Merit & Family purchased engines from Canada for 30,000 Canadian dollars on March 10 with payment due on June 8. Also, on March 10, Merit acquired a 90-day forward contract to purchase 30,000 Canadian dollars at C$1 = $0.50. The forward contract was acquired to manage Merit & Family’s exposed net liability position in Canadian dollars, but it was not designated as a hedge. The spot rates were

Required:
Prepare journal entries for Merit & Family to record the purchase of the engines, entries associated with the forward contract, and entries for the payment of the foreign currency payable. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• Record the entry to revalue the foreign currency receivable to the current equivalent U.S. dollar value.
• Record the entry to revalue the foreign currency accounts payable to the current U.S. dollar value.
• Record the payment of U.S. dollars to an exchange broker for the forward contract.
• Record the receipt of Canadian dollars from the exchange broker.
• Record the settlement of the foreign currency payable.

Bracy Company acquired a new piece of construction equipment on January 1, 2015, at a cost of $92,300. The equipment was expected to have a useful life of 7 years and a residual value of $16,000 and is being depreciated on a straight-line basis.

On January 1, 2016, the equipment was appraised and determine to have a fair value of $92,920, a salvage value of $16,000, and a remaining useful life of six years.

a. Determine the amount of depreciation expense that Bracy should recognize in determining net income in 2015, 2016, and 2017 and the amount at which equipment should be carried on December 31, 2015, 2016, and 2017 balance sheets using (1) U.S. GAAP and (2) IFRS. In measuring property, plant, and equipment subsequent to the acquisition, Bracy used the revaluation model in IAS16.

b. Determine the adjustments that Bracy would make in 2015, 2016, and 2017 to reconcile net income and stockholders' equity under U.S. GAAP to IFRS.

Each change occurs during 2021 before any adjusting entries or closing entries were prepared. Assume the tax rate for each company is 25% in all years. Any tax effects should be adjusted through the deferred tax liability account.

1. Fleming Home Products introduced a new line of commercial awnings in 2020 that carry a one-year warranty against manufacturer’s defects. Based on industry experience, warranty costs were expected to approximate 2% of sales. Sales of the awnings in 2020 were $2,900,000. Accordingly, warranty expense and a warranty liability of $58,000 were recorded in 2020. In late 2021, the company’s claims experience was evaluated, and it was determined that claims were far fewer than expected: 1% of sales rather than 2%. Sales of the awnings in 2021 were $3,400,000, and warranty expenditures in 2021 totaled $77,350.
2. On December 30, 2017, Rival Industries acquired its office building at a cost of $880,000. It was depreciated on a straight-line basis assuming a useful life of 40 years and no salvage value. However, plans were finalized in 2021 to relocate the company headquarters at the end of 2025. The vacated office building will have a salvage value at that time of $640,000.
3. Hobbs-Barto Merchandising, Inc., changed inventory cost methods to LIFO from FIFO at the end of 2021 for both financial statement and income tax purposes. Under FIFO, the inventory at January 1, 2021, is $630,000.
4. At the beginning of 2018, the Hoffman Group purchased office equipment at a cost of $264,000. Its useful life was estimated to be 10 years with no salvage value. The equipment was depreciated by the sum-of-the-years’-digits method. On January 1, 2021, the company changed to the straight-line method.
5. In November 2019, the State of Minnesota filed suit against Huggins Manufacturing Company, seeking penalties for violations of clean air laws. When the financial statements were issued in 2020, Huggins had not reached a settlement with state authorities, but legal counsel advised Huggins that it was probable the company would have to pay $140,000 in penalties. Accordingly, the following entry was recorded:

Late in 2021, a settlement was reached with state authorities to pay a total of $284,000 in penalties.

6. At the beginning of 2021, Jantzen Specialties, which uses the sum-of-the-years’-digits method, changed to the straight-line method for newly acquired buildings and equipment. The change increased current year net earnings by $379,000.

Required:
For each situation:
1. Identify the type of change.
2. Prepare any journal entry necessary as a direct result of the change, as well as any adjusting entry for 2021 related to the situation described.
  

On March 1, 202x, the XYZ Company acquired 40% of the voting stock of KLM Company for $6 million. The net worth of KLM book value is $10 million. The fair market value of the KLM assets and liabilities are equal except for a building with book value of $ 3 million has a fair value of $5 million

KLM reported net income of $2 million and made dividends distribution of 1 million during the year ending 12/31/202x. Assume xyz is using the equity method for the investment.

A. was there any good will in this transaction? How much?

B. Make the jounral entry to reflect the above transactions by xyz company during 2020

Assume XYZ uses straight line depreciation and 10 years economic life

Show the general ledger of "investment" account and ending balance by XYZ company on 12/31/20x

The following information relates to the 2020 debt and equity investment transactions of Sarasota Ltd., a publicly accountable Canadian corporation. All of the investments were acquired for trading purposes and accounted for using the FV-NI model, with all transaction costs being expensed. No investments were held at December 31, 2019, and the company prepares financial statements only annually, each December 31, following IFRS.

1. On February 1, the company purchased Williams Corp. 12% bonds, at par value for $560,000, plus accrued interest. Interest is payable April 1 and October 1.

2. On April 1, semi-annual interest was received on the Williams bonds.

3. On July 1, 9% bonds of Saint Inc. were purchased. These bonds, with a par value of $198,000, were purchased at par plus accrued interest. Interest dates are June 1 and December 1. 4. On August 12, 3,400 shares of Scotia Corp. were acquired at a cost of $59.00 per share. A 1% commission was paid.

