Solutions Manual for Intermediate Accounting, 13th Canadian Edition by Kieso, Weygandt, Warfield, Wiecek, McConomy

Solutions Manual for Intermediate Accounting, 13th Canadian Edition by Kieso, Weygandt, Warfield, Wiecek, McConomy. NON-FINANCIAL AND CURRENT LIABILITIES Learning Objectives 1. Understand the importance of non-financial and current liabilities from a business perspective. 2. Define liabilities, distinguish financial liabilities from other liabilities, and identify how they are measured. 3. Define current liabilities and identify and account for common types of current liabilities. 4. Identify and account for the major types of employee-related liabilities. 5. Explain the recognition, measurement, and disclosure requirements for decommissioning and restoration obligations. 6. Explain the issues and account for product guarantees, other customer program obligations, and unearned revenue. 7. Explain and account for contingencies and uncertain commitments, and identify the accounting and reporting requirements for guarantees and commitments. 8. Indicate how non-financial and current liabilities are presented and analyzed. 9. Identify differences in accounting between IFRS and ASPE, and what changes are expected in the near future. Summary of Questions by Learning Objectives and Bloom’s Taxonomy Item LO BT Item LO BT Item LO BT Item LO BT Item LO BT Brief Exercises 1. 1 C 8. 3 AP 15. 4 AP 22. 5,9 AP 29. 6,9 AP 2. 3 AP 9. 3 AP 16. 4 AP 23. 6 AP 30. 7,9 AP 3. 3 AP 10. 3 AP 17. 4 AP 24. 6 AP 31. 7 AP 4. 3 AP 11. 3 AP 18. 4 AP 25. 6 AP 32. 8 AN 5. 3 AP 12. 3 AP 19. 4 AP 26. 6 AP 33. 8 AN 6. 2,3 AP 13. 3,9 C 20. 2,5 AP 27. 6 AP 34. 8 AN 7. 3 AP 14. 3,9 C 21. 5,9 AP 28. 6 AP 34. 8 AN Exercises 1. 2,9 C 8. 3,8,9 AP 15. 5,9 AP 22. 6,9 AP 29. 7,9 C 2. 3 AP 9. 3,8,9 AP 16. 5,9 AP 23. 6,9 AP 30. 8 AN 3. 3 AP 10. 4 AP 17. 6 AP 24. 6,9 AP 31. 8 AN 4. 3,9 AP 11. 4 AP 18. 3,4,6 AP 25. 6 AP 32. 8 AN 5. 3 AP 12. 4 AP 19. 6,9 AP 26. 6,9 AP 6. 3,9 AP 13. 4 AP 20. 6,8,9 AP 27. 6 AP 7. 3,4,6,7,9 C 14. 4,9 AN 21. 6,9 AP 28. 6 AP Problems 1. 2,3,5,9 AP 5. 4 AP 9. 6,7,9 AP 13. 6,9 AP 17. 7,8,9 AP 2. 2,3 AP 6. 4 AP 10. 6,7,10 AP 14. 6,8,9 AP 3. 2,3,4,6,9 AP 7. 4,9 AN 11. 6,8 AP 15. 6,9 AP 4. 2,3,5,6 AP 8. 5,7 AP 12. 6,7,9 AP 16. 7,8 AP Cases 1. 6,9 AN 2. 3. Integrated Cases 1. 7 AN 2. 7 AP 3. 7 AP Research and Analysis 1. 5,6,7 AP 3. 6,7,8 AP 5. 6,7 AP 6. 4,8 AP 7. 2,6,7 AN 2. 3,7,8 AP 4. 3,5,6,8 AP Legend: The following abbreviations will appear throughout the solutions manual file. LO Learning objective BT Bloom's Taxonomy K Knowledge C Comprehension AP Application AN Analysis S Synthesis E Evaluation Difficulty: Level of difficulty S Simple M Moderate C Complex Time: Estimated time to complete in minutes AACSB Association to Advance Collegiate Schools of Business Communication Communication Ethics Ethics Analytic Analytic Tech. Technology Diversity Diversity Reflec. Thinking Reflective Thinking CPA CM CPA Canada Competency Map Ethics Professional and Ethical Behaviour PS and DM Problem-Solving and Decision-Making Comm. Communication Self-Mgt. Self-Management Team & Lead Teamwork and Leadership Reporting Financial Reporting Stat. & Gov. Strategy and Governance Mgt. Accounting Management Accounting Audit Audit and Assurance Finance Finance Tax DAIS Taxation Data Analytics and Information Systems ASSIGNMENT CLASSIFICATION TABLE Topics Brief Exercises Exercises Problems 1& 2. Concept of liabilities; definition, measurement, and classification. 1, 6, 20 1 1, 2, 3, 4, 7 3. Current liabilities including accounts and notes payable, dividends payable, sales and income tax payable, refund liabilities, and short-term obligations expected to be refinanced. 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 2, 3, 4, 5, 6, 7, 8, 9,18 1, 2, 3, 4 4. Employee-related liabilities. 15, 16, 17, 18, 19 7, 9, 10, 11, 12, 13, 14, 18 3, 5, 6, 7 5. Asset retirement obligations. 20, 21, 22 15, 16 1, 4, 8 6. Unearned revenue. 23, 24 7, 17, 18 8, 9, 16 6. Product guarantees, warranties, and other customer programs. 25, 26, 27, 28, 29 7, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28 3, 4, 10, 11, 12, 13, 14, 15 7. Contingencies, guarantees, and uncertain commitments. 