equity for the current year. 7..
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MULTIPLE CHOICE—Conceptual 1. Which of the following is not considered to be an accounting change? a. Change in accounting estimate. b. Change in the composition of the board of directors. c. Change in accounting policy. d. Correction of a prior period error. 2. One condition required by IFRS is that a voluntary change in accounting policy.
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Ex. 21-53—Change in estimate, voluntary change in accounting policy, correction of errors. Give examples and discuss the accounting procedures and disclosure required for the following: (a) Change in estimate (b) Voluntary change in accounting policy (c) Correction of an error       .
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Ex. 21-55—Effects of errors on financial statements. Show how the following independent errors will affect net income on the income statement and the shareholders' equity section of the balance sheet using the symbol + (plus) for overstated, - (minus) for understated, and 0 (zero) for no effect.       .
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Ex. 22-68—Effects of transactions on statement of cash flows. Indicate for each of the following what should be disclosed on a statement of cash flows (indirect method) and in which section. If not disclosed, write, "Not shown." If an item is a noncash transaction that should be shown separately, write "noncash.".
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PROBLEMS Pr. 21-58—Correction of errors. Rangoon Inc reported net incomes for a three-year period as follows: 2010, $62,000; 2011, $63,000; 2012, $60,000. In reviewing the accounts in 2013 (after the books for the prior year had been closed), you find that the following errors have been made: 2010 2011 2012 Instructions (a) Calculate corrected net incomes for.
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Ex. 21-50—Matching disclosures to situations. In the blank to the left of each statement, fill in the letter from the following list which best describes the treatment of the item on the financial statements of Stedman Inc for the current year ending December 31, 2012. a. Change in accounting policy requiring retrospective.
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Use the following information for questions 25 through 29. On January 1, 2012, Dionne Ltd. signs a 10-year non-cancellable lease agreement to lease a storage building from Seline Inc. Seline is in the business of leasing/selling property. Collectibility of the lease payments is reasonably assured and no additional costs are to.
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11. A company changes from straight-line depreciation to the double declining balance method. The entry to record this change should include a a. debit to Accumulated Depreciation. b. credit to Other Comprehensive Income. c. credit to Future (Deferred) Income Tax Asset. d. debit to Future (Deferred) Income Tax Liability. 12. Stockton Ltd changed its inventory.
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Ex. 22-71—Cash flows from operating activities (indirect and direct methods). Presented below is the latest income statement of Oxford Ltd: In addition, the following information related to net changes in working capital is presented: Oxford Ltd also reports that depreciation expense for the year was $13,700 and that the future income tax liability.
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Ex. 21-52—Recognition of accounting changes or corrections. For each of the following items, indicate the type of accounting change and how each is recognized in the accounting records in the current year. (a) Change from straight-line method of depreciation to double declining-balance (b) Change from the cash basis to the accrual basis of.
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*Ex. 21-57—Non-counterbalancing error correction. Canton Corp bought a truck on January 3, 2010 for $175,000. It had a $15,000 estimated residual value and a ten-year life. Canton uses straight-line depreciation. An expense account was debited in error on the purchase date, but this was not discovered until late 2012. Instructions       .
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Pr. 22-75—Statement of cash flows (indirect method). The net changes in the balance sheet accounts of Edmonton Corporation for the year 2012 are shown below. 1. On January 2, 2012, temporary investments costing $121,000 were sold for $150,000. 2. The company paid the cash dividend February 1, 2012, and distributed the stock dividend.
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Ex. 22-65—Classification of cash flows and transactions. Give: (a) Three distinct examples of investing activities. (b) Three distinct examples of financing activities. (c) Three distinct examples of significant noncash transactions. (d) Two examples of transactions not shown on a statement of cash flows.       .
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Use the following information for questions *32 through *34. An insurance premium of $3,600 was prepaid in 2011 covering the calendar years 2011, 2012, and 2013. This had been debited to insurance expense. In addition, on December 31, 2012, fully depreciated machinery was sold for $1,900 cash, but the sale was.
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MULTIPLE CHOICE—Computational 24. On January 1, 2009, Dietrich Ltd bought machinery for $250,000. They used straight-line depreciation for this machinery, over an estimated useful life of ten years, with no residual value. At the beginning of 2012, Dietrich decided the estimated useful life of this machinery was only eight years (from.
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Ex. 22-70—Calculations for statement of cash flows. Maliseet Ltd sold a machine that cost $19,000 and had a book value of $11,000 for $13,000. Data from the corporation's comparative balance sheets are: Instructions From the above information, how should four items be shown on a statement of cash flows (indirect method)? Show your.
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Ex. 21-49—Matching accounting changes to situations. The three types of accounting changes are: Code a. Change in accounting policy. b. Change in accounting estimate. c. Error correction. Instructions Following are a series of situations. You are to enter a code letter to the left to indicate the type of change. ____ 1. Change due to debiting a.
