Solution Manual for m m
IntermediatemAccountingmVolumem2m8thm EditionmThomasmH.mBeechy,mJoanm
E.mConrod, m Elizabet h m Farrell, mIngrid m McLeod- Dick, m Kayla m To mulka, m Ro mi-
Leem Sev el mChapterm12-22
Chapter 12: Financial Liabilities and Provisions
m m m m m
Case 12-1 WintermFunmIncorporated
12-2 PrescriptionsmDepot mLimited
12-3 CamanimCorporation
Suggested mTime
TechnicalmReview
TR12-1 Financialmliabilitiesmand mprovisionsm(IFRS)m...... 10
TR12-2 Financialmliabilitiesmand mprovisionsm(ASPE)m..... 10
TR12-3 Provision,mmeasurement m................................... 10
TR12-4 Guaranteem......................................................... 10
TR12-5 Provision,mwarrantym.......................................... 5
TR12-6 Foreignmcurrencym.............................................. 5
TR12-7 Notempayablem.................................................... 5
TR12-8 Discounting,mnotempayable................................ 10
TR12-9 Discounting,mprovisionm..................................... 10
TR12-10 Classification,mliabilities................................... 10
Assignment mA12-1 Financialmversusmnon-financialmliabilities……. 10
A12-2 Commonmfinancialmliabilities………………… 10
A12-3 Commonmfinancialmliabilities............................ 10
A12-4 Commonmfinancialmliabilities:mtaxesm................. 20
A12-5 Commonmfinancialmliabilities:mtaxesm ................ 20
A12-6 Foreignmcurrencympayables……………………. 10
A12-7 Foreignmcurrencympayablesm............................... 10
A12-8 Commonmfinancialmliabilitiesmand mforeignmcurrenc 25
y
A12-9 Provisions......................................................... 20
A12-10 Provisionsm........................................................ 20
A12-11 Provisions......................................................... 20
A12-12 Provisionmmeasurement m.................................... 15
A12-13 Provisionmmeasurement m.................................... 15
A12-14 Provisions;mcompensated mabsences…………... 15
A12-15 Provisions;mcompensated mabsencesm.................. 15
A12-16 Provisions;mwarrantym........................................ 15
A12-17 Provisions;mwarrantym ....................................... 20
A12-18 Provisions;mwarrantym ....................................... 25
A12-19 Discounting;mno-interest mnotem........................... 15
©m2022 mMcGra w mH illm Lt d.m Allm right s mres erv
Solutions m Ma nua lmt omacc om pa nym Inte rme diate m Ac c ounting,m Volume m2 ,m8 thm ed ed.
ition 14-1
, A12-20 Discounting;mlow-interest mnotem ........................ 20
A12-21 Discounting;mlow-interest mnotem......................... 20
A12-22 Discounting;mprovision..................................... 15
A12-23 Discounting;mprovision..................................... 25
A12-24 Discounting;mprovision..................................... 25
A12-25 Classificationmand mSCF..................................... 20
A12-26 SCFm.................................................................. 20
A12-27 Liabilitiesm–mIFRSmand mASPEm .......................... 10
A12-28 Liabilitiesm-mASPEm ........................................... 20
A12-29 Liabilitiesm-mASPEm............................................ 20
A12-30 Provisions/Contingenciesm–mIFRSmand mASPE…. 20
A12-31 DAISm–mwarrantymprovisionmtrend……………... 15
A12-32 DAISm–mprovisionmformcouponmrefund………… 15
Cases
Casem12-1m(LO12.3,mLO12.5,mLO12.6)
WintermFunmIncorporated
To:mMembersmof mBoard mof mDirectorsmFro
m:mAccountingmConsultant
RE:mWintermFunmIncorporated
Overview
WintermFunmIncorporated m(WFI)musesmIFRSmformfinancialmreporting. mThe mbankmloan mhasmam
minimumm current mratiom somyoumwillmneed mtombemcarefulmand mwatchmformanymimpactsmonmthe
mratio.mYoumhavemhad mamtoughmyearmthismyearmand mfaced mamlossmsomthembankmfinancingmismcrit
icalmtomyourmoperations.
Issues
1. Revenuemrecognitionmmemberships
2. Revenuemrecognitionmguests
3. Specialmpromotions
4. Coupons
5. ManufacturermLoan
6. Lawsuit
7. Warranty
8. Gasolinemstoragemtanks
9. Foreignmcurrencympayables
10. Compensated mabsences
Solutions m Ma nua lmt omacc om pa nym Inte rme diate m Ac c ounting,m Volume m2 ,m8 th m e d 14-2
ition
, ©m2022 mMcGra w mH illm Lt d.m Allmright s mres erv ed.
©m2022 mMcGra w mH illm Lt d.m Allm right s mres erv
Solutions m Ma nua lmt omacc om pa nym Inte rme diate m Ac c ounting,m Volume m2 ,m8 thm ed ed.
ition 14-3
, AnalysismandmRecommendations
1. Revenuemrecognitionmmembership
smFollowingmthem5mstepmIFRSmmodel:
Initiationmfee
Stepm1:mThemcontract mwithmthemcustomerm ismformthemmembership minmthemclub.m Thismwould mb
emamwrittenmagreement mbetweenmthemmembermand mWFI.
