Solution manual for intermediate accounting volume 1 8th edition thomas h beechy joan e conrod elizabeth farrell ingrid .

SOLUTION MANUAL FOR S S


Intermediate Accounting Volume 1 8E Thomas H. Beechy, Joan E. Conrod,E
S S S S S S S S S S S


lizabeth Farrell, Ingrid McLeod-Dick, Kayla Tomulka, Romi-Lee Sevel
S S S S S S S


AllSChaptersS1-11S [WithSAppendix]

Chapter 1: The Framework for Financial Reporting
S S S S S S




CaseS 1-1 MullaSandSYang
1-2 RichardSWright
1-3 TaylorSJay

SuggestedSTimeS
Technical 1-1 ChapterSoverview,Strue-falseS.............................. 10
1-2 ChapterSoverview,Strue-falseS.............................. 10
1-3 Acronyms……………………………………… 10
1-4 IFRSSorSASPE…………………………………. 10
1-5 IFRSSorSASPE…………………………………. 10
1-6 DisclosedSbasisSofSaccounting………………… 10
1-7 GAAPSandSreportingScurrencyS........................... 10
1-8 GAAPSandSreportingScurrencyS........................... 10
1-9 UsersSandSobjectives………………………….. 10
1-10 RequiredSfinancialSstatementsS............................ 10

AssignmentS1-1 IASBSstandard-setting...................................... 10
1-2 InternationalScomparisons................................ 10
1-3 AccountingSchoicesS.......................................... 10
1-4 EffectSofSaccountingSpoliciesS .......................... 15
1-5 ReportingSalternativesS...................................... 10
1-6 Non-IFRSSsituationsS........................................ 15
1-7 ReportingSsituationsS......................................... 20
1-8 ReportingSsituationsS......................................... 15
1-9 ObjectivesSofSfinancialSreportingS..................... 20
1-10 ImpactSofSdifferingSobjectivesS ......................... 20
1-11 AccountingSpolicySdisagreement...................... 15
1-12 AccountingSpoliciesSandSreportingSobjectives.. 10
1-13 PolicySchoiceS.................................................... 20




©S2022SMcGrawSHill.SAllSrightsSreserve
SolutionsSManualStoSaccompanySIntermediateSAccounting,SVolumeS1,S8thS editi d
on 4-1

,Cases

CaseS1-1S(LO1.2,SLO1.3,SLO1.4,SLO1.5)

NotesSforSDiscussionSWithSElicia:

ThereSisSaSconflictSofSinterestSbetweenStheSobjectivesSofSEliciaSandSDabikaSdueStoStheSbuyo
utSclauseSinStheSshareholderSagreement.SEliciaSwillShaveSaSmotivationStoSdecreaseSsharehol
ders‘SequitySsinceSthisSwillSreduceStheSamountSthatSsheSwillSbeSrequiredStoSpayStoSbuySoutSD
abika.SDabikaSwillSbeSinterestedSinSincreasingSshareholders‘SequityStoSincreaseStheSamountS
sheSwillSreceive.SItSmustSbeSclarifiedSwhoSISamSworkingSforSsinceSISmayShaveSaSconflictSofSin
terestSsinceSISknowSbothSparties.

ItS isS importantS thatS allS accountingS policiesS areS ‗fair‘S toS bothS sides.S WhatS isS considered
‗fair‘?SFromSDabika‘sSperspective,SfairScouldSbeSaccountingSpoliciesSconsistentSwithSpriorS
years.SFromSElicia‘sSperspective,SfairScouldSbeSifStheSeconomicSeventsSchangeStheSaccounti
ngSpolicySwouldSchange.SFairScouldSbeSbothSsidesSsplitStheSdifferenceSwhereSDabikaSandSEl
iciaSdisagreeSonSvalue.SInStheSfutureSitSisSimportantSthatStheSshareholdersSagreementSisSmore
Sspecific.




DueStoStheSchoicesSallowedSwithinSGAAPSaSpolicyScouldSbeSselectedSthatSwouldSbeSmoreSb
eneficialStoSoneSofStheSparties.SItSisSassumedSsinceSthisSisSaSsmallSprivateScompanySthatStheyS
areSusingSASPE.SThereSisSnoSindicationSthatSneitherSEliciaSorSDabikaSwouldSbeSusingSIFRSS
norSthatStheSbankSrequiresSit.

