Accounting Expert Answers & Study Resources : Page 130

18) Select transactions of SimBis Accounting Inc. (SAI) are listed below. SAI uses the indirect method to determine cash flows from operating activities. 1. SAI purchases a $200,000, 45-day treasury bill held-for-trading investment. 2. SAI amortizes $32,000 of the discount on bonds payable. 3. At year-end SAI increases its allowance for bad debts.

23) On January 1, 2017, Adara acquired equipment under a finance lease. The lease calls for fifteen annual payments of $10,000 due at the beginning of the year. Adara must return the equipment to the lessor at the end of the lease. The January 1, 2017 payment was made as.

5) The following amortization schedule is for a lease entered into at the start of fiscal 2017 for an asset that will be useful for 5 years. The company uses straight-line depreciation method. Period Year Interest for year @ 4% Payments at end of year Reduction in principal Principal after interest and payments $489,700 1 2017 $19,588 110,000 90,412 399,288 2 2018 15,972 110,000 94,028 305,260 3 2019 12,210 110,000 97,790 207,470 4 2020 8,299 110,000 101,701 105,769 5 2021 4,231 110,000 105,769 0 Required: Provide the appropriate presentation.

18.6   Learning Objective 6 1) On January 1, 2017, Teddy Company sold a building to Breezy Bank for $40,000,000 and immediately leased it back under a 25-year non-cancellable lease at $3,208,000 per year, payable at the beginning of each year. Breezy used an implicit rate of 7% to determine the lease.

22) Here are the terms of a lease agreement: Fair value of leased asset 50,000 Lease term 4 years Payment frequency Annual Payment timing End of year Guaranteed residual value 25,000 Interest rate implicit in lease (known to lessee) 5% Lessee's incremental borrowing rate 8% Required: a. Determine the amount of lease payment that the lessor would require to lease the asset. b. Compute the present value.

15) On July 1, 2017, Janus Company leased equipment to Pluto Company. The terms of the lease are as follows:   Fair value of leased asset 60,000 Lease payments, due at end of lease term starting June 30, 2018 12,000 Lease term 9 years Economic life of leased asset 10 years Guaranteed residual value 6,000 Lessee's incremental borrowing rate 15%   Pluto uses straight-line depreciation.

18) The following are some of the characteristics of an asset available for lease:   Fair value of leased asset 120,000 Useful life 10 years Lease term 7 years Payment frequency Annual Payment timing Beginning of year Unguaranteed residual value 10,000 Interest rate implicit in lease (not known to lessee) 15% Lessee's incremental borrowing rate 14% Required: a. Determine the amount of lease payment that the lessor would require.

13) The following are characteristics of a lease: Price of leased asset from manufacturer 193,000 Lease payments 50,000 Lease term 5 years Lease frequency Annual Payment timing End of year Guaranteed residual value 35,000 Interest rate implicit in the lease agreement 14% Required: Determine the appropriate classification for this lease for the lessor (who is not the manufacturer) and record the journal entries for the lessor.

17.5   Learning Objective 5 1) Which statement is correct? A) The defined benefit liability or asset must be separately identified on the income statement. B) The components of pension expense must be disclosed in the notes to the statements. C) The defined benefit liability or asset must be separately identified on the balance sheet. D).

19.1   Learning Objective 1 1) Which statement is correct? A) Net income equals the cash generated by the company's operations. B) Net income seldom reflects the change in cash during the period. C) Net income is the most important metric to measure the financial performance of a company. D) Cash flow is the most important.

5) On January 1, 2017, Soldier Company sold a building to Billy Bank for $40,000,000 and immediately leased it back under a 25-year non-cancellable lease at $3,208,000 per year, payable at the beginning of each year. Billy used an implicit rate of 7.3333% to determine the lease payments, and this.

7) What are four examples of lease conditions that help mitigate agency costs? 8) List factors that impact the degree to which this agency cost is a factor. 9) What is the general criterion for deciding whether a lease is an operating or a finance lease? 10) Which statement is correct respecting the.

