Exam 2: Intermediate Accounting Volume 2

Use the following information for questions. On December 31, 2014, Diaz Corp.is in financial difficulty and cannot pay a $900,000 note with $90,000 accrued interest payable to Cameron Ltd., which is now due.Cameron agrees to accept from Diaz equipment that has a fair value of $435,000, an original cost of $720,000, and accumulated depreciation of $345,000.Cameron also forgives the accrued interest, extends the maturity date to December 31, 2017, reduces the face amount of the note to $375,000, and reduces the interest rate to 6%, with interest payable at the end of each year. -Diaz should recognize a gain or loss on the transfer of the equipment of

At the time of recognition of an asset retirement obligation, the present value should be

The shareholders' equity of Tirana Ltd.at July 31, 2014 is presented below: Common shares, no par value, authorized 400,000 shares, On August 1, 2014, the board of directors declared a 10% stock dividend, to be distributed on September 15.The market price of Tirana's common shares was $35 on August 1 and $38 on September 15.What is the debit to retained earnings as a result of the declaration and distribution of this stock dividend?

Included in Harrison Inc.'s account balances at December 31, 2014, were the following: Harrison's December 31, 2014 financial statements were to be issued on March 31, 2015.On January 15, 2015, the entire $600,000 balance of the 6% note was refinanced by issuance of a long-term note to be repaid in 2015.In addition, on March 10, 2015, Harrison made arrangements to refinance the 4% note on a long-term basis.Under IFRS, on the December 31, 2014 statement of financial position, the amount of the notes payable that Harrison should classify as current liabilities is

Accounting for a troubled debt settlement At December 31, 2014, Oscar Ltd.owes Wilde Corp.for a $300,000 note payable, plus accrued interest of $27,000.Oscar is now in financial difficulty and cannot repay Wilde.To settle the debt, Wilde agrees to accept from Oscar equipment with a fair value of $285,000, an original cost of $420,000, and accumulated depreciation to date of $98,000. Instructions a.Calculate the gain or loss to Oscar on the settlement of the debt. b.Calculate the gain or loss to Oscar on the transfer of the equipment. c.Prepare the journal entry on Oscar's books to record the settlement of the debt. d.Prepare the journal entry on Wilde's books to record the settlement of the receivable.

The preemptive right enables a shareholder to

Direct incremental costs incurred to sell shares such as underwriting costs should be accounted for as

Which of the following may be classified as a current liability?

Segmented reporting Tangerine Corporation's most recent (condensed)income statement is presented below: Instructions (Assume that the corporation adheres to IFRS) a.Prepare a schedule showing the amounts distributed to each segment. b.Based only on the above information, which segments must be reported and why?

Which of the following is generally NOT used as a basis for calculating bonuses or profit sharing amounts?

On May 1, 2014, when the market value of Jay Ltd.'s common shares was $15 per share, the corporation had 100,000 no par value common shares issued and outstanding.On this day, Jay declared and issued a 15% common stock dividend.As a result of this stock dividend, Jay's total shareholders' equity

According to the existing IFRS and the CICA Handbook Part II guidelines, which of the following is NOT an essential characteristic of a liability?

Use the following information for questions. On December 31, 2014, Diaz Corp.is in financial difficulty and cannot pay a $900,000 note with $90,000 accrued interest payable to Cameron Ltd., which is now due.Cameron agrees to accept from Diaz equipment that has a fair value of $435,000, an original cost of $720,000, and accumulated depreciation of $345,000.Cameron also forgives the accrued interest, extends the maturity date to December 31, 2017, reduces the face amount of the note to $375,000, and reduces the interest rate to 6%, with interest payable at the end of each year. -Diaz should record interest expense for 2017 of

Which of the following transactions would NOT result in an increase to retained earnings?

How should cumulative preferred dividends in arrears be shown on the balance sheet?

Entries for bonds payable Long-Term Financial Liabilities 14- 27 Prepare journal entries to record the following transactions related to Chico Ltd.'s long-term bonds: a.On April 1, 2014, Chico issued $600,000, 9% bonds (dated January 1, 2014)for $645,442 including accrued interest.Interest is payable annually on January 1, and the bonds mature on January 1, 2024. b.On July 1, 2016, Chico retired 30% of the bonds at 102 plus accrued interest.Chico uses straight-line amortization.

A feature common to both stock splits and stock dividends is

Which type of dividends do NOT reduce total shareholders' equity?

On December 31, 2014, Street Ltd.has $2,000,000 in short-term notes payable due on February 14, 2015.On January 10, 2015, Street arranged a line of credit with Regal Bank, which allows Street to borrow up to $1,500,000 at 1% above the prime rate for three years.On February 2, 2015, Street borrowed $1,200,000 from Regal Bank and used $500,000 additional cash to liquidate $1,700,000 of the short-term notes payable.Assuming Street adheres to IFRS, the amount of the short-term notes payable that should be reported as current liabilities on Street's December 31, 2014 statement of financial position (to be issued on March 5, 2015)is

Use the following information for questions. Riga Ltd.has outstanding 100,000 no par common shares and 20,000 no par, $0.40, preferred shares issued at $5 each.The preferred shares are cumulative and non-participating.Dividends have been paid every year except the past two years and the current year. -The Common Shares account currently shows a balance of $200,000.Assuming that $61,000 will be distributed as a dividend in the current year, and the preferred shares are also fully participating, how much will the common shareholders receive?