Solution Manual for Intermediate Accounting (Volume 2),
8th Canadian Edition By Thomas H. Beechy, Joan E. Conrod /
Verified All Chapters (12 - 22)Complete
,Solution 3 Manual 3 for
Intermediate 3 Accounting 3 Volume 3 2 3 8th 3 Edition 3 Thomas 3 H. 3 Beechy,
3 Joan 3 E. 3 Conrod, 3 Elizabeth 3 Farrell, 3 Ingrid 3 McLeod-Dick, 3 Kayla 3 Tomulka,
3 Romi-Lee 3 Sevel 3 Chapter 312-22
Chapter 312: 3Financial 3Liabilities 3and 3Provisions
Case 12-1 Winter 3Fun 3Incorporated
12-2 Prescriptions 3Depot
3Limited
12-3 Camani 3Corporation Suggested 3Time
Technical 3Review
TR12-1 Financial 3liabilities 3and 3provisions 3(IFRS) ........10
TR12-2 Financial 3liabilities 3and 3provisions 3(ASPE) .......10
TR12-3 Provision, 3measurement................................... 10
TR12-4 Guarantee 3......................................................... 10
TR12-5 Provision, 3warranty3.......................................... 5
TR12-6 Foreign 3currency 3.............................................. 5
TR12-7 Note 3payable 3.................................................... 5
TR12-8 Discounting, 3note 3payable................................ 10
TR12-9 Discounting, 3provision..................................... 10
TR12-10 3 Classification, 3liabilities................................... 10
Assignment 3A12-1 Financial 3versus 3non-financial 3liabilities……. 10
A12-2 Common 3financial 3liabilities………………… 10
A12-3 Common 3financial 3liabilities............................ 10
A12-4 Common 3financial 3liabilities: 3taxes 3................. 20
A12-5 Common 3financial 3liabilities: 3taxes 3 ................ 20
A12-6 Foreign 3currency 3payables……………………. 10
A12-7 Foreign 3currency 3payables 3............................... 10
A12-8 Common 3financial 3liabilities 3and 3foreign 25
currency
A12-9 Provisions......................................................... 20
A12-10 Provisions 3........................................................ 20
A12-11 Provisions......................................................... 20
A12-12 Provision 3measurement.................................... 15
A12-13 Provision 3measurement.................................... 15
A12-14 Provisions; 3compensated 3absences…………... 15
A12-15 Provisions; 3compensated 3absences 3.................. 15
A12-16 Provisions; 3warranty 3........................................ 15
A12-17 Provisions; 3warranty 3 ....................................... 20
A12-18 Provisions; 3warranty 3 ....................................... 25
A12-19 Discounting; 3no-interest 3note........................... 15
Solutions Manual to accompany Intermediate Accounting, Volume 2, 8th edition 14-2
, A12-20 Discounting; 3low-interest 3note 3 ........................ 20
A12-21 Discounting; 3low-interest 3note......................... 20
A12-22 Discounting; 3provision..................................... 15
A12-23 Discounting; 3provision..................................... 25
A12-24 Discounting; 3provision..................................... 25
A12-25 Classification 3and 3SCF..................................... 20
A12-26 SCF 3.................................................................. 20
A12-27 Liabilities 3– 3IFRS 3and 3ASPE 3 .......................... 10
A12-28 Liabilities 3- 3ASPE 3 ........................................... 20
A12-29 Liabilities 3- 3ASPE 3............................................ 20
A12-30 3 3 Provisions/Contingencies 3– 3IFRS 3and 3ASPE…. 20
A12-31 DAIS 3– 3warranty 3provision 3trend……………... 15
A12-32 DAIS 3– 3provision 3for 3coupon 3refund………… 15
Cases
Case 312-1 3(LO12.3, 3LO12.5, 3LO12.6)
Winter 3Fun 3Incorporated
To: 3Members 3of 3Board 3of
3Directors 3 From: 3Accounting
3Consultant
RE: 3Winter 3Fun 3Incorporated
Overview
Winter 3Fun 3Incorporated 3(WFI) 3uses 3IFRS 3for 3financial 3reporting. 3The 3bank
3loan 3has 3 a 3minimum 3current 3ratio 3so 3you 3will 3need 3to 3be 3careful 3and
3watch 3for 3any 3impacts 3on 3 the 3 ratio. 3 You 3 have 3had 3 a 3tough 3year 3this 3year
3and 3faced 3a 3loss 3so 3the 3bank 3financing 3 is 3critical 3to 3your 3operations.
Issues
1. Revenue 3recognition 3memberships
2. Revenue 3recognition 3guests
3. Special 3promotions
4. Coupons
5. Manufacturer 3Loan
6. Lawsuit
7. Warranty
8. Gasoline 3storage 3tanks
9. Foreign 3currency 3payables
10. Compensated 3absences
, nalysis 3and 3Recommendations
1. Revenue3recognition
3 memberships 3Following 3the 35
3step 3 IFRS 3model:
Initiation 3fee
Step 31: 3The 3contract 3with 3the 3customer 3is 3for 3the 3membership 3in 3the 3club.