Stepm2:mTheremis monemperformancemobligation,mthempromised mservicem ismmembershipm inmthe
mskimclub.mTheremismnomtransfermof mthemservicemuntilmthemmembershipmismprovided.
Stepm3:mThemcontract mpricem ism$10,000.m Themnon-
refundablemdeposit mismanmadvancempayment mtowardsmthisminitiationmfeemand mismpart mof mthem
overallmtransactionmprice.
Stepm4:mNomallocationmsincemtheremismonlymonemperformancemobligation.
Stepm5:mThemperformancemobligation mformtheminitiationmfeemismsatisfied movermthemperiod mof mt
imemthat mthemmembermbelongsmtomthemclub.m Them$10,000mwould mbemrecognized movermthemav
eragemperiod mammembermbelongs.m Therem should mbemenoughmhistorical mdatamavailablemtomco
memupmwithmamreasonable mestimate.m There mwould mbemnomcashmcollectionm riskm sincemthemam
ount mismpaid mupfront.
Annualmfee
Stepm1:mThemannualmfeemismamwrittenmagreement mbetweenmthemmembermand mWFI.m
Stepm2:mTheremismagainmonemperformancemobligation,mthemservicemformthismyear.
Stepm3:mThemfeemof m$2,000mismthemtotalmcontract mpricemand mismreceived minm20X5mformthem20X
6mskimseason.mThismwould mbemunearned mrevenuemwhenmreceived.
Stepm4:mTheremismnomallocationmsincemtheremismonly monemperformancemobligation.
Stepm5:mAssumingmthemskimseasonmgoesmfrommDecm1muntilm Marchm31 m$500mwould mbemrecog
nized minm20X5mand mthemremainderminm20X6mwhichmwould mbemthemperiod minmwhichmthemserv
icemismperformed.mTheremwould mbemnomcashm collectionmriskmsincemthemamount mismpaid mupfro
nt.
2. Revenuemrecognitionmguestsm
Followingmthem5mstepmIFRSmmodel
:
Stepm1:mThemcontract mwithmthemguest mismthemwrittenmcontract mwhenmtheymreceivemthemticket mt
Solutions m Ma nua lmt omacc om pa nym Inte rme diate m Ac c ounting,m Volume m2 ,m8 th m e d 14-4
ition
IntermediatemAccountingmVolumem2m8thm EditionmThomasmH.mBeechy,mJoanm
E.mConrod, m Elizabet h m Farrell, mIngrid m McLeod- Dick, m Kayla m To mulka, m Ro mi-
Leem Sev el mChapterm12-22
Chapter 12: Financial Liabilities and Provisions
m m m m m
Case 12-1 WintermFunmIncorporated
12-2 PrescriptionsmDepot mLimited
12-3 CamanimCorporation
Suggested mTime
TechnicalmReview
TR12-1 Financialmliabilitiesmand mprovisionsm(IFRS)m...... 10
TR12-2 Financialmliabilitiesmand mprovisionsm(ASPE)m..... 10
TR12-3 Provision,mmeasurement m................................... 10
TR12-4 Guaranteem......................................................... 10
TR12-5 Provision,mwarrantym.......................................... 5
TR12-6 Foreignmcurrencym.............................................. 5
TR12-7 Notempayablem.................................................... 5
TR12-8 Discounting,mnotempayable................................ 10
TR12-9 Discounting,mprovisionm..................................... 10
TR12-10 Classification,mliabilities................................... 10
Assignment mA12-1 Financialmversusmnon-financialmliabilities……. 10
A12-2 Commonmfinancialmliabilities………………… 10
A12-3 Commonmfinancialmliabilities............................ 10
A12-4 Commonmfinancialmliabilities:mtaxesm................. 20
A12-5 Commonmfinancialmliabilities:mtaxesm ................ 20
A12-6 Foreignmcurrencympayables……………………. 10
A12-7 Foreignmcurrencympayablesm............................... 10
A12-8 Commonmfinancialmliabilitiesmand mforeignmcurrenc 25
y
A12-9 Provisions......................................................... 20
A12-10 Provisionsm........................................................ 20
A12-11 Provisions......................................................... 20
A12-12 Provisionmmeasurement m.................................... 15
A12-13 Provisionmmeasurement m.................................... 15
A12-14 Provisions;mcompensated mabsences…………... 15
A12-15 Provisions;mcompensated mabsencesm.................. 15
A12-16 Provisions;mwarrantym........................................ 15
A12-17 Provisions;mwarrantym ....................................... 20
A12-18 Provisions;mwarrantym ....................................... 25
A12-19 Discounting;mno-interest mnotem........................... 15
©m2022 mMcGra w mH illm Lt d.m Allm right s mres erv
Solutions m Ma nua lmt omacc om pa nym Inte rme diate m Ac c ounting,m Volume m2 ,m8 thm ed ed.