Inventory
EliciaSwantsStoSwriteSoffStheSinventorySvalueSforStheSgardenSgnomesSandSstatuesSandSthisSwi
llSdecreaseStheSamountSofStheSpaymentStoSDabika.SAccordingStoSASPE,SinventorySwouldSbeS
valuedSatStheSlowerSofScostSandSnetSrealizableSvalue.SEvenSthoughSthisSinventoryShasSbeenSsi
ttingSinStheSgardeningScentreSthereSisSstillSaSfewSbeingSsoldSeachSyear.SThisSindicatesSthereSisS
stillSsomeSvalueSassociatedSwithStheSinventorySandSthereforeSitSshouldSnotSbeSwrittenSdownS
toSzero.SItSshouldSbeSdeterminedSwhatStheSnetSrealizableSvalueSofSthisSinventorySisS toSdeter
mineS theSamountS ofStheS writeS off.S IfS itS isS allS writtenSoffS andSthenSsoldSatSaSlaterSdateSthisSwo
uldSnotSbeSfairStoSDabikaSsinceSEliciaSwouldSgetStheSbenefitSofSaSreducedSshareholders‘Sequi
tySandSthusSaSlowerSpaymentSrequiredStoSDabika.STheSpurchaseSofSthisSinventorySwouldShav
eSbeenSaSdecisionSmadeSbySbothSDabikaSandSEliciaSsoSifStheSinventorySisSunsellableStheySsho
uldSbothSbearStheSimpactSofSthisSdecision.

Warranty
AccordingStoSASPEStheSaccountingSpolicySisSappropriateSandSaSwarrantySexpenseSshouldSb
eSincludedSforStheSguarantee.STheSimpactSisSthatSthisSwouldSdecreaseSshareholders‘SequitySa
ndStheSamountSofStheSpaymentStoSDabika.SThisSisSaSnewSpolicySthatSdidSnotSexistSuntilSthisSye
ar.STheSestimateSofS5%SwasSonlySbasedSonSsalesSfromStheSfall.SSinceSitSisSaSnewSpolicySthatS
wasSmadeSbySEliciaSonSherSownSitSmaySbeSappropriateSthatStheSimpactSofSthisSisSexcludedSfr
omStheScalculationSofSshareholders‘Sequity.SAtSaSminimumStheSestimateSshould


S©2022SMcGrawSHill.SAllSrightsSreserved
2-2 SolutionsSManualStoSaccompanySIntermediateSAccounting,SVolumeS1,S8thS editi
on

,beSreviewedStoSdetermineSifSitSisSreasonable.SFurthermore,StheSestimate,SifSincludedSinStheSs
hareholders‘SequityScalculation,SshouldSbeSagreedSuponSbySbothSEliciaSandSDabika.

ComputerSEquipment
ASPESisSflexibleSinStheSmethodSusedStoSdepreciateSassets.STheSdecliningSbalanceSmethodSus
ingS40%SwouldSwriteSoffStheSvalueSofStheScomputersSinSapproximatelyStwoSyears.SThisSisSve
rySfastSespeciallySforSaSsmallScompanySthatSisSlikelyStoSuseSaScomputerSforSaSlongerSperiodSo
fStimeSdueStoSlimitedSresourcesSasScomparedStoSaSlargerScompany.SJustSbecauseStheScompute
rSmaySbecomeSobsoleteSquicklySdoesSnotSmeanStheSbusinessSwillSnotScontinueStoSderiveSben
efitSfromStheScontinuedSuseSofStheScomputer.STheSimpactSofShigherSdepreciationSisSaSreducti
onSinStheSpaymentStoSDabika.SIfSweSlookSatSconsistencySwithSotherSassetsSitSwouldSbeSappro
priateStoSuseStheSstraightSlineSmethod.SWeSshouldSinquireSwithSEliciaSasStoSherSrationaleSforS
choosingSdecliningSbalanceSinsteadSofStheSstraight-
lineSdepreciatoinSmethodSusedSforSallSotherSassetsSandSdetermineStheSdecliningSmethodSrefle
ctsStheSactualSusageSofStheSassetS(i.e.SmoreSofStheSassetSusedSearlierSon).SSinceSagainSsinceSth
isSwasSaSdecisionSmadeSonlySbeSEliciaSmaybeSitSshouldSbeSexcludedSfromStheScalculationSorS
maybeStheSpolicySshouldSbeSconsistentSwithStheirSotherSassetsSbutSfurtherSinformationSisSreq
uired.