30, 31 7, 29 8, 9, 12, 16, 17 8. Presentation and analysis. 32, 33, 34, 35 8, 9, 20, 30, 31, 32 3, 8, 9, 11, 16, 17 9. IFRS and ASPE compared. 13,14, 21, 22, 29, 30, 31 1, 4, 6, 7, 8, 9, 14, 15, 16, 19, 20, 21, 22, 24, 29 1, 3, 7, 9, 12, 13, 14, 15, 17 ASSIGNMENT CHARACTERISTICS TABLE Item Description Level of Difficulty Time (minutes) E13.1 Balance sheet classification of various liabilities Simple 10-15 E13.2 Accounts and notes payable Simple 10-15 E13.3 Notes payable and reversing entry Moderate 15-20 E13.4 Liability for returnable containers Moderate 15-20 E13.5 Entries for sales taxes Moderate 25-35 E13.6 Income tax Moderate 15-20 E13.7 Financial statement impact of liability transactions Moderate 30-35 E13.8 Refinancing of short-term debt Moderate 20-25 E13.9 Refinancing of short-term debt Simple 10-15 E13.10 Payroll tax entries Moderate 15-20 E13.11 Compensated absences–vacation and sick pay Moderate 40-45 E13.12 Compensated absences–vacation and sick pay Moderate 25-30 E13.13 Compensated absences–parental benefits Moderate 20-25 E13.14 Bonus calculation and income statement preparation Complex 15-20 E13.15 Asset retirement obligation Moderate 40-45 E13.16 Asset retirement obligation Moderate 40-50 E13.17 Unearned revenue Simple 10-15 E13.18 HST and payroll Moderate 15-20 E13.19 Warranties–assurance-type and cash basis Simple 10-15 E13.20 Warranties–assurance-type Moderate 15-20 E13.21 Warranties–assurance-type and service-type Moderate 20-25 E13.22 Warranties–assurance-type and service-type Moderate 25-30 E13.23 Customer loyalty programs Moderate 15-20 E13.24 Premium entries Moderate 15-20 E13.25 Premiums Moderate 20-30 E13.26 Premiums Simple 10-15 E13.27 Coupons and rebates Moderate 15-20 E13.28 Customer returns Simple 10-15 E13.29 Contingencies and commitments Moderate 20-30 E13.30 Ratio calculations and discussion Simple 15-20 E13.31 Ratio calculations and analysis Simple 20-25 E13.32 Ratio calculations and effect of transactions Moderate 15-25 ASSIGNMENT CHARACTERISTICS TABLE (CONTINUED) Item Description Level of Difficulty Time (minutes) P13.1 Current liability entries and adjustments Simple 40-50 P13.2 Instalment notes Moderate 40-45 P13.3 Current liabilities: various Complex 45-55 P13.4 Asset retirement obligation and warranties Moderate 25-35 P13.5 Payroll tax entries Moderate 25-35 P13.6 Payroll tax entries Moderate 35-45 P13.7 Bonus calculation Moderate 35-40 P13.8 Loss contingencies: entries and essay. Moderate 45-50 P13.9 Advances, self-insurance, loss contingencies, guarantees, and commitments Moderate 35-40 P13.10 Assurance-type warranties and cash basis Simple 25-30 P13.11 Assurance-type and service-type warranties Moderate 20-30 P13.12 Warranty calculations Moderate 30-35 P13.13 Premium entries Moderate 30-45 P13.14 Premium entries and financial statement presentation Moderate 30-45 P13.15 Warranties and premiums Simple 35-40 P13.16 Guarantees and contingencies Complex 35-45 P13.17 Loss contingencies: entries and essays Moderate 45-50 SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 13.1 (a) Working capital is the excess of total current assets over total current liabilities. It represents the liquid buffer that is available to meet the financial demands of the company’s operating cycle. Current liabilities place a demand on the company’s current assets. Management of the due dates of current liabilities and management of current assets to generate cash on a timely basis are important for effective management of business operations. Effective management of working capital to achieve high liquidity may also contribute to positive cash from operating activities, as seen on the statement of cash flows. (b) Wellson can improve its management of working capital by focusing on the management of current liabilities as well as current assets. For example, if Wellson has a cash flow shortage, it can take advantage of the full credit period extended by its suppliers. As another example, Wellson may also time the due dates of shortterm notes payable to coincide with expected periods of positive cash flow. LO 1 BT: C Difficulty: M Time: 10 min.