3This 3would 3 be 3a 3written 3agreement 3between 3the 3member 3and 3WFI.
Step 32: 3There 3is 3one 3performance 3obligation, 3the 3promised 3service 3is
3membership 3in 3 the 3ski 3club. 3There 3is 3no 3transfer 3of 3the 3service 3until 3the
3membership 3is 3provided.
Step 3 3: 3 The 3 contract 3 price 3 is 3 $10,000. 3 The 3 non-refundable 3 deposit 3 is
3 an 3 advance 3 payment 3towards 3this 3initiation 3fee 3and 3is 3part 3of 3the 3overall
3transaction 3price.
Step 34: 3No 3allocation 3since 3there 3is 3only 3one 3performance 3obligation.
Step 3 5: 3 The 3 performance 3 obligation 3 for 3the 3 initiation 3 fee 3is 3 satisfied 3 over
3 the 3 period 3 of 3time 3that 3the 3member 3belongs 3to 3the 3club. 3The 3$10,000
3would 3be 3recognized 3over 3 the 3average 3period 3a 3 member 3belongs. 3 There
3 should 3 be 3enough 3 historical 3 data 3 available 3 to 3 come 3 up 3 with 3 a 3 reasonable
3 estimate. 3 There 3 would 3 be 3 no 3 cash 3 collection 3 risk 3since 3the 3amount 3is 3paid
3upfront.
Annual 3fee
Step 31: 3The 3annual 3fee 3is 3a 3written 3agreement 3between 3the 3member
3and 3 WFI. 3Step 32: 3There 3is 3again 3one 3performance 3obligation, 3the
3service 3for 3this 3 year.
Step 33: 3The 3fee 3of 3$2,000 3is 3the 3total 3contract 3price 3and 3is 3received 3in 320X5
3for 3the 3 20X6 3ski 3season. 3This 3would 3be 3unearned 3revenue 3when 3received.
Step 34: 3There 3is 3no 3allocation 3since 3there 3is 3only 3one 3performance 3obligation.
Step 3 5: 3 Assuming 3 the 3 ski 3 season 3 goes 3 from 3 Dec 3 1 3 until 3 March 3 31
3 $500 3 would 3 be 3 recognized 3 in 3 20X5 3 and 3 the 3 remainder 3 in 3 20X6 3 which
3 would 3 be 3the 3 period 3 in 3 which 3 the 3service 3is 3performed. 3There 3would 3be
3no 3cash 3collection 3risk 3 since 3the 3amount 3is 3 paid 3upfront.
Solutions Manual to accompany Intermediate Accounting, Volume 2, 8th edition 14-2
2. Revenue 3recognition
8th Canadian Edition By Thomas H. Beechy, Joan E. Conrod /
Verified All Chapters (12 - 22)Complete
,Solution 3 Manual 3 for
Intermediate 3 Accounting 3 Volume 3 2 3 8th 3 Edition 3 Thomas 3 H. 3 Beechy,
3 Joan 3 E. 3 Conrod, 3 Elizabeth 3 Farrell, 3 Ingrid 3 McLeod-Dick, 3 Kayla 3 Tomulka,
3 Romi-Lee 3 Sevel 3 Chapter 312-22
Chapter 312: 3Financial 3Liabilities 3and 3Provisions
Case 12-1 Winter 3Fun 3Incorporated
12-2 Prescriptions 3Depot
3Limited
12-3 Camani 3Corporation Suggested 3Time
Technical 3Review
TR12-1 Financial 3liabilities 3and 3provisions 3(IFRS) ........10
TR12-2 Financial 3liabilities 3and 3provisions 3(ASPE) .......10
TR12-3 Provision, 3measurement................................... 10
TR12-4 Guarantee 3......................................................... 10
TR12-5 Provision, 3warranty3.......................................... 5
TR12-6 Foreign 3currency 3.............................................. 5
TR12-7 Note 3payable 3.................................................... 5
TR12-8 Discounting, 3note 3payable................................ 10
TR12-9 Discounting, 3provision..................................... 10
TR12-10 3 Classification, 3liabilities................................... 10
Assignment 3A12-1 Financial 3versus 3non-financial 3liabilities……. 10
A12-2 Common 3financial 3liabilities………………… 10
A12-3 Common 3financial 3liabilities............................ 10
A12-4 Common 3financial 3liabilities: 3taxes 3................. 20
A12-5 Common 3financial 3liabilities: 3taxes 3 ................ 20
A12-6 Foreign 3currency 3payables……………………. 10
A12-7 Foreign 3currency 3payables 3............................... 10
A12-8 Common 3financial 3liabilities 3and 3foreign 25
currency
A12-9 Provisions......................................................... 20
A12-10 Provisions 3........................................................ 20
A12-11 Provisions......................................................... 20
A12-12 Provision 3measurement.................................... 15
A12-13 Provision 3measurement.................................... 15
A12-14 Provisions; 3compensated 3absences…………... 15
A12-15 Provisions; 3compensated 3absences 3.................. 15
