Solution Manual for Intermediate Accounting (Volume 2),
8th Canadian Edition By Thomas H. Beechy, Joan E. Conrod /
Verified All Chapters (12 - 22)Complete
,Solution Manual for
Intermediate Accounting Volume 2 8th Edition Thomas H. Beechy, Joan E.
Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel
Chapter 12-22
Chapter 12: Financial Liabilities and Provisions
Case 12-1 Winter Fun Incorporated
12-2 Prescriptions Depot Limited
12-3 Camani Corporation
Suggested Time
Technical Review
TR12-1 Financial liabilities and provisions (IFRS) ............10
TR12-2 Financial liabilities and provisions (ASPE) ...........10
TR12-3 Provision, measurement................................... 10
TR12-4 Guarantee ......................................................... 10
TR12-5 Provision, warranty .......................................... 5
TR12-6 Foreign currency .............................................. 5
TR12-7 Note payable .................................................... 5
TR12-8 Discounting, note payable................................ 10
TR12-9 Discounting, provision..................................... 10
TR12-10 Classification, liabilities................................... 10
Assignment A12-1 Financial versus non-financial liabilities……. 10
A12-2 Common financial liabilities………………… 10
A12-3 Common financial liabilities............................ 10
A12-4 Common financial liabilities: taxes ................. 20
A12-5 Common financial liabilities: taxes ................ 20
A12-6 Foreign currency payables……………………. 10
A12-7 Foreign currency payables ............................... 10
A12-8 Common financial liabilities and foreign 25
currency
A12-9 Provisions......................................................... 20
A12-10 Provisions ........................................................ 20
A12-11 Provisions......................................................... 20
A12-12 Provision measurement.................................... 15
A12-13 Provision measurement.................................... 15
A12-14 Provisions; compensated absences…………... 15
A12-15 Provisions; compensated absences .................. 15
A12-16 Provisions; warranty ........................................ 15
A12-17 Provisions; warranty ....................................... 20
A12-18 Provisions; warranty ....................................... 25
A12-19 Discounting; no-interest note........................... 15
Solutions Manual to accompany Intermediate Accounting, Volume 2, 8th edition 14-2
, A12-20 Discounting; Vlow-interest Vnote V ........................ 20
A12-21 Discounting; Vlow-interest Vnote......................... 20
A12-22 Discounting; Vprovision..................................... 15
A12-23 Discounting; Vprovision..................................... 25
A12-24 Discounting; Vprovision..................................... 25
A12-25 Classification Vand VSCF..................................... 20
A12-26 SCF V.................................................................. 20
A12-27 Liabilities V– VIFRS Vand VASPE V .......................... 10
A12-28 Liabilities V- VASPE V ........................................... 20
A12-29 Liabilities V- VASPE V............................................ 20
A12-30 V V Provisions/Contingencies V– VIFRS Vand VASPE…. 20
A12-31 DAIS V– Vwarranty Vprovision Vtrend……………... 15
A12-32 DAIS V– Vprovision Vfor Vcoupon Vrefund………… 15
Cases
Case V12-1 V(LO12.3, VLO12.5, VLO12.6)
Winter VFun VIncorporated
To: VMembers Vof VBoard Vof
VDirectors V From: VAccounting
VConsultant
RE: VWinter VFun VIncorporated
Overview
Winter VFun VIncorporated V(WFI) Vuses VIFRS Vfor Vfinancial Vreporting. VThe Vbank
Vloan V has V a Vminimum Vcurrent Vratio Vso Vyou Vwill Vneed Vto Vbe Vcareful Vand Vwatch
Vfor Vany Vimpacts Von V the V ratio. V You V have V had V a Vtough V year V this V year Vand V faced
V a V loss Vso V the Vbank V financing V is Vcritical Vto Vyour Voperations.
Issues
1. Revenue Vrecognition Vmemberships
2. Revenue Vrecognition Vguests
3. Special Vpromotions
4. Coupons
5. Manufacturer VLoan
6. Lawsuit
7. Warranty
8. Gasoline Vstorage Vtanks
9. Foreign VcurrencyVpayables
10. Compensated Vabsences
, Analysis Vand VRecommendations
1. RevenueVrecognition
V memberships VFollowing Vthe V5
Vstep V IFRS Vmodel:
Initiation Vfee
Step V1: VThe Vcontract Vwith Vthe Vcustomer Vis Vfor Vthe Vmembership Vin Vthe Vclub. VThis
Vwould V be Va Vwritten Vagreement Vbetween Vthe Vmember Vand VWFI.
