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PROBLEMS Pr. 20-66—Lessee accounting—capital lease. Matsushita Ltd, a private corporation adhering to ASPE, enters into a non-cancellable lease agreement on July 1, 2012, to lease equipment from Momoyama Ltd. The following data are relevant to the lease agreement: 1. The term of the lease is 4 years, with no renewal option. Payments of.
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MULTIPLE CHOICE—CPA Adapted 58. The following information pertains to Rembrandt Inc's pension plan: If no change in actuarial estimates occurred during 2012, Rembrandt's accrued benefit obligation at December 31, 2012 would be a. $85,600. b. $100,000. c. $105,600. d. $109,600. 59. At December 31, 2012, the following information was provided by the Leonardo Corp. defined benefit pension.
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Ex. 19-79—Measuring and recording pension expense. The following information relates to the defined benefit pension plan for the employees of Huckleberry Ltd for 2012. The corporation uses the deferral and amortization approach.   Instructions (a) Calculate the pension expense to be reported for 2012. (b) Prepare the journal entries to record pension expense and the.
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6. For a lessee, the minimum lease payments may include a. the minimum rental payments and a guaranteed residual value only. b. the minimum rental payments and a bargain purchase option only. c. a bargain purchase option and a guaranteed residual value. d. the minimum rental payments, a bargain purchase option, and a guaranteed.
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Ex. 19-71—Measuring and recording pension expense. Pumpkin Ltd received the following information from its pension plan trustee concerning their defined benefit pension plan for the year ended December 31, 2012: For 2012, the service cost is $210,000 and the amortization of past service costs is $240,000. During 2012, Pumpkin contributed $595,000 to.
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26. Post-retirement benefits may include all of the following except a. severance pay to laid-off employees. b. dental care. c. legal and tax services. d. tuition assistance. 27. Which of the following statements is correct about post-retirement health care benefits? a. They are generally funded. b. The benefits are well-defined and level in dollar amount. c. The beneficiary.
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Use the following information for questions 62 and 63. Bateman Corp. provides a defined benefit pension plan for its employees, and uses the deferral and amortization approach to account for it. The trustee administering the plan provided the following information for the year ended December 31, 2012: On December 31, 2011, the.
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6. Accounting problems for all pension plans may include all the following except a. measuring the amount of pension obligation. b. reporting the status and effects of the plan in the financial statements. c. allocating the cost of the plan to the proper periods. d. determining the level of individual premiums. 7. In pension accounting,.
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Pr. 19-82—Preparation of a pension worksheet and pension entries. The accountant for Camberwell Corp has developed the following information regarding the company's defined benefit pension plan for 2012: Instructions (a) Using the above information, complete the pension work sheet below for 2012. Indicate credit entries by parentheses, e.g. (72,000). (b) Prepare the journal entries.
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Ex. 19-73—Pension plan calculations and journal entries. On January 1, 2012, Prune Ltd reported the following balances relating to their defined benefit pension plan: Instructions (a) Calculate the accrued benefit obligation at December 31, 2012. There are no actuarial gains or losses or past service costs. (b) Calculate the fair value of plan assets.
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PROBLEMS Pr. 19-81—Measuring and recording pension expense. Presented below is information related to the pension plan of Swiss Chard Ltd. for the year 2012. 1. The service cost of pension expense is $300,000. 2. At January 1, 2012, the accrued benefit obligation was $375,000, and the fair value of the pension plan assets was.
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21. Which of the following statements is correct? a. There is a general ledger account called Accrued Pension Asset/Liability. b. There is a general ledger account called Accrued Benefit Obligation. c. There is a general ledger account called Pension Fund Assets. d. Accrued Pension Asset/Liability and Accrued Benefit Obligation should both be reported on.
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MULTIPLE CHOICE—CONCEPTUAL 1. An essential element in a lease agreement is that the a. lessee transfers less than the total interest in the property. b. lessor transfers less than the total interest in the property. c. lease must contain a bargain purchase option. d. rental (lease) payments must be the same for the duration of.
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11. The accrued benefit obligation is always increased by a. current service cost and payments to retirees. b. current service cost and interest cost. c. interest cost and actuarial gains. d. current service cost and past service costs. 12. For defined benefit plans, the attribution period for employees is the time between a. the hire date.
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*Ex. 20-65— Lessee and lessor accounting (sale-leaseback). On January 1, 2012, Soprano Inc sells machinery to Tenor Corp at its fair value of $1,200,000 and immediately leases it back. The machinery’s original cost was $2,000,000, and its book value at January 1, 2012 was $1,050,000. The lease is for 10 years.
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Pr. 19-83—Amortization of past service costs using EARSL (Expected Average Remaining Service Life). On January 1, 2011, Fudge Inc amended its defined benefit pension plan, which caused an increase of $3,600,000 in its accrued benefit obligation. The company has 400 employees who are expected to receive benefits under the plan..
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Use the following information for questions 50 through 54. The following information relates to the defined benefit pension plan for the employees of Raspberry Ltd. The corporation uses the deferral and amortization approach. Raspberry estimates that the employee average remaining service life (EARSL) is 16 years. In 2012, Raspberry contributed $315,000 to.
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MULTIPLE CHOICE—CPA Adapted 46. On December 31, 2012, Westway Inc. leased machinery with a fair value of $420,000 from Northern Rentals. The agreement is a six-year non-cancellable lease requiring annual payments of $80,000 beginning December 31, 2012. The lease is appropriately accounted for by Westway as a capital (finance) lease. Westway’s.
