Intermediate Accounting
Volume 1 8th Edition
ST
SOLUTIONS
UV
IA
MANUAL
_A
PP
Thomas H. Beechy
RO
Joan E. Conrod
Elizabeth Farrell
────────────────────────────────────────────────────
VE
Comprehensive Solutions Manual for Instructors
and Students
D?
© Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla
Tomulka & Romi-Lee Sevel. All rights reserved. Reproduction or distribution without
?
permission is prohibited.
© Successhands
, Solutions Manual for Intermediate Accounting, Volume 1 (8th Edition)
Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick,
Kayla Tomulka & Romi-Lee Sevel
ISBN: 9781260881233
ST
VOLUME 1: FINANCIAL REPORTING FOUNDATIONS AND ASSET
ACCOUNTING
UV
1. The Framework for Financial Reporting
2. Accounting Judgements
3. Statements of Income and Comprehensive Income
4. Statements of Financial Position and Changes in Equity; Disclosure Notes
IA
5. The Statement of Cash Flows
6. Revenue Recognition
7. Financial Assets: Cash and Receivables
_A
8. Cost-Based Inventories and Cost of Sales
9. Long-Lived Assets
10. Depreciation, Amortization, and Impairment
11. Financial Instruments: Investments in Bonds and Equity Securities
PP
RO
VE
D?
?
© Successhands
, Solution Manual for
Intermediate Accounting Volume 1 8E Thomas H. Beechy, Joan E. Conrod,
Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel
SMT
All Chapters 1-11 [With Appendix]
Chapter 1: The Framework for Financial Reporting
UEDV
Case 1-1 Mulla and Yang
1-2 Richard Wright
1-3 Taylor Jay
ICAO
Suggested Time
Technical 1-1 Chapter overview, true-false .............................. 10
1-2 Chapter overview, true-false .............................. 10
1-3 Acronyms……………………………………… 10
_NA
1-4 IFRS or ASPE…………………………………. 10
1-5 IFRS or ASPE…………………………………. 10
1-6 Disclosed basis of accounting………………… 10
1-7 GAAP and reporting currency ........................... 10
1-8 GAAP and reporting currency ........................... 10
PNPO
1-9 Users and objectives………………………….. 10
1-10 Required financial statements ............................ 10
Assignment 1-1 IASB standard-setting ...................................... 10
1-2 International comparisons ................................ 10
RISO
1-3 Accounting choices .......................................... 10
1-4 Effect of accounting policies .......................... 15
1-5 Reporting alternatives ...................................... 10
1-6 Non-IFRS situations ........................................ 15
1-7 Reporting situations ......................................... 20
SVE
1-8 Reporting situations ......................................... 15
1-9 Objectives of financial reporting ..................... 20
1-10 Impact of differing objectives ......................... 20
1-11 Accounting policy disagreement......................
EDU
15
1-12 Accounting policies and reporting objectives .. 10
1-13 Policy choice .................................................... 20
?R?
© 2022 McGraw Hill. All rights reserved
Solutions Manual to accompany Intermediate Accounting, Volume 1, 8th edition 2-1
, Cases
Case 1-1 (LO1.2, LO1.3, LO1.4, LO1.5)
SMT
Notes for Discussion With Elicia:
There is a conflict of interest between the objectives of Elicia and Dabika due to the
buyout clause in the shareholder agreement. Elicia will have a motivation to decrease
shareholders‘ equity since this will reduce the amount that she will be required to pay to
UEDV
buy out Dabika. Dabika will be interested in increasing shareholders‘ equity to increase
the amount she will receive. It must be clarified who I am working for since I may have a
conflict of interest since I know both parties.
It is important that all accounting policies are ‗fair‘ to both sides. What is considered
ICAO
‗fair‘? From Dabika‘s perspective, fair could be accounting policies consistent with prior
years. From Elicia‘s perspective, fair could be if the economic events change the
accounting policy would change. Fair could be both sides split the difference where
Dabika and Elicia disagree on value. In the future it is important that the shareholders
_NA
agreement is more specific.
Due to the choices allowed within GAAP a policy could be selected that would be more
beneficial to one of the parties. It is assumed since this is a small private company that
they are using ASPE. There is no indication that neither Elicia or Dabika would be using
PNPO
IFRS nor that the bank requires it.
Inventory
Elicia wants to write off the inventory value for the garden gnomes and statues and this
will decrease the amount of the payment to Dabika. According to ASPE, inventory would
RISO
be valued at the lower of cost and net realizable value. Even though this inventory has
been sitting in the gardening centre there is still a few being sold each year. This indicates
there is still some value associated with the inventory and therefore it should not be
written down to zero. It should be determined what the net realizable value of this
inventory is to determine the amount of the write off. If it is all written off and then sold
at a later date this would not be fair to Dabika since Elicia would get the benefit of a
SVE
reduced shareholders‘ equity and thus a lower payment required to Dabika. The purchase
of this inventory would have been a decision made by both Dabika and Elicia so if the
inventory is unsellable they should both bear the impact of this decision.
EDU
Warranty
According to ASPE the accounting policy is appropriate and a warranty expense should
be included for the guarantee. The impact is that this would decrease shareholders‘ equity
and the amount of the payment to Dabika. This is a new policy that did not exist until this
?R?
year. The estimate of 5% was only based on sales from the fall. Since it is a new policy
that was made by Elicia on her own it may be appropriate that the impact of this is
excluded from the calculation of shareholders‘ equity. At a minimum the estimate should
©2022 McGraw Hill. All rights reserved
2-2 Solutions Manual to accompany Intermediate Accounting, Volume 1, 8th edition
Volume 1 8th Edition
ST
SOLUTIONS
UV
IA
MANUAL
_A
PP
Thomas H. Beechy
RO
Joan E. Conrod
Elizabeth Farrell
────────────────────────────────────────────────────
VE
Comprehensive Solutions Manual for Instructors
and Students
D?
© Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla
Tomulka & Romi-Lee Sevel. All rights reserved. Reproduction or distribution without
?
permission is prohibited.
© Successhands
, Solutions Manual for Intermediate Accounting, Volume 1 (8th Edition)
Thomas H. Beechy, Joan E. Conrod, Elizabeth Farrell, Ingrid McLeod-Dick,
Kayla Tomulka & Romi-Lee Sevel
ISBN: 9781260881233
ST
VOLUME 1: FINANCIAL REPORTING FOUNDATIONS AND ASSET
ACCOUNTING
UV
1. The Framework for Financial Reporting
2. Accounting Judgements
3. Statements of Income and Comprehensive Income
4. Statements of Financial Position and Changes in Equity; Disclosure Notes
IA
5. The Statement of Cash Flows
6. Revenue Recognition
7. Financial Assets: Cash and Receivables
_A
8. Cost-Based Inventories and Cost of Sales
9. Long-Lived Assets
10. Depreciation, Amortization, and Impairment
11. Financial Instruments: Investments in Bonds and Equity Securities
PP
RO
VE
D?
?
© Successhands
, Solution Manual for
Intermediate Accounting Volume 1 8E Thomas H. Beechy, Joan E. Conrod,
Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel
SMT
All Chapters 1-11 [With Appendix]
Chapter 1: The Framework for Financial Reporting
UEDV
Case 1-1 Mulla and Yang
1-2 Richard Wright
1-3 Taylor Jay
ICAO
Suggested Time
Technical 1-1 Chapter overview, true-false .............................. 10
1-2 Chapter overview, true-false .............................. 10
1-3 Acronyms……………………………………… 10
_NA
1-4 IFRS or ASPE…………………………………. 10
1-5 IFRS or ASPE…………………………………. 10
1-6 Disclosed basis of accounting………………… 10
1-7 GAAP and reporting currency ........................... 10
1-8 GAAP and reporting currency ........................... 10
PNPO
1-9 Users and objectives………………………….. 10
1-10 Required financial statements ............................ 10
Assignment 1-1 IASB standard-setting ...................................... 10
1-2 International comparisons ................................ 10
RISO
1-3 Accounting choices .......................................... 10
1-4 Effect of accounting policies .......................... 15
1-5 Reporting alternatives ...................................... 10
1-6 Non-IFRS situations ........................................ 15
1-7 Reporting situations ......................................... 20
SVE
1-8 Reporting situations ......................................... 15
1-9 Objectives of financial reporting ..................... 20
1-10 Impact of differing objectives ......................... 20
1-11 Accounting policy disagreement......................
EDU
15
1-12 Accounting policies and reporting objectives .. 10
1-13 Policy choice .................................................... 20
?R?
© 2022 McGraw Hill. All rights reserved
Solutions Manual to accompany Intermediate Accounting, Volume 1, 8th edition 2-1
, Cases
Case 1-1 (LO1.2, LO1.3, LO1.4, LO1.5)
SMT
Notes for Discussion With Elicia:
There is a conflict of interest between the objectives of Elicia and Dabika due to the
buyout clause in the shareholder agreement. Elicia will have a motivation to decrease
shareholders‘ equity since this will reduce the amount that she will be required to pay to
UEDV
buy out Dabika. Dabika will be interested in increasing shareholders‘ equity to increase
the amount she will receive. It must be clarified who I am working for since I may have a
conflict of interest since I know both parties.
It is important that all accounting policies are ‗fair‘ to both sides. What is considered
ICAO
‗fair‘? From Dabika‘s perspective, fair could be accounting policies consistent with prior
years. From Elicia‘s perspective, fair could be if the economic events change the
accounting policy would change. Fair could be both sides split the difference where
Dabika and Elicia disagree on value. In the future it is important that the shareholders
_NA
agreement is more specific.
Due to the choices allowed within GAAP a policy could be selected that would be more
beneficial to one of the parties. It is assumed since this is a small private company that
they are using ASPE. There is no indication that neither Elicia or Dabika would be using
PNPO
IFRS nor that the bank requires it.
Inventory
Elicia wants to write off the inventory value for the garden gnomes and statues and this
will decrease the amount of the payment to Dabika. According to ASPE, inventory would
RISO
be valued at the lower of cost and net realizable value. Even though this inventory has
been sitting in the gardening centre there is still a few being sold each year. This indicates
there is still some value associated with the inventory and therefore it should not be
written down to zero. It should be determined what the net realizable value of this
inventory is to determine the amount of the write off. If it is all written off and then sold
at a later date this would not be fair to Dabika since Elicia would get the benefit of a
SVE
reduced shareholders‘ equity and thus a lower payment required to Dabika. The purchase
of this inventory would have been a decision made by both Dabika and Elicia so if the
inventory is unsellable they should both bear the impact of this decision.
EDU
Warranty
According to ASPE the accounting policy is appropriate and a warranty expense should
be included for the guarantee. The impact is that this would decrease shareholders‘ equity
and the amount of the payment to Dabika. This is a new policy that did not exist until this
?R?
year. The estimate of 5% was only based on sales from the fall. Since it is a new policy
that was made by Elicia on her own it may be appropriate that the impact of this is
excluded from the calculation of shareholders‘ equity. At a minimum the estimate should
©2022 McGraw Hill. All rights reserved
2-2 Solutions Manual to accompany Intermediate Accounting, Volume 1, 8th edition