A12-16 Provisions; 3warranty 3........................................ 15
A12-17 Provisions; 3warranty 3 ....................................... 20
A12-18 Provisions; 3warranty 3 ....................................... 25
A12-19 Discounting; 3no-interest 3note........................... 15
Solutions Manual to accompany Intermediate Accounting, Volume 2, 8th edition 14-2
, A12-20 Discounting; 3low-interest 3note 3 ........................ 20
A12-21 Discounting; 3low-interest 3note......................... 20
A12-22 Discounting; 3provision..................................... 15
A12-23 Discounting; 3provision..................................... 25
A12-24 Discounting; 3provision..................................... 25
A12-25 Classification 3and 3SCF..................................... 20
A12-26 SCF 3.................................................................. 20
A12-27 Liabilities 3– 3IFRS 3and 3ASPE 3 .......................... 10
A12-28 Liabilities 3- 3ASPE 3 ........................................... 20
A12-29 Liabilities 3- 3ASPE 3............................................ 20
A12-30 3 3 Provisions/Contingencies 3– 3IFRS 3and 3ASPE…. 20
A12-31 DAIS 3– 3warranty 3provision 3trend……………... 15
A12-32 DAIS 3– 3provision 3for 3coupon 3refund………… 15
Cases
Case 312-1 3(LO12.3, 3LO12.5, 3LO12.6)
Winter 3Fun 3Incorporated
To: 3Members 3of 3Board 3of
3Directors 3 From: 3Accounting
3Consultant
RE: 3Winter 3Fun 3Incorporated
Overview
Winter 3Fun 3Incorporated 3(WFI) 3uses 3IFRS 3for 3financial 3reporting. 3The 3bank
3loan 3has 3 a 3minimum 3current 3ratio 3so 3you 3will 3need 3to 3be 3careful 3and
3watch 3for 3any 3impacts 3on 3 the 3 ratio. 3 You 3 have 3had 3 a 3tough 3year 3this 3year
3and 3faced 3a 3loss 3so 3the 3bank 3financing 3 is 3critical 3to 3your 3operations.
Issues
1. Revenue 3recognition 3memberships
2. Revenue 3recognition 3guests
3. Special 3promotions
4. Coupons
5. Manufacturer 3Loan
6. Lawsuit
7. Warranty
8. Gasoline 3storage 3tanks
9. Foreign 3currency 3payables
10. Compensated 3absences
, nalysis 3and 3Recommendations
1. Revenue3recognition
3 memberships 3Following 3the 35
3step 3 IFRS 3model:
Initiation 3fee
Step 31: 3The 3contract 3with 3the 3customer 3is 3for 3the 3membership 3in 3the 3club.
3This 3would 3 be 3a 3written 3agreement 3between 3the 3member 3and 3WFI.
Step 32: 3There 3is 3one 3performance 3obligation, 3the 3promised 3service 3is
3membership 3in 3 the 3ski 3club. 3There 3is 3no 3transfer 3of 3the 3service 3until 3the
3membership 3is 3provided.
Step 3 3: 3 The 3 contract 3 price 3 is 3 $10,000. 3 The 3 non-refundable 3 deposit 3 is
3 an 3 advance 3 payment 3towards 3this 3initiation 3fee 3and 3is 3part 3of 3the 3overall
3transaction 3price.
Step 34: 3No 3allocation 3since 3there 3is 3only 3one 3performance 3obligation.
Step 3 5: 3 The 3 performance 3 obligation 3 for 3the 3 initiation 3 fee 3is 3 satisfied 3 over
3 the 3 period 3 of 3time 3that 3the 3member 3belongs 3to 3the 3club. 3The 3$10,000
3would 3be 3recognized 3over 3 the 3average 3period 3a 3 member 3belongs. 3 There
3 should 3 be 3enough 3 historical 3 data 3 available 3 to 3 come 3 up 3 with 3 a 3 reasonable
3 estimate. 3 There 3 would 3 be 3 no 3 cash 3 collection 3 risk 3since 3the 3amount 3is 3paid
3upfront.
Annual 3fee
Step 31: 3The 3annual 3fee 3is 3a 3written 3agreement 3between 3the 3member
3and 3 WFI. 3Step 32: 3There 3is 3again 3one 3performance 3obligation, 3the
3service 3for 3this 3 year.
Step 33: 3The 3fee 3of 3$2,000 3is 3the 3total 3contract 3price 3and 3is 3received 3in 320X5
3for 3the 3 20X6 3ski 3season. 3This 3would 3be 3unearned 3revenue 3when 3received.
Step 34: 3There 3is 3no 3allocation 3since 3there 3is 3only 3one 3performance 3obligation.
Step 3 5: 3 Assuming 3 the 3 ski 3 season 3 goes 3 from 3 Dec 3 1 3 until 3 March 3 31
3 $500 3 would 3 be 3 recognized 3 in 3 20X5 3 and 3 the 3 remainder 3 in 3 20X6 3 which
3 would 3 be 3the 3 period 3 in 3 which 3 the 3service 3is 3performed. 3There 3would 3be
3no 3cash 3collection 3risk 3 since 3the 3amount 3is 3 paid 3upfront.
Solutions Manual to accompany Intermediate Accounting, Volume 2, 8th edition 14-2
2. Revenue 3recognition