ition 14-1
, A12-20 Discounting;mlow-interest mnotem ........................ 20
A12-21 Discounting;mlow-interest mnotem......................... 20
A12-22 Discounting;mprovision..................................... 15
A12-23 Discounting;mprovision..................................... 25
A12-24 Discounting;mprovision..................................... 25
A12-25 Classificationmand mSCF..................................... 20
A12-26 SCFm.................................................................. 20
A12-27 Liabilitiesm–mIFRSmand mASPEm .......................... 10
A12-28 Liabilitiesm-mASPEm ........................................... 20
A12-29 Liabilitiesm-mASPEm............................................ 20
A12-30 Provisions/Contingenciesm–mIFRSmand mASPE…. 20
A12-31 DAISm–mwarrantymprovisionmtrend……………... 15
A12-32 DAISm–mprovisionmformcouponmrefund………… 15
Cases
Casem12-1m(LO12.3,mLO12.5,mLO12.6)
WintermFunmIncorporated
To:mMembersmof mBoard mof mDirectorsmFro
m:mAccountingmConsultant
RE:mWintermFunmIncorporated
Overview
WintermFunmIncorporated m(WFI)musesmIFRSmformfinancialmreporting. mThe mbankmloan mhasmam
minimumm current mratiom somyoumwillmneed mtombemcarefulmand mwatchmformanymimpactsmonmthe
mratio.mYoumhavemhad mamtoughmyearmthismyearmand mfaced mamlossmsomthembankmfinancingmismcrit
icalmtomyourmoperations.
Issues
1. Revenuemrecognitionmmemberships
2. Revenuemrecognitionmguests
3. Specialmpromotions
4. Coupons
5. ManufacturermLoan
6. Lawsuit
7. Warranty
8. Gasolinemstoragemtanks
9. Foreignmcurrencympayables
10. Compensated mabsences
Solutions m Ma nua lmt omacc om pa nym Inte rme diate m Ac c ounting,m Volume m2 ,m8 th m e d 14-2
ition
, ©m2022 mMcGra w mH illm Lt d.m Allmright s mres erv ed.
©m2022 mMcGra w mH illm Lt d.m Allm right s mres erv
Solutions m Ma nua lmt omacc om pa nym Inte rme diate m Ac c ounting,m Volume m2 ,m8 thm ed ed.
ition 14-3
, AnalysismandmRecommendations
1. Revenuemrecognitionmmembership
smFollowingmthem5mstepmIFRSmmodel:
Initiationmfee
Stepm1:mThemcontract mwithmthemcustomerm ismformthemmembership minmthemclub.m Thismwould mb
emamwrittenmagreement mbetweenmthemmembermand mWFI.
Stepm2:mTheremis monemperformancemobligation,mthempromised mservicem ismmembershipm inmthe
mskimclub.mTheremismnomtransfermof mthemservicemuntilmthemmembershipmismprovided.
Stepm3:mThemcontract mpricem ism$10,000.m Themnon-
refundablemdeposit mismanmadvancempayment mtowardsmthisminitiationmfeemand mismpart mof mthem
overallmtransactionmprice.
Stepm4:mNomallocationmsincemtheremismonlymonemperformancemobligation.
Stepm5:mThemperformancemobligation mformtheminitiationmfeemismsatisfied movermthemperiod mof mt
imemthat mthemmembermbelongsmtomthemclub.m Them$10,000mwould mbemrecognized movermthemav
eragemperiod mammembermbelongs.m Therem should mbemenoughmhistorical mdatamavailablemtomco
memupmwithmamreasonable mestimate.m There mwould mbemnomcashmcollectionm riskm sincemthemam
ount mismpaid mupfront.
Annualmfee
Stepm1:mThemannualmfeemismamwrittenmagreement mbetweenmthemmembermand mWFI.m
Stepm2:mTheremismagainmonemperformancemobligation,mthemservicemformthismyear.
Stepm3:mThemfeemof m$2,000mismthemtotalmcontract mpricemand mismreceived minm20X5mformthem20X
6mskimseason.mThismwould mbemunearned mrevenuemwhenmreceived.
Stepm4:mTheremismnomallocationmsincemtheremismonly monemperformancemobligation.
Stepm5:mAssumingmthemskimseasonmgoesmfrommDecm1muntilm Marchm31 m$500mwould mbemrecog
nized minm20X5mand mthemremainderminm20X6mwhichmwould mbemthemperiod minmwhichmthemserv
icemismperformed.mTheremwould mbemnomcashm collectionmriskmsincemthemamount mismpaid mupfro
nt.
2. Revenuemrecognitionmguestsm
Followingmthem5mstepmIFRSmmodel
:
Stepm1:mThemcontract mwithmthemguest mismthemwrittenmcontract mwhenmtheymreceivemthemticket mt
Solutions m Ma nua lmt omacc om pa nym Inte rme diate m Ac c ounting,m Volume m2 ,m8 th m e d 14-4
ition
