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Ex.19-78Actuary’s role What is an actuary’s chief purpose in pension accounting and what actuarial assumptions do they make? Ex.19-79Defined benefit vesting Define the term vesting and explain how defined benefit plans vest. Ex. 19-80Pension accounting terminology Briefly explain the following terms a)Service cost b)Interest cost c)Past service costs d)Vested benefits .
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Ex. 17-58 Effect of dilutive securities on earnings per share calculations A publicly accountable enterprise is planning on issuing the following two securities in the coming year 1.Convertible debt where mandatory conversion will take place five years after issue. 2.Debt with detachable warrants. The warrants can be exercised if profits exceed $1,000,000 in.
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31.Any past service costs should be included in the a) pension expense of current and future periods. b) pension expense of past periods. c) pension expense of the current period. d) plan assets. 32.Under IFRS, a net defined benefit asset is reported when a) the defined benefit obligation exceeds the fair value of pension plan assets. b).
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Ex.19-98Disclosure analysis Given there is a significant amount of information included in the notes to the financial statements on pensions, what should an analyst focus on and why? Ex.19-99Differences between ASPE and IFRS Discuss the differences in recognition of defined benefit plans with benefits that vest or accumulate under ASPE and IFRS Ex.19-100Differences between.
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Ex.19-94Measuring and recording pension expense The following information relates to the defined benefit pension plan for Orange Ltd. for 2017. The corporation uses ASPE. Current service cost...........................$590,000 Contributions................................495,000 Interest rate for obligation......................10% Expected & actual return on plan assets...........8% Past Service Costs – amendment to plan..........100,000 Defined benefit obligation, Jan 1.................602,000 Fair value of plan assets, Jan 1..................550,000 Actuarial.
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Ex. 19-81Pension asset terminology Discuss the following ideas related to pension assets: a)Actual return on plan assets b)Expected return on plan assets c)Unexpected gains and losses on plan assets Ex. 19-82Pension plan calculations The following information relates to the defined benefit pension plan for Strawberry Dale Ltd.: Dec 31/16 Dec 31/17 Defined benefit obligation$2,250,000$3,000,000 Fair value of plan.
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11. In calculating the present value of the minimum lease payments, IFRS requires the lessee should a) use its incremental borrowing rate in all cases. b) use either its incremental borrowing rate or the interest rate implicit in the lease, whichever is higher. c) use either its incremental borrowing rate or the interest.
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11) In regard to reconciling income reported on the financial statements to taxable income, which of the following statements is incorrect? a)All differences between accounting income and taxable income are considered. b) Only reversible differences are considered. c) Only those that result in temporary differences are considered when determining deferred tax amounts for.
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Ex.19-87Return on plan assets How is the return on plan assets determined? Ex.19-88Calculate surplus/deficit Star Company calculated its defined benefit obligation at December 31, 2017 to be $1,975,000. The fair value of the plan assets on the same date was $1,545,000. Instructions Calculate Star Company’s plan surplus or deficit and explain what the surplus or.
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61.              The net defined benefit liability/asset that should be reported at December 31, 2017 is a) $120,000 asset. b) $120,000 liability. c) $204,000 asset. d) $360,000 liability. 62.              Presented below is pension information related to Mango Ltd. at December 31, 2017.The corporation uses IFRS. Defined benefit obligation......................$3,500,000Cr Plan assets (at fair value)......................2,500,000Dr Past service costs............................100,000 Contributions to plan..........................200,000               The.
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Pr. 19-104Calculating pension expense and pension plan surplus or deficit Fernando’s Furniture Inc. sponsors a defined benefit pension plan for its employees. The plan’s trustee reports the following information for calendar 2017: Defined benefit obligation, Jan 1.................$240,000 Fair value of plan assets, Jan 1..................180,000 Current service cost........................... 80,000 Actual & expected return on plan assets...........21,000 Contributions................................70,000 Benefits.
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Ex. 19-91Measuring 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, 2017 January 1, 2017December 31, 2017 Defined benefit obligation$3,500,000$3,990,000 Fair value of plan assets1,750,0002,240,000 For 2017, the service cost is $210,000 and past service cost (effective.