CaseS1-2S(LO1.2,SLO1.3,SLO1.4,SLO1.5)

DearSRichardSWright:

ISamShappyStoSrespondStoSyourSquestionsSregardingStheSaccountingSchangesSthatStheSnewSba
nkerShasSrequested.SItSisSimportantSthatSyouSrealizeSthatStheSneedsSofStheSbankerSareSdifferen
tSthanSyourSneeds.STheSbankSisSinterestedSinSyourSabilityStoSmakeSloanSpayments;Stherefore,S
theSbankerSwantsStoSassessSfutureScashSflows,ScollateralSandSyourSabilityStoSpaySbackStheSloa
n.

First,SthereSisStheSissueSofSmovingStoStheSaccrualSbasis.SWhileSit‘sStrueSthat,Sultimately,Swhat
SyouSearnSisStheSnetScashSinSyourSpocket,StheScashSbasisSofSaccountingSdoesn‘tSwhollyScaptu

reSallSofStheScashSflowsSthatSwillShappenSinStheSfuture.SYourSbankerSwantsStoSknowSwhatSlia
bilitiesSyou‘llShaveStoSpaySinStheScomingSmonthsS(andSyears),SandSwhatSamountsSyouScurren
tlySareSowedSthatSwillSbeScollectedSinStheSfutureSweeksSorSmonths.STheSaccrualSmethodSreall
ySgivesSaSclearSpictureSofSfutureS―cashSflow‖.

It‘sSforSmuchStheSsameSreasonSthatSheSwishesSyouStoSshowSyourScattleSatSmarketSvalue.SI‘mSs
ureSheSrecognizesSthatSbothSyourSdairyScattleSandSyourSbreedersSareSintendedS forScontinued
SuseSandSareSnotSforSsaleSinStheSnormalScourseSofSbusiness.AsSsaleableSstock,StheScattleSrepre

sentSaSpotentialScashSresourceSinStheSeventSofSbankruptcySorSdefault.SAfterSall,SyouSprobably
SuseStheScattleSasScollateralSforSloans,SandSheSneedsStoSknowStheSvalueSofSthatScollateral.




YouSshouldSnotStryStoSestimateStheSvalueSofSyourSstockSbySyourself.SForScredibility,SyouSsho
uldSobtainSanSindependentSestimate.STheSvaluationSwillSrequireSaSprofessionalSevaluationS(a
ndStheScostSthereof),SbutSwillSbeSnecessarySinSorderStoSsatisfyStheSbank.



©S2022SMcGrawSHill.SAllSrightsSreserve
SolutionsSManualStoSaccompanySIntermediateSAccounting,SVolumeS1,S8thS editi d
on 4-3

, Sincerely,S
Andriana

CaseS1-3S(LO1.1,SLO1.2,SLO1.3,SLO1.4,SLO1.5)

Overview

ThisScaseSisSintendedStoSgetSstudentsStoSfocusSonStheSdifferencesSbetweenScompaniesSandSth
eSvariousSfactorsSthatShaveSaSbearingSonStheirSfinancialSreportingSobjectives.SStudentsSareSas
kedStoSprioritizeStheSfactorsSorScharacteristicsSthatSareSmostSlikelyStoSaffectSeachScompany‘s
SfinancialSreporting.




CompanySCharacterics

AllSthreeScompaniesSareSprivateSenterprises.SSignificantScharacteristicsSofSeachSareSasSfollo
ws:

BreezeSInc. SaturnSSoftware Intern’lSAutoSParts
Business NewSmobileSphoneSnetwork CustomSsoftware AutoSpartsSforSinternational
development autoSmakers
Owners PrivateSinvestorsSandSventure TwoSentrepreneurs,Snot WealthySfamily
capitalists wealthy
OtherS capitalSs EgyptianSfund PensionSfund— DebtSthroughSinvestmentSf
ources pref.SsharesSBankSlineSofScr undsSandSbySU.S.SandSCdn.
edit banks
CapitalSrequi CapitalSintensiveSstart-up Salary- EstablishedSmanufacturer;S
rements basedSoperation;Sworkin expandingStoSgainSforeign
gScapitalSneeded customers
Constraints EgyptSfundShasS3SboardSseats BankScovenants: ProbableSdebtScovenants
– restrictionsSonSdivide
nd/salarySpayouts
– newSdebt
PreferredSdividendSrequired
Reporting CRTC PensionSfund InvestmentSfundsSandSbanks
requirements EgyptSfund;SJapanSpartner Bank PotentialSnewScustomers
IPO NotSinStheSforeseeableSfuture Unlikely Yes,SanticipatedSinS2-3Syears
probable?




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S

2-4 SolutionsSManualStoSaccompanySIntermediateSAccounting,SVolumeS1,S8thS editi
on