Step V2: VThere Vis Vone Vperformance Vobligation, Vthe Vpromised Vservice Vis
Vmembership Vin V the Vski Vclub. VThere Vis Vno Vtransfer Vof Vthe Vservice Vuntil Vthe
Vmembership Vis Vprovided.
Step V 3: V The V contract V price V is V $10,000. V The V non-refundable V deposit V is V an
V advance V payment Vtowards Vthis Vinitiation Vfee Vand Vis Vpart Vof Vthe Voverall
Vtransaction Vprice.
Step V4: VNo Vallocation Vsince Vthere Vis Vonly Vone Vperformance Vobligation.
Step V 5: V The V performance V obligation V for Vthe V initiation V fee Vis V satisfied V over V the
V period V of Vtime Vthat Vthe V member Vbelongs Vto V the V club. V The V$10,000 Vwould Vbe
V recognized Vover V the V average V period V a V member V belongs. V There V should V be
V enough V historical V data V available V to V come V up V with V a V reasonable V estimate.
V There V would V be V no V cash V collection V risk Vsince Vthe Vamount Vis Vpaid Vupfront.
Annual Vfee
Step V1: VThe Vannual Vfee Vis Va Vwritten Vagreement Vbetween Vthe Vmember
and V WFI. VStep V2: VThere Vis Vagain Vone Vperformance Vobligation, Vthe
V
service Vfor Vthis V year.
V
Step V3: VThe Vfee Vof V$2,000 Vis Vthe Vtotal Vcontract Vprice Vand Vis Vreceived Vin V20X5 Vfor
Vthe V 20X6 Vski Vseason. VThis Vwould Vbe Vunearned Vrevenue Vwhen Vreceived.
Step V4: VThere Vis Vno Vallocation Vsince Vthere Vis Vonly Vone Vperformance Vobligation.
Step V 5: V Assuming V the V ski V season V goes V from V Dec V 1 V until V March V 31 V $500
V would V be V recognized V in V 20X5 V and V the V remainder V in V 20X6 V which V would V be
V the V period V in V which V the Vservice Vis V performed. V There Vwould Vbe V no V cash
Vcollection Vrisk V since Vthe Vamount Vis V paid Vupfront.
2. Revenue Vrecognition
Solutions Manual to accompany Intermediate Accounting, Volume 2, 8th edition 14-2
guests V Following Vthe V5 Vstep
V
8th Canadian Edition By Thomas H. Beechy, Joan E. Conrod /
Verified All Chapters (12 - 22)Complete
,Solution Manual for
Intermediate Accounting Volume 2 8th Edition Thomas H. Beechy, Joan E.
Conrod, Elizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel
Chapter 12-22
Chapter 12: Financial Liabilities and Provisions
Case 12-1 Winter Fun Incorporated
12-2 Prescriptions Depot Limited
12-3 Camani Corporation
Suggested Time
Technical Review
TR12-1 Financial liabilities and provisions (IFRS) ............10
TR12-2 Financial liabilities and provisions (ASPE) ...........10
TR12-3 Provision, measurement................................... 10
TR12-4 Guarantee ......................................................... 10
TR12-5 Provision, warranty .......................................... 5
TR12-6 Foreign currency .............................................. 5
TR12-7 Note payable .................................................... 5
TR12-8 Discounting, note payable................................ 10
TR12-9 Discounting, provision..................................... 10
TR12-10 Classification, liabilities................................... 10
Assignment A12-1 Financial versus non-financial liabilities……. 10
A12-2 Common financial liabilities………………… 10
A12-3 Common financial liabilities............................ 10
A12-4 Common financial liabilities: taxes ................. 20
A12-5 Common financial liabilities: taxes ................ 20
A12-6 Foreign currency payables……………………. 10
A12-7 Foreign currency payables ............................... 10
A12-8 Common financial liabilities and foreign 25
currency
A12-9 Provisions......................................................... 20
A12-10 Provisions ........................................................ 20
A12-11 Provisions......................................................... 20
A12-12 Provision measurement.................................... 15
A12-13 Provision measurement.................................... 15
A12-14 Provisions; compensated absences…………... 15
A12-15 Provisions; compensated absences .................. 15
A12-16 Provisions; warranty ........................................ 15
A12-17 Provisions; warranty ....................................... 20