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MULTIPLE CHOICE—Conceptual 1. Why has accounting for leases been controversial? a) Leasing is uncommon. b) Companies have structured leases in a way that the lease liabilities remain “off-balance sheet”. c) All leases are structured the same way and treated the same way. d) Most leases are immaterial. 2. Accounting for leases is important to all EXCEPT.
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11.In calculating diluted earnings per share, dividends on non-convertible cumulative preferred shares should be a) ignored. b) deducted from net income whether declared or not. c) deducted from net income only if declared. d) added back to net income whether declared or not. 12.What effect will the acquisition of treasury shares have on shareholders' equity.
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63.              On December 31, 2017, Eastern 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, 2017. The lease is appropriately accounted for by Eastern as a finance lease. Eastern’s incremental borrowing.
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Pr. 16-95Hedging (forward contract) On May 1, 2017, Startrek Corp., a coffee wholesaler, placed an order with its supplier for six tons of coffee, to be delivered and paid for on September 30, 2017.At this time, the spot (current) price for one ton of coffee is $3,000, and the future (forward).
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Exercises Ex.19-74Pension terminology Briefly explain the following terms a)Pension plan b)Contributory plans c)Non-contributory plans Ex.19-75Examples of employee post-employment benefits There are a variety of post-employment benefits that are earned by employees and that are expected to be provided to them on a long-term basis. List some examples of employee post-employment benefits. Ex.19-76Defined contribution plan What is a defined contribution.
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1) Of the various taxation options available to OECD countries, those that had the most negative impact on gross domestic product were a)property taxes. b) consumption taxes. c) corporate taxes. d) personal income taxes. 2) Under IFRS, end of the period adjustments may need to be made to income for all of the following reasons.
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PROBLEMS Use the following information to answer Pr. 17-62–17-63. HarleyCorp. has been operating successfully for the past fifteen years. However, during recent years, its common shares outstanding changed as shown below. The corporation uses the calendar year as its fiscal year. 201720162015 Shares outstanding, Jan 1 300,000240,000200,000 Shares sold, Apr 201540,000 25% stock dividend, Jul 1,.
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Pr. 17-68 Basic and diluted earnings per share ArltInc., a publicly accountable corporation, has a July 31 year end. For the 2017 fiscal year, there were 100,000 common shares outstanding all year. Net income for the year ended July 31, 2017 was $950,000. Their income tax rate is 30%. Part A During.
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21.The reverse treasury stock method is used for a) written call options. b) written put options. c) convertible preferred shares. d) convertible bonds. 22.Which of the following statements is correct? a) Options that are in the money are ignored in earnings per share calculations. b) Options that are out of the money are ignored in earnings per.
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PROBLEMS Pr. 19-103Measuring and recording pension expense Presented below is information related to the defined benefit pension plan of Swiss Chard Ltd. for the year 2017.The corporation uses IFRS. Defined benefit obligation, Jan 1.................$375,000 Fair value of plan assets, Jan 1..................350,000 Current service cost...........................300,000 Interest (discount) rate.........................10% Expected& actual return on plan assets...........9% Past service cost (as of.
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Pr. 17-65Basic and diluted earnings per share Bloodhound Corp. provides the following data for calendar 2017 Net Income.....................................$2,400,000 Transactions in Common SharesChangeCumulative Jan 1beginning               1,000,000 Mar 1purchase of treasury shares(60,000)940,000 Jun 1shares split 2 for 1940,0001,880,000 Nov 1issuance of new shares120,0002,000,000 8% Cumulative Convertible Preferred Shares (no par) Convertible into 200,000 common shares adjusted for split on June 1......................$1,000,000 Stock.
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MULTIPLE CHOICE—Conceptual 1.EPS is important to common shareholders for all of the following reasons, EXCEPT a)it indicates the amount of income that is earned by each common share. b)common shareholders have a residual interest in the company. c)it is an indicator of cumulative dividend payments. d)it is an indicator of the amount of income earned.