8) What amount is included in the pension reconciliation for the balance sheet? A) Current service cost. B) Unamortized actuarial gains. C) Benefit paid. D) Contributions paid. 9) What amount will be presented on the balance sheet for fiscal 2017? Fiscal 2016 Fiscal 2017 Fair value of pension plan assets 50,000,000 45,000,000 Accrued pension obligation 60,000,000 42,000,000 Contributions 7,000,000 10,000,000 Benefits 8,000,000 8,000,000 A) $3,000,000 surplus B) $3,000,000 deficit C) $5,000,000 D) $8,000,000 10).

16) Here are the terms of a lease agreement: Fair value of leased asset 250,000 Lease term 4 years Payment frequency Annual Payment timing End of year Guaranteed residual value 25,000 Interest rate implicit in lease (known to lessee) 14% Lessee's incremental borrowing rate 16% Required: a. Determine the amount of lease payment that the lessor would require to lease the asset. b. Compute the present value.

9) On January 1, 2017, Brownee Company entered a lease to rent office space. The lease requires $350,000 per year, at the end of each year, for 20 years. The lease is non-cancellable and non-renewable. The building's estimated useful life is 40 years, and its current fair value is estimated.

26) The following are some of the characteristics of an asset available for lease: Fair value of leased asset 150,000 Lease term 8 years Payment frequency Annual Payment timing Beginning of year Guaranteed residual value 25,000 Interest rate implicit in lease (not known to lessee) 11% Lessee's incremental borrowing rate 9%   Required: a. Determine the amount of lease payment that the lessor would require to lease.

19.2   Learning Objective 2 1) Which statement is correct? A) A held for trading security can be classified as cash. B) A held to maturity security cannot be classified as cash. C) A held for trading security can be classified as cash equivalent. D) A held for trading security cannot be classified as cash equivalent. 2).

19.4   Learning Objective 4 1) Which statement is correct? A) Cash flows are grouped by operating, investing and financing activities. B) Cash inflows and outflows are netted against each other. C) Net interest received or paid can be offset in the cash flow statement. D) Income tax paid does not need to be presented separately. 2).

14) Boris Corporation started operations on March 1, 2017. It needs to acquire a special piece of equipment for its manufacturing operations. It is evaluating two options as follows. Option 1: Lease the equipment for 5 years. Lease payments would be $12,000 per year, due at the beginning of each fiscal.

18.4   Learning Objective 4 1) In general, which statement is correct? A) Lessees prefer finance leases. B) Lessees prefer operating leases. C) Operating leases are more favourable to the lessor in the short term. D) Finance leases are more favourable to the lessee in the short term. 2) Why do the supporting indicators for lease classification.

6) On January 1, 2017, Pelvisee Company entered a lease to rent office space. The lease requires Pelvisee to pay $390,000 per year, at the beginning of each year, for 15 years. The lease is non-cancellable and non-renewable. The building's estimated useful life is 30 years, and its current fair.

18.2   Learning Objective 2 1) List four examples of the risks and four examples of rewards of ownership. 2) What are executory costs? A) Maintenance costs that are applicable to only operating leases. B) Maintenance costs that are incurred only when the asset is leased. C) Maintenance costs that are incidental costs in a lease.

10) What guidance does IFRS provide with respect to reporting bank overdrafts on the statement of cash flows? 11) Why are "cash and cash equivalents" treated as a single unit on the cash flow statement? 12) Identify if the following investments meet the requirements to be classified as cash and cash equivalents. .

10) Viribana Corporation started operations on March 1, 2017. It needs to acquire a special piece of equipment for its manufacturing operations. It is evaluating two options as follows. Option 1: Lease the equipment for 10 years. Lease payments would be $11,200 per year, due at the beginning of each fiscal.