A12-18 Provisions; warranty ....................................... 25
A12-19 Discounting; no-interest note........................... 15
Solutions Manual to accompany Intermediate Accounting, Volume 2, 8th edition 14-2
, A12-20 Discounting; Vlow-interest Vnote V ........................ 20
A12-21 Discounting; Vlow-interest Vnote......................... 20
A12-22 Discounting; Vprovision..................................... 15
A12-23 Discounting; Vprovision..................................... 25
A12-24 Discounting; Vprovision..................................... 25
A12-25 Classification Vand VSCF..................................... 20
A12-26 SCF V.................................................................. 20
A12-27 Liabilities V– VIFRS Vand VASPE V .......................... 10
A12-28 Liabilities V- VASPE V ........................................... 20
A12-29 Liabilities V- VASPE V............................................ 20
A12-30 V V Provisions/Contingencies V– VIFRS Vand VASPE…. 20
A12-31 DAIS V– Vwarranty Vprovision Vtrend……………... 15
A12-32 DAIS V– Vprovision Vfor Vcoupon Vrefund………… 15
Cases
Case V12-1 V(LO12.3, VLO12.5, VLO12.6)
Winter VFun VIncorporated
To: VMembers Vof VBoard Vof
VDirectors V From: VAccounting
VConsultant
RE: VWinter VFun VIncorporated
Overview
Winter VFun VIncorporated V(WFI) Vuses VIFRS Vfor Vfinancial Vreporting. VThe Vbank
Vloan V has V a Vminimum Vcurrent Vratio Vso Vyou Vwill Vneed Vto Vbe Vcareful Vand Vwatch
Vfor Vany Vimpacts Von V the V ratio. V You V have V had V a Vtough V year V this V year Vand V faced
V a V loss Vso V the Vbank V financing V is Vcritical Vto Vyour Voperations.
Issues
1. Revenue Vrecognition Vmemberships
2. Revenue Vrecognition Vguests
3. Special Vpromotions
4. Coupons
5. Manufacturer VLoan
6. Lawsuit
7. Warranty
8. Gasoline Vstorage Vtanks
9. Foreign VcurrencyVpayables
10. Compensated Vabsences
, Analysis Vand VRecommendations
1. RevenueVrecognition
V memberships VFollowing Vthe V5
Vstep V IFRS Vmodel:
Initiation Vfee
Step V1: VThe Vcontract Vwith Vthe Vcustomer Vis Vfor Vthe Vmembership Vin Vthe Vclub. VThis
Vwould V be Va Vwritten Vagreement Vbetween Vthe Vmember Vand VWFI.
Step V2: VThere Vis Vone Vperformance Vobligation, Vthe Vpromised Vservice Vis
Vmembership Vin V the Vski Vclub. VThere Vis Vno Vtransfer Vof Vthe Vservice Vuntil Vthe
Vmembership Vis Vprovided.
Step V 3: V The V contract V price V is V $10,000. V The V non-refundable V deposit V is V an
V advance V payment Vtowards Vthis Vinitiation Vfee Vand Vis Vpart Vof Vthe Voverall
Vtransaction Vprice.
Step V4: VNo Vallocation Vsince Vthere Vis Vonly Vone Vperformance Vobligation.
Step V 5: V The V performance V obligation V for Vthe V initiation V fee Vis V satisfied V over V the
V period V of Vtime Vthat Vthe V member Vbelongs Vto V the V club. V The V$10,000 Vwould Vbe
V recognized Vover V the V average V period V a V member V belongs. V There V should V be
V enough V historical V data V available V to V come V up V with V a V reasonable V estimate.
V There V would V be V no V cash V collection V risk Vsince Vthe Vamount Vis Vpaid Vupfront.
Annual Vfee
Step V1: VThe Vannual Vfee Vis Va Vwritten Vagreement Vbetween Vthe Vmember
and V WFI. VStep V2: VThere Vis Vagain Vone Vperformance Vobligation, Vthe
V
service Vfor Vthis V year.
V
Step V3: VThe Vfee Vof V$2,000 Vis Vthe Vtotal Vcontract Vprice Vand Vis Vreceived Vin V20X5 Vfor
Vthe V 20X6 Vski Vseason. VThis Vwould Vbe Vunearned Vrevenue Vwhen Vreceived.
Step V4: VThere Vis Vno Vallocation Vsince Vthere Vis Vonly Vone Vperformance Vobligation.
Step V 5: V Assuming V the V ski V season V goes V from V Dec V 1 V until V March V 31 V $500
V would V be V recognized V in V 20X5 V and V the V remainder V in V 20X6 V which V would V be
V the V period V in V which V the Vservice Vis V performed. V There Vwould Vbe V no V cash
Vcollection Vrisk V since Vthe Vamount Vis V paid Vupfront.
2. Revenue Vrecognition
Solutions Manual to accompany Intermediate Accounting, Volume 2, 8th edition 14-2
guests V Following Vthe V5 Vstep
V