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41.              Initial direct costs are a) costs incurred by a lessee that are directly associated with negotiating and arranging a lease. b) expensed in the year of incurrence by the lessor in a financing-type lease. c) spread over the term of a sales-type lease by the lessee. d) deferred and allocated over the.
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MULTIPLE CHOICE—Computational 53.              On January 1, 2017, Marlene Corp. enters into an agreement with Dietrich Rentals Inc. to lease a machine from them. Both corporations adhere to ASPE. The following data relate to the agreement: 1.The term of the non-cancellable lease is three years with no renewal option. Payments of $271,622.
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MULTIPLE CHOICE—Conceptual 1.Employee future benefits do NOT include a) post-employment pension plans. b) long-term severance benefits. c) regular vacation pay. d) unrestricted sabbatical leaves. 2. Examples of post-employment benefits that are provided after employment but before retirement include all EXCEPT a) long-term disability income benefits. b) pension plan. c) long-term severance benefits. d) continuation of benefits such as health care. 3..
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41) On January 2, 2016, BrunswickCorp. purchased a depreciable asset for $600,000. The asset has an estimated 4 year life with no residual value. Straight-line depreciation is being used for financial statement purposes but the following CCA amounts will be deducted for tax purposes:2016$150,0002019$56,2502017225,000202028,1252018112,500202128,125Assuming an income tax rate of 30%.
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Ex.19-84Methods of measuring pension obligations Discuss the different methods of measuring the pension obligation and identify which method is used for IFRS and ASPE. Ex.19-85Defined benefit obligation continuity schedule Provide the defined benefit obligation (DBO) continuity schedule. Ex.19-86Plan assets continuity schedule Provide the plan assets continuity schedule. .
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Ex. 19-83Pension plan calculations and journal entries On January 1, 2017, Prune Ltd. reported the following balances relating to their defined benefit pension plan: Defined benefit obligation......................$3,200,000 Fair value of plan assets.......................3,200,000 Other data related to the pension plan for 2017 are: Current service cost...........................140,000 Contributions to the plan.......................204,000 Benefits paid................................200,000 Actual return on plan assets....................192,000 Interest (discount) rate.
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Pr. 17-64Diluted earnings per share On January 1, 2017, BarleyCorp. had 200,000 common shares outstanding. On April 1, 2017, 20,000 common shares were issued and on September 1, 2017, Bernard bought back 30,000 treasury shares. The market price of the common shares averaged $50 during 2017. The corporation’s income tax rate.
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  MULTIPLE CHOICE—Computational 28.At January 1, 2017, ArielCorp. had 300,000 common shares outstanding (no preferred shares issued). On July 1, 2017, the corporation issued 450,000 shares, and reported net income of $630,000 for calendar 2017. Basic earnings per share for 2017 would be a) $2.10. b) $1.40. c) $1.20. d) $0.84. 29.At December 31, 2017, BariumCorp. had.
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Pr. 19-105Preparation of a pension worksheet and pension entries The accountant for Camberwell Ltd. has developed the following information regarding the company's defined benefit pension plan for calendar 2017: Service cost.................................$600,000 Actual return on plan assets....................315,000 Contributions................................1,080,000 Benefits paid to retirees........................72,000 Interest (discount) rate.........................10% The corporation uses the immediate recognition approach under ASPE. Instructions a)Using the above information, complete.
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41.Regarding post-employment health-care benefits, a) they are generally funded. b) they are well-defined and level in dollar amount. c) the beneficiary is the retiree, spouse, and other dependents. d) benefits are payable monthly. 42.Accrued post-employment benefit obligations are a) recorded at their present value. b) recorded in the same manner as pension benefit obligations. c) not recognized in.
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38.Information concerning the capital structure of Shepherd Corporation follows   December 31,     20172016 Common shares outstanding100,000 shares100,000 shares Convertible preferred shares outstanding10,000 shares10,000 shares 9% convertible bonds$2,000,000$2,000,000 During 2017, Shepherd paid dividends of $1.00 per common share and $2.50 per preferred share. The preferred shares are non-cumulative, and convertible into 20,000 common shares. The 9% convertible bonds.
