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2) Super Control Group has the following investments: Transactions Net income of Investee for calendar 2012 Fair value at Dec 31, 2012 XYZ Corp • Purchased all of the outstanding shares on Mar 31 for $1,500,000. $1,000,000 $1,150,000 VWX Inc. • Purchased 80% for $1,000,000 Acquired joint control over the strategic, operating and investing decisions on January 1. 200,000 175,000 ABC Inc • Purchased.
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11) For each of the following financial asset classifications shown in the left column, identify the combinations of (i) the type of financial instrument in the middle column that can be put into that classification and (ii) the trading intent that would lead to that classification. 12) For financial reporting purposes,.
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51) Which statement is correct? A) Agricultural activity relates to the point of harvest and beyond. B) Agricultural activity includes fishing from the open ocean. C) Agricultural activity includes logging from unmanaged forests. D) Agricultural activity involves transforming biological assets. 52) Which statement is not correct? A) Agricultural activity involves growth, degeneration and reproduction. B) Agricultural activity.
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21) What factor will not affect the estimated useful life of a definite lived intangible asset? A) Legal life of the asset. B) Productive capacity. C) Competitive pressures. D) Technological obsolescence. 22) What factor will not affect the estimated useful life of a definite lived intangible asset? A) Legal life of the asset. B) Technological obsolescence. C) Physical.
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27) Discuss three factors that are important in classifying an investment as a 'loan or receivable.' 28) On January 25, 2011, Harper Ltd. purchased 2,500 common shares of RBC (Royal Bank of Canada) for $10 each. During the remainder of 2011, Harper received $2.75 per share in dividends and RBC's earnings.
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16) Explain how the depreciation method should be selected for property, plant and equipment. 17) Explain the accounting purpose of 'depreciation.' Does depreciation represent the decline in value of an asset? 18) At December 31, 2012, the following data were available for a building owned by Omega Company: Building cost $700,000 Accumulated depreciation - building 525,000 Estimated.
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31) Polar Sky Railway (PSR), a transportation company, has substantial investments in property, plant, and equipment. In 2011, the company exchanged some of these assets with other companies. [Note: any depreciation expense prior to the following transaction has already been properly recorded.] PSR is trying to expand its business in.
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26) Explain derecognition of property, plant or equipment. 27) What does a "gain on disposal of property, plant and equipment" mean? Does a gain suggest good or excellent management and a loss on disposal indicate poor management? Explain your conclusion. 28) Will the method of depreciation affect the net cash outflow associated.
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8.3   Comprehensive Problems 1) Growth Industries incurred the following costs in fiscal 2011: Land and building   Land purchase $3,000,000 Dismantling of old building 50,000 Proceeds from selling parts of old building 10,000 Building materials, labour for construction of new building 2,000,000 Roof of new building 750,000 Heating and air conditioning system for new building 500,000 Directly attributable overhead during construction of new building 100,000 General and.
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19) Listed below are several long-lived assets owned by X Corp. The company uses straight-line depreciation. Assume in all cases that the asset's first and last years are full years, and that all assumptions and estimates used to derive depreciation remain unchanged throughout the assets' useful lives.     Requirement: For each asset, calculate.
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61) What is the effect of overstating 2012 depreciation expense? A) Accumulated depreciation will be understated for 2012. B) Net income for 2012 will be overstated. C) Ending retained earnings for 2012 will be understated. D) Ending retained earnings for 2012 will be overstated. 62) When is property, plant and equipment (PPE) not derecognized? A) When.
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7.2   Problems 1) Explain why there is no one single measurement basis that is suitable for all financial assets. Does this mean that a company can choose any measurement base for any investment? 2) Explain what financial assets are, how they differ from other types of assets, and why there is a.
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8.2   Problems 1) Explain what costs should be capitalized to property, plant and equipment. Include a discussion of costs incurred for acquired assets, self constructed assets and repairs. 2) Explain why it is necessary to separate property, plant and equipment (PPE) items into separate components. 3) Using the conceptual framework, explain why there.
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21) What is the meaning of 'residual value'? A) The estimated amount that an entity would currently obtain from disposal of the asset, after deducting disposal costs, for an asset of similar age and condition expected at the end of its useful life. B) The total amount to be expensed through depreciation. C).
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41) Soorya Resources incurred the following costs: Mine Site Costs incurred in exploration and evaluation Costs incurred in development Status at year-end Alpha 300,000 100,000 Producing @5% of reserves Beta 200,000 Abandoned Zeta 100,000 200,000 In development How much would be capitalized as 'intangible assets' under the full cost method? A) $300,000 B) $400,000 C) $500,000 D) $600,000 42) GoodResources incurred the following costs: Mine Site Costs incurred in exploration and evaluation Costs incurred.
