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Study Resources (Accounting)

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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EXERCISES Ex 21-47 Overall objectives of accounting and disclosure standards for accounting changes What are the three main objectives of accounting and disclosure standards for accounting changes? Ex. 21-48 Conditions for a change in accounting policy under IFRS and ASPE What conditions are allowed for a change in accounting policy to be acceptable? Ex. 21-49.
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73.              On July 1, 2017, Nickel Ltd. leases equipment from Dime Corp., under an eight year capital (finance) lease. Equal annual payments of $100,000 are required, payable on July 1 of each year. The first payment is made on July 1, 2017. The appropriate rate of interest for this.
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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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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. 21-52Retrospective application for accounting changes Discuss how retrospective application for accounting changes would be applied. Ex. 21-53 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. 1.Change from straight-line method of.
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Ex. 20-96Accounting for a capital lease by the lessee Explain the procedures used by the lessee to account for a capital or finance lease. Ex. 20-97Capital lease amortization and journal entries Erica Corp. leases machinery on January 1, 2017, and records this as a finance lease. Seven annual lease payments of $140,000 are.
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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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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. 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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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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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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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—Computational 26. Caspar Corp. began operations on January 1, 2016, and uses FIFO to cost its inventory. Management is contemplating a change to the average cost method and is interested in determining what effect such a change will have on pre-tax income. Accordingly, the following information has been developed: Ending Inventory2016   2017    FIFO$240,000$270,000 Average.
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Ex 20-100 Differences between approaches What are the differences between capital and operating leases under ASPE? Ex. 20-101Reasons companies resist capital leases Companies have resisted having an increased recognition of capital leases, what arguments have companies used against capitalization? Ex. 20-102 Operating lease calculations On January 1, 2017, Lewis Corp. purchased a building for $900,000,.
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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 Sora Inc. for the current year ending December 31, 2017: a) Change in accounting policy requiring.
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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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*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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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. 20-87 IFRS 16 classification of leases Under the new IFRS 16 what are leases classified as and how are they accounted for?What are the two exceptions to this standard? Ex. 20-88Lease criteria under IFRS 16 Discuss the criteria cited by IFRS 16 to support classifying a lease as a finance lease. Ex. 20-89Lease.
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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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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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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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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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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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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. 19-83Pension 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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Ex. 20-107Accounting for a direct financing lease by the lessor Explain the procedures used to account for a direct financing lease (ASPE) or finance lease (IFRS) by the lessor. Ex. 20-108 Accounting for a sales-type lease by the lessor Explain the procedures used to account for a sales-type lease (ASPE) or manufacturer or.
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Pr. 20-123 Lessee accounting – under IFRS 16 On January 1, 2017, Shrek Inc. enters into a seven-year non-cancellable lease with Fiona Ltd. For machinery having an estimated useful life of nine years and a fair value of $4,300,000.Shrek’s incremental borrowing rate is 8% and Fiona’s implicit rate is 6%.Shrek uses.
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Ex. 20-114 Differences between ASPE and IFRS 16 Discuss the differences between ASPE and IFRS 16 in recognition of leases by lessee. Ex. 20-115Differences between ASPE and IFRS 16 Discuss the differences between ASPE and IFRS 16 in recognition of leases by the lessor. *Ex. 20-116Lessee and lessor accounting (sale-leaseback) On January 1, 2017, Baritone.
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PROBLEMS Pr. 20-121Lessee accounting—capital lease Long Ltd., a private corporation adhering to ASPE, enters into a non-cancellable lease agreement on July 1, 2017, to lease equipment from Fong 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 $126,807.
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Ex 20-91Discount rates For the lessee discuss what discount rates should be used and the rationale behind the rate for ASPE and IFRS. *Ex. 20-92 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? * Ex. 20-93 Calculate lease payment by.
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Ex. 20-109 Recording a manufacturer/dealer lease On January 1, Lexy Corp. leases a truck they have manufactured to Roxy Corp.Lexy has calculated the lease payments to Roxy to be $40,000 per year for 4 years and the sales price of the truck is $130,000.It cost Lexy $100,000 to manufacture the truck.Record.
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Ex. 20-94 Hidden costs in leases Many car dealerships will advertise car leases for 0% financing. Does 0% financing actually exist or are their hidden costs associated with the lease? If, so what are some examples. Ex. 20-95 Lessor accounting—sales-type lease Albert Corp., a private corporation that adheres to ASPE, is a manufacturer.
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Pr. 20-124Lessor accounting—lease with IFRS criteria On January 1, 2017, Regal Air Inc. enters into an eight year, non-cancellable lease agreement to lease an airplane to Atlantic Airlines, with payments required at the end of each year. The following information relates to this agreement: 1.Atlantic Airlines has the option to purchase the.
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Ex. 20-117 Sale-leaseback transactions Why would a company enter into a sale-leaseback transaction? *Ex. 20-118 Lessee and lessor accounting (sale-leaseback) On January 1, 2017, Kirk Corp. sells land to Spock Inc. for $2,000,000, and immediately leases the land back. Both companies follow ASPE. The following information relates to this transaction: 1.The term of the.
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Ex. 20-103 IFRS 16 additional disclosures A right-of-use or capital lease has similar disclosures as in the standards for long-term liabilities and some additional disclosures. What are the additional disclosures? Ex. 20-104 IFRS 16 disclosure requirements for non-capital leases What disclosures are required under IFRS 16 for leases that are exempt from right-of-use.
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Pr. 20-122Lessee accounting—capital lease On January 1, 2017, 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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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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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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EXERCISES Ex. 20-83 IAS 17 versus IFRS 16 Explain the issues with IAS 17 compared to IFRS 16. Ex. 20-84 IFRS 16 effective date When is the effective date for IFRS 16 and is US GAAP adopting a similar standard? Ex. 20-85Types of lessors Explain the difference between a manufacturer finance company and an independent finance.
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Ex. 20-111Calculation of lease amounts for lessor for Manufacturer/Dealer leases with guaranteed residual amount. Cow Co. is a farming equipment dealer who reports using IFRS. It plans to lease a piece of farming equipment to Horse Inc.and wants to earn a profit on the equipment as well as earn interest.The details.
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Ex. 20-98 Lease liabilities What approach does IFRS use and what items need to be considered in determining the lease liability? Ex. 20-99 Initial measurement of right-of-use asset and lease liability Larry Co.leases a fleet of vehicles to Curly Co. for 5 years.The annual lease payment, due at the beginning of the year.
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