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Pr. 17-69Basic and diluted earnings per share The following data are presented by Quentin Corp. for calendar 2017 Net income$4,500,000 Common shares outstanding, 1,000,000 shares 10%, cumulative preferred shares, convertible into 120,000 common shares$1,600,000 8% convertible bonds; convertible into 105,000 common shares$7,500,000 360,000 call options exercisable at $25 per share Additional information 1.The common and preferred shares and.
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51.              Presented below is information related to Peach Corporation’s defined benefit pension plan for calendar 2017. The corporation uses IFRS. Defined benefit obligation, Jan 1.................$200,000 Fair value of plan assets, Jan 1..................180,000 Current service cost...........................27,000 Contributions to plan..........................25,000 Actual and expected return on plan assets.........9,000 Benefits paid to retirees........................40,000 Interest (discount) rate.........................10% The fair value of the.
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21. The lease liability under IFRS 16 is amortized using a) the straight-line amortization method. b) the discounted amortization method. c) the present value interest method. d) the effect interest method. 22. A lessee reported a ten-year capital lease requiring equal annual payments. The reduction of the lease liability in year 2 should equal a) the.
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Ex. 19-92Measuring and recording pension expense The following information relates to the defined benefit pension plan for Huckleberry Ltd. for 2017.The corporation uses IFRS. Current service cost...........................$260,000 Contributions................................250,000 Interest rate for obligation......................10% Expected & actual return on plan assets...........9% Defined benefit obligation, Jan 1.................240,000 Fair value of plan assets, Jan 1..................180,000 Actuarial gain................................24,000 Instructions a)Calculate the pension expense to be.
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*Ex.19-101Calculating pension components Describe how each of the following is calculated: Current service cost Defined benefit obligation Past service cost * *Ex.19-102Calculate current service costs Joe Smith, age 45, begins employment with Square Corporation on January 1, 2017 at a starting salary of $45,000. It is expected that Joe will work for the company for 20 years,.
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Exercises Ex.17-51EPS calculations What are the two formulas normally calculated only for common shares, and how and why are they used? Ex. 17-52EPS disclosures under IFRS What EPS disclosures are required under IFRS? Ex. 17-53EPS presentation When and how is EPS used and presented? .
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11.Accounting problems for all pension plans may include all the following EXCEPT a) determining the level of individual premiums. 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) measuring the amount of pension obligation. 12.In pension accounting, the actuary’s.
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Pr. 17-67Basic and diluted earnings per share ChamaaLtd. provides the following information for 2017 1.Net income$560,000 2.Capital structure a)Convertible 6% bonds. Each of the 300, $1,000 bonds is convertibleinto 50 common shares for the next 10 years 300,000 b) Common shares, 200,000 shares issued and outstanding during theentire year 2,000,000 c) Stock options outstanding to buy.
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21) Taxable income of a corporation a)differs from accounting income due to differences in intraperiod allocation between the two methods of income determination. b) differs from accounting income due to differences in interperiod allocation and permanent differences between the two methods of income determination. c) is based on generally accepted accounting principles. d) is.
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31) At the end of 2017, its first year of operations, Kali Corp. prepared the following reconciliation between pre-tax accounting income and taxable income:Pre-tax accounting income$800,000Estimated lawsuit expense 400,000Excess CCA for tax purposes(900,000)Taxable income$300,000The estimated lawsuit expense of $400,000 will be deductible in 2018 when it is expected to be.
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Ex. 17-54Weighted average of common shares outstanding At January 1, 2017, Elan Corporation had 300,000 common shares outstanding (no preferred issued). On March 1, the corporation issued 45,000 new shares to raise additional capital. On July 1, the corporation declared and issued a 2 for 1 stock split. On October 1,.
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Ex. 17-56 Basic and diluted earnings per share Throughout the calendar year 2017, Kali Corporation has 400,000 common shares outstanding (no preferred shares issued). In addition, Collie has 5,000, 20-year, 7% bonds outstanding, issued at par in 2015. Each $1,000 bond is convertible into 20 common shares after June 30, 2018..
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