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17) Accounting standards provide for a variety of different measurement bases for different types of financial assets. IFRS has six measurement bases, namely: •consolidation •fair value with changes through income •proportionate consolidation •fair value with changes through other comprehensive income •equity method •amortized cost Required: a. Explain why reporting entities should, on the one hand, use consolidation, proportionate.
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13) Forest Company paid $38,000,000 for a warehouse and related assets from a company that was in bankruptcy. The warehouse includes land, building, moving equipment, and heating /ventilation/air conditioning (HVAC) system. An independent appraiser valued these items individually as follows:   Requirement: Allocate the purchase price among the assets acquired. 14) Office Plus Company.
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7.3   Comprehensive Problems 1) Bountiful Corporation has the following investment portfolio at December 31, 2012: Management intentions Transactions Fair value @ Dec 31, 2012 Shares in Sherman Inc. Intend to trade frequently •Purchased 1,500 shares on Mar 31 for $1,500,000. •Purchased 50 shares for $60,000. •Dividends of $50/share were received on July 18. •Sold 10 shares on Sept 1 for.
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9.1   Multiple Choice Questions 1) Which of the following is not a characteristic of intangible assets? A) Intangibles do not have physical substance. B) Intangibles benefit more than one year. C) Intangibles have fixed determinable cash flows. D) Intangibles are held for use in the ordinary course of business. 2) Which of the following is a.
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8.1   Multiple Choice Questions 1) Which of the following is a not characteristic of property, plant and equipment (PPE)? A) PPE are tangible items. B) PPE benefit more than one year. C) PPE are held for use in the ordinary course of business. D) PPE have fixed and determinable future cash flows. 2) What costs should.
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4) Identify whether each of the following items is a financial asset: 5) Describe the single most important characteristic of a financial asset that distinguishes it from a real asset. 6) Explain the characteristics of a financial asset. Discuss if cash has the characteristics of a financial asset. Why is (or is.
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31) Which statement is not correct? A) The three phases in mining activities are: mineral exploration, development and extraction. B) The accounting for mineral exploration is conceptually similar to that for research activities. C) Mineral exploration costs can be capitalized because markets for mineral resources are well established. D) A mineral site entering.
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14) Classify each of the following items into one of the seven categories of financial assets relevant for financial reporting purposes. Select the category that best suits the situation given. 15) Classify each of the following items into one of the seven categories of financial assets relevant for financial reporting purposes..
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11) Which statement is not correct? A) Goodwill represents the difference between the purchase price and the fair value of net assets acquired. B) Fair value is the amount at which an item could be sold in an arm's length transaction. C) Economic goodwill differs from accounting goodwill and can be created by.
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22) Invest Up Hardware operates a chain of hardware stores. Recent operations have been stable and profitable, resulting in a significant amount of cash inflows. During the past fiscal year ended December 31, the company made a number of investments, as described below. a.Invest Up bought 30,000 shares of Machine Mart,.
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9.2   Problems 1) Explain the accounting requirements for externally purchased intangibles and internally developed intangibles. 2) Explain the difference in recognition of externally acquired intangibles versus internally developed intangibles. 3) Explain the accounting for internally developed intangible assets. .
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4) The following transactions occurred in fiscal 2011: •Synthesize Inc. exchanged machinery with Energize Corp. Synthesize's machinery Energize's machinery Cost 500,000 620,000 Accumulated depreciation 200,000 500,000 Fair value 350,000 Not known •Synthesize Inc. purchased equipment by signing a 5 year non-interest bearing note payable for $200,000. The implicit rate of interest was 5%. •Synthesize received a government grant of $10,000 to help purchase the.
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11) What costs should not be capitalized to 'equipment'? A) Non-refundable sales tax. B) Equipment purchase cost. C) Abnormal waste in testing. D) Equipment specific training. 12) How should $45,000 spent to obtain greater productive efficiency for a machine with a carrying value of $80,000 be accounted for? A) Capitalized, then depreciated during current and subsequent.
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4) Koala had the following transactions relating to its investments during 2013. Koala uses the effective interest method of amortization of premiums or discounts when applicable. a.On July 1, 2013, Koala acquired a $400,000, 16%, 8-year government bond with interest paid semi-annually on January 1 and July 1. Because the market.
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