5. On September 1, Williams Corp. bonds with a par value of $112,000 were sold at 104.6 plus accrued interest.

6. On September 28, a dividend of $0.56 per share was received on the Scotia Corp. shares.

7. On October 1, semi-annual interest was received on the remaining Williams Corp. bonds.

8. On December 1, semi-annual interest was received on the Saint Inc. bonds.

9. On December 28, a dividend of $0.58 per share was received on the Scotia Corp. shares.

10. On December 31, the following fair values were determined: Williams Corp. bonds 102.00; Saint Inc. bonds 97; and Scotia Corp. shares $61.80.

required:

1.Prepare all 2020 journal entries necessary to properly account for the investment in the Williams Corp. bonds.

2.Prepare all 2020 journal entries necessary to properly account for the investment in the Saint Inc. bonds.

3.Prepare all 2020 journal entries necessary to properly account for the investment in the Scotia Corp. shares.

Sheridan Inc. earns $470000 and pays cash dividends of $100000 during 2020. Carla Vista Corporation owns 62700 of the 209000 outstanding shares of Sheridan Inc. How much revenue from investment should Carla Vista report in 2020?

Sunland Inc. earns $550000 and pays cash dividends of $145000 during 2020. Wildhorse Corporation owns 73850 of the 211000 outstanding shares of Sunland. What amount should Wildhorse show in the investment account at December 31, 2020 if the beginning of the year balance in the account was $40000?

On January 2, Matthews Corporation acquired 20% of the outstanding common stock of Dennehy Company for $450,000. For the year ended December 31, Dennehy reported net income of $90,000 and paid cash dividends of $30,000 on its common stock. On December 31, the carrying value of Matthews’ investment in Dennehy under the equity method is

At December 31, 2020, the trading securities for Eddy Company are as follows:

Security       Cost       Fair Value
A       $16,000       $20,000
B       34,000       32,000
$50,000       $52,000

Prepare the adjusting entry at December 31, 2020, to report the securities at fair value. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

CoronadoCorp. has common stock of $4600000, retained earnings of $1600000, unrealized gains on trading securities of $120000 and unrealized losses on available-for-sale securities of $180000. What is the total amount of its stockholders’ equity?

On January 1, 2020, Sheffield Corp. paid $940000 for 117500 shares of Ivanhoe Company’s common stock, which represents 26% of Ivanhoe's outstanding common stock. Ivanhoe reported net income of $224000 and paid cash dividends of $63000 during 2020. Sheffield should report the investment in Ivanhoe Company on its December 31, 2020, balance sheet at:

Which of the following is the correct matching concerning the appropriate accounting for long-term stock investments?

% of Investor Ownership      Accounting Guidelines

Coronado Corporation purchased 960 shares of Wildhorse common stock ($50 par) at $82 per share as a short-term investment. The shares were subsequently sold at $78 per share. The cost of the securities purchased and gain or loss on the sale were

Cost        Gain or Loss

Conrad Playground Supply underwent a restructuring in 2021. The company conducted a thorough internal audit, during which the following facts were discovered. The audit occurred during 2021 before any adjusting entries or closing entries are prepared.

1. Additional computers were acquired at the beginning of 2019 and added to the company’s office network. The $49,500 cost of the computers was inadvertently recorded as maintenance expense. Computers have five-year useful lives and no material salvage value. This class of equipment is depreciated by the straight-line method.
2. Two weeks prior to the audit, the company paid $21,500 for assembly tools and recorded the expenditure as office supplies. The error was discovered a week later.
3. On December 31, 2020, merchandise inventory was understated by $87,000 due to a mistake in the physical inventory count. The company uses the periodic inventory system.
4. Two years earlier, the company recorded a 4% stock dividend (2,900 common shares, $1 par) as follows:

The shares had a market price at the time of $12 per share.

5. At the end of 2020, the company failed to accrue $122,000 of interest expense that accrued during the last four months of 2020 on bonds payable. The bonds, which were issued at face value, mature in 2025. The following entry was recorded on March 1, 2021, when the semiannual interest was paid, as well as on September 1 of each year:

6. A three-year liability insurance policy was purchased at the beginning of 2020 for $74,700. The full premium was debited to insurance expense at the time.

Required:
For each error, prepare any journal entry necessary to correct the error, as well as any year-end adjusting entry for 2021 related to the situation described. (Ignore income taxes.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Conrad Playground Supply underwent a restructuring in 2021. The company conducted a thorough internal audit, during which the following facts were discovered. The audit occurred during 2021 before any adjusting entries or closing entries are prepared.

1. Additional computers were acquired at the beginning of 2019 and added to the company’s office network. The $46,000 cost of the computers was inadvertently recorded as maintenance expense. Computers have five-year useful lives and no material salvage value. This class of equipment is depreciated by the straight-line method.
2. Two weeks prior to the audit, the company paid $18,000 for assembly tools and recorded the expenditure as office supplies. The error was discovered a week later.
3. On December 31, 2020, merchandise inventory was understated by $80,000 due to a mistake in the physical inventory count. The company uses the periodic inventory system.
4. Two years earlier, the company recorded a 5% stock dividend (2,200 common shares, $1 par) as follows:

The shares had a market price at the time of $11 per share.

5. At the end of 2020, the company failed to accrue $108,000 of interest expense that accrued during the last four months of 2020 on bonds payable. The bonds, which were issued at face value, mature in 2025. The following entry was recorded on March 1, 2021, when the semiannual interest was paid, as well as on September 1 of each year:

6. A three-year liability insurance policy was purchased at the beginning of 2020 for $72,600. The full premium was debited to insurance expense at the time.

Required:
For each error, prepare any journal entry necessary to correct the error, as well as any year-end adjusting entry for 2021 related to the situation described. (Ignore income taxes.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)