24) Here are the terms of a lease agreement: Fair value of leased asset 175,000 Lease term 8 years Payment frequency Annual Payment timing End of year Guaranteed residual value 15,000 Interest rate implicit in lease (known to lessee) 6% Lessee's incremental borrowing rate 8% Required: Determine the amount of lease payment that the lessor would require to lease the asset. 25) The following are some of.

11) Chambers leased equipment to Montga Company on November 1, 2016. The terms of the lease are as follows: Lease term 10 years Economic life of leased asset 12 year Fair value of leased asset 104,000 Guaranteed residual value 10,000 Lease payments, due each Nov 1 12,000 Lessee's incremental borrowing rate 5% Montga uses straight-line depreciation for its property, plant, and equipment.   Required: a. Prepare.

3) On May 1, 2018, Janus Company entered into a ten-year lease for equipment. Annual lease payments are $5,000, payable at the beginning of each lease year (May 1). At the end of the lease, possession of the equipment will revert to the lessor. The equipment has an expected useful.

28) The following are some of the characteristics of an asset available for lease: Fair value of leased asset 88,000 Useful life 10 years Lease term 7 years Payment frequency Annual Payment timing Beginning of year Guaranteed residual value 10,000 Interest rate implicit in lease (not known to lessee) 10% Lessee's incremental borrowing rate 8% Required: a. Determine the amount of lease payment that the lessor would require.

11) The following are the characteristics of a lease: Fair value of leased asset 150,000 Lease payments 25,500 Lease term 7 Payment frequency Annual Payment timing End of year Guaranteed residual value None Interest rate implicit in lease 8%   Required: Determine the present value of minimum lease payments (MLP) and the appropriate classification of this lease for the lessee. 12) The following are the characteristics of a.

14) Masons' balance sheet shows a defined benefit asset of $740,000. Records show that there are $89,000 of past service costs and $610,000 of actuarial losses that remain unamortized. Required: Using the pension reconciliation required in the company's note disclosures, determine the pension plan's surplus or deficit. 15) Feldman has a defined benefit.

18.5   Learning Objective 5 1) On April 1, 2018, Helo Company entered into a five-year lease for equipment. Annual lease payments are $15,000, payable at the beginning of each lease year (April 1). At the end of the lease, possession of the equipment will revert to the lessor. The equipment has.

16) Sherya Inc.'s policy is to report all cash flows arising from interest and dividends in the operating section. Sherya's activities for the year ended December 31, 2018 included the following: ?Interest expense for the period was $10,000. The interest payable account decreased $4,000. ?Made a $110,000 principal payment on a bank.

13) Here are the terms of a lease agreement: Fair value of leased asset 250,000 Lease term 10 years Payment frequency Annual Payment timing End of year Guaranteed residual value 0 Interest rate implicit in lease (known to lessee) 9% Lessee's incremental borrowing rate 9% Required: a. Determine the amount of lease payment that the lessor would require to lease the asset. b. Compute the present value.

19) Select transactions of June Bowen Inc. (JBI) are listed below. JBI uses the indirect method to determine cash flows from operating activities. 1. JBI amortizes $12,000 of the discount on bonds payable. 2. At year-end JBI increases its allowance for bad debts by $18,000. 3. JBI's income tax expense totaled $50,000. Its.

18.3   Learning Objective 3 1) Which statement is correct about the "guaranteed residual value"? A) It is assurance that the lessee will take care of the property. B) It is provided by the lessor. C) Lessor assumes the risk of the property falling below the guaranteed amount. D) It is not included in the minimum.

8) Why do lessors prefer financing lease treatment over operating lease treatment? 9) Which statement is true? A) The guaranteed residual value is provided by the lessor. B) The bargain purchase option is not a part of the minimum lease payment calculation. C) The incremental borrowing rate is the interest rate that the lessor.

18.1   Learning Objective 1 1) Which statement is correct? A) In an operating lease, the lessee uses the asset for most of the asset's useful life. B) The lessee expenses the cost of the lease in the period the benefits are received in an operating lease. C) An operating lease transfers the risks and.