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Pr. 19-84—Measuring, recording, and reporting pension expense and liability. On January 1, 2012, Welles Ltd. started a defined benefit pension plan that grants benefits to its 100 employees for services rendered in the years prior to the adoption of the plan. The total expected service-years of the 100 employees who are.
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Pr. 19-85—Calculating pension expense and pension plan funded status. Fernando’s Furniture Inc. sponsors a defined benefit pension plan for its employees. As of January 1, 2012, the following balances are reported: • For the year ended December 31, 2012, the pension service cost was $80,000. • The actuary’s expected rate of return on.
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Ex. 19-76—Corridor approach for amortization of actuarial gains and losses. Pineapple Corp has 200 employees who are expected to receive benefits under the company's defined benefit pension plan. The total number of service-years of these employees is 2,000. The actuary for the company's pension plan calculated the following net gains and.
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Pr. 20-68—Lessor accounting—lease with IFRS criteria. On January 1, 2012, Royal Air Inc. enters into an eight year, non-cancellable lease agreement to lease an airplane to Pacific Airlines, with payments required at the end of each year. The following information relates to this agreement: 1. Pacific Airlines has the option to purchase.
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Ex. 19-75—Pension plan calculations and journal entries. Information about the defined benefit pension plan of Olive Corp. is as follows: The accrued pension liability was $15,000 at January 1, 2011 and $35,000 at January 1, 2012. Olive uses the deferral and amortization approach. Instructions (a) Calculate the corridor for 2012. (b) Calculate the accrued pension.
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Ex. 19-78—Pension plan calculations. The following information relates to the defined benefit pension plan for the employees of Strawberry Dale estimates that the expected average remaining service life (EARSL) of the employees is 15 years. In 2012, the corporation contributed $390,000 to the plan, and the trustee paid $210,000 in benefits to.
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Ex. 19-72—Calculating accrued pension asset/liability. Satsuma Corp. provided the following balances regarding their defined benefit pension plan at December 31, 2012: Satsuma uses the deferral and amortization approach. Instructions (a) Calculate the accrued pension asset or liability. (b) Assume the same facts as in (a) but that Satsuma had an actuarial gain of $20,000 in.
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Ex. 19-80—Calculating and recording post-retirement expense. The following information is related to the Papaya Corp. post-retirement benefits plan for 2012: Instructions (a) Calculate the post-retirement benefit expense for 2012. (b) Prepare the journal entries to record post-retirement expense and the employer’s contributions for 2012.       .
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Ex. 19-77—Pension reconciliation schedule. Boysenberry Inc provides the following information about its defined benefit pension plan for the year ended December 31, 2012: Instructions Prepare a schedule to reconcile the funded status of the pension plan with the amounts that would be reported on Boysenberry Inc's balance sheet at December 31, 2012.       .
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Use the following information for questions 38 through 41. The following information relates to Gooseberry Corp for their past two fiscal years. The corporation uses the deferral and amortization approach. 41. The amount of the actuarial gain/loss at December 31, 2013 is a. $30,000 gain. b. $165,000 gain. c. $180,000 gain. d. $195,000 gain. Use the following.
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Ex. 20-61—Capital lease amortization and journal entries. Erica Corp leases machinery on January 1, 2012, and records this as a capital (finance) lease. Seven annual lease payments of $140,000 are required the end of each year, starting December 31, 2012. The present value of the lease payments at 10% is $681,600. Erica.
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*Ex. 20-64—Lessee and lessor accounting (sale-leaseback). On January 1, 2012, Kirk Corp sells land to Spock Inc for $4,000,000, and immediately leases the land back. The following information relates to this transaction: 1. The term of the non-cancellable lease is 20 years and the title transfers to Kirk at the end of.
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Ex. 20-62—Operating lease calculations. On January 1, 2012, Lewis Corp purchased a building for $1,800,000, with the intention of leasing it. The building is expected to have a 20 year life, no residual value, and will be depreciated on a straight-line basis. On April 1, 2012, under a cancellable lease, Lewis.
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MULTIPLE CHOICE—Computational 31. Presented below is pension information related to Apple Inc. for the year 2012. The corporation uses the deferral and amortization approach. a. $216,000. b. $240,000. c. $288,000. d. $324,000. 32. Presented below is pension information related to Banana Inc. for the year 2012. The corporation uses the immediate recognition approach. The pension expense to.
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Use the following information for questions 35 through 37. The following information is available for Figgy Enterprises Ltd for 2012. The corporation uses the deferral and amortization approach. 36. How much should the Accrued Pension Asset/Liability be increased (decreased) by at December 31, 2012? a. $120,000 increase. b. $ 84,000 decrease. c. $ 36,000 increase. d. $.
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Pr. 20-67—Lessee accounting—capital lease. On January 1, 2012, Fargo Corp enters into a ten-year non-cancellable lease with Wells Ltd for equipment having an estimated useful life of 11 years and a fair value of $6,000,000. Fargo's incremental borrowing rate is 8%, but they do not know Wells’ implicit rate. Fargo uses.
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Ex. 20-60—Classification approach vs. contract-based approach. Explain the difference between classification approach vs contract-based approach for capitalizing leases. Which does the IASB favour? Why?       .
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Ex. 20-63—Lessor accounting—sales-type lease. Albert Corp, a private corporation that adheres to ASPE, is a manufacturer of truck trailers. On January 1, 2012, Albert leases ten trailers to Einstein Inc under a six-year non-cancellable lease agreement. The following information about the lease and the trailers is provided: 1. Equal annual payments (due.
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