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Ex. 21-56—Effects of errors on net income. Tokyo Corp. began operations on January 1, 2011. Financial statements for 2011 and 2012 contained the following errors: In addition, on December 26, 2012, fully depreciated equipment was sold for $19,000, but the sale was not recorded until 2013. No corrections have been made for.
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Ex. 22-66—Effects of transactions on the statement of cash flows (indirect method). Any given transaction may affect a statement of cash flows (using the indirect method) in one or more of the following ways: Cash flows from operating activities A. Net income will be increased or adjusted upward. B. Net income will be decreased.
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Ex. 22-67—Effects of transactions on the statement of cash flows. Indicate for each of the following what should be disclosed on a statement of cash flows (indirect method). If not disclosed, write "Not shown." There may be more than one answer for some items. For an item that is added to.
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Ex. 22-73—Preparation of statement of cash flows (format provided). Comparative balance sheets for Digby Bay Ltd are shown below. Additional information concerning transactions and events during 2012: 1. Net income for the year was $80,000. 2. Depreciation on plant assets was $12,700. 3. Sold the long-term investments for $28,000. 4. Paid cash dividends of $34,000. 5..
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16. When a company decides to switch from deferring development costs to expensing them immediately, this change should be treated as a a. change in accounting policy. b. change in accounting estimate. c. prior period adjustment. d. correction of an error. 17. When an entity is first transitioning to IFRS, any adjustments required to bring.
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Ex. 22-64—Classification of cash flows. Note that X in the following statement of cash flows identifies a dollar amount and the letters (A) through (F) identify specific items, which appear in the major sections of the statement of cash flows prepared using the indirect method. Instructions For each of the following items, indicate.
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MULTIPLE CHOICE—CPA Adapted 52. Algonquin Corp.'s comparative balance sheets at December 31, 2012 and 2011 reported accumulated depreciation balances of $960,000 and $720,000, respectively. Equipment with a cost of $60,000 and a book value of $48,000 was the only equipment sold in 2012. Therefore, the depreciation expense for 2012 was a. $228,000. b..
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Use the following information for questions 28 and 29. Lemmon Corp purchased a machine on January 1, 2009, for $300,000. The machine is being depreciated on a straight-line basis, using an estimated useful life of six years with no residual value. On January 1, 2012, Lemmon determined, as a result of.
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MULTIPLE CHOICE—COMPUTATIONAL 21. On December 1, 2012, Rambo Corporation leased office space for 10 years at a monthly rental of $50,000. On that date Rambo paid the landlord the following amounts: The entire $420,000 payment was debited to Prepaid Rent in 2012. What amount should Rambo recognize as rent expense for the.
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Pr. 22-76—Statement of cash flows (direct method). Queenstown Ltd has prepared the following comparative balance sheets at December 31, 2011 and 2012: 1. The Accumulated Depreciation account has been credited only for the depreciation expense for the year. There were no disposals of property, plant and equipment, but new equipment was purchased.
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Ex. 22-69—Calculations for statement of cash flows. During 2012, equipment was sold for $15,000. This equipment originally cost $24,000 and had a book value of $14,000 at the date of sale. Accumulated depreciation for equipment was $65,000 at December 31, 2011 and $62,000 at December 31, 2012. Instructions Based on the above information.
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46. Cardiff Corp reported net income for the calendar year 2012 of $600,000. Additional information follows: Based only on the information given above, the cash provided by operating activities (indirect method) for the year ended December 31, 2012 is a. $1,130,000. b. $1,180,000. c. $1,210,000. d. $1,260,000. Use the following information for questions 47 through 51. Portsmouth Manufacturing.
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Use the following information for questions 35 through 39. On January 1, 2012, Muriatta Corp enters into an agreement with Econo Rentals Inc to lease a machine. Both corporations adhere to IFRS. The following data pertain to the agreement: (a) The term of the non-cancellable lease is 3 years with no renewal.
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MULTIPLE CHOICE—Conceptual 1. The primary purpose of the statement of cash flows is to provide information a. about an entity’s operating, investing, and financing activities during a period. b. that is useful in assessing cash flow prospects. c. about an entity’s cash receipts and cash payments during a period. d. about an entity's ability to.
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Pr. 21-59—Accounting for accounting changes and error corrections. During the 2012 year-end audit, the following items come to your attention: 1. Manila bought a truck on January 1, 2009 for $98,000 cash, with an $8,000 estimated residual value and a six-year life. The company debited an expense account for the entire cost.
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Use the following information for questions 56 and 57. Crowfoot Corp's transactions for the year ended December 31, 2012 included the following: ? Purchased land for $110,000 cash. ? Borrowed $110,000 from the bank on a long term note. ? Sold long-term investments for $100,000. ? Reduced accounts receivable by $20,000. ? Paid cash dividends of.
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