14) Recon Cile Ltd.'s policy is to report all cash flows arising from interest and dividends in the operating section. Recon Cile's activities for the year ended December 31, 2018 included the following: ?Sold a held-for-trading investment for $16,000. The book value of this investment, which was not designated as a.

20) Salisbury Creamery leases its ice cream making equipment from Little Rock Finance Company under the following lease terms:   ?The lease term is five years, non-cancellable, and requires equal rental payments of $56,926 due at the beginning of each year starting January 1, 2016. ?Upon inception of the lease on January 1,.

12) Mamie K. Ltd.'s policy is to report all cash flows arising from interest and dividends in the operating section. Mamie's activities for the year ended December 31, 2018 included the following: ?Income tax expense for the year was $36,000. ?Sales for the year were $730,000. ?Accounts payable decreased $20,000 in 2018. ?Selling and.

21) The opening balance in the land account for Adara Corp for fiscal 2017 was $500,000; the closing balance was $610,000. During the year land costing $130,000 was given to a creditor in full settlement of a $152,000 loan. The fair value of the land at the time of the.

7) Provide a summary of presentation and disclosure requirements relating to the statement of cash flows. Summary of presentation and disclosure requirements relating to the statement of cash flows. Presentation: Disclosure: 8) Financial information for Fesone Inc.'s balance sheet for fiscal 2017 and 2018 follows: 20182017 Cash204,800550,000 Accounts receivable1,150,0001,300,000 Inventory410,000250,000 Investments - held for trading400,000 Investments - held to maturity150,000 Property.

17) Changing Assumptions Ltd. has the following details related to its defined benefit pension plan as at December 31, 2013: Pension fund assets of $1,900,000 and Actuarial obligation of $1,806,317. The actuarial obligation represents the present value of a single benefit payment of $3,200,000 that is due on December 31, 2019,.

5) Complete this table identifying the key differences between IFRS and ASPE standards for leasing. ISSUE IFRS ASPE Lease capitalization criteria–lessee Lease capitalization criteria–lessor Lessor's classification of finance (capital) leases Lessee's discount rate for present value calculations 6) Assume that Speery agrees to lease a new machine from LEERY on January 1, 2017, for $30,000 per year, paid.

35) For the following lease, determine the minimum present value calculation for the lessor. Annual payment (due at end of year) $23,000 Lease term 5 Incremental rate 10% Implicit rate (known to lessee) 8% Unguaranteed residual value NA Guaranteed residual value 25,000 A) 91,832 B) 102,711 C) 105,444 D) 108,846 36) For the following lease, determine the minimum present value calculation for the lessee. Annual payment (due at.

12) Cerebral Corporation started operations on March 1, 2017. It needs to acquire a special piece of equipment for its manufacturing operations. It is evaluating two options as follows. The equipment has a useful life of 5 years and would be depreciated on a straight-line basis. No residual value is expected.

5) Complete the following: a. List the three primary sources of information required to prepare a statement of cash flows. b. A company may report its accounts receivable at the gross amount less an allowance for bad debts. Contrast the direct and indirect methods of adjusting for accounts receivable reported at the.

19.3   Learning Objective 3 1) Which of the following is a financing activity? A) Collection of accounts receivable. B) Collection of loans receivable C) Receipt of bank loan. D) Sale of a machine. 2) Which of the following is an operating activity? A) Receipt of customer deposit. B) Proceeds from mortgage issue. C) Purchase of land. D) Redemption of preferred.

17.6   Comprehensive Question 1) Capricious Co. Ltd. (Cap) operates a defined benefit pension plan that offers its employees an annual retirement income based on years of service and average of the final five years' earnings prior to retirement. On January 1, 2015, Cap improved the pension benefits by increasing the percentage of.

8) What are the options for recording interest and dividends received and interest and dividends paid on the cash flow statement according to Accounting Standards for Private Enterprises (ASPE)? 9) Which statement is correct according to IAS 7? A) An enterprise must classify the receipt of interest and dividends received as an.