ABC Co.'s balance sheet includes the following asset, at December 31, 2019 after annual depreciation has been recorded:

       Equipment....................................................... $120000

       Less: accumulated depreciation....................... (40000)

       Net Book value ................................................. $80000

After performing its annual review for impairment, ABC Co. obtains the following data:

       Equipment’s value in use.................................. $78000

       Equipment’s fair value less disposal costs.......... 76000

The remaining useful life of the asset at January 1, 2020 is 8 years. ABC Co. applies straight-line depreciation to its equipment assets and the equipment has a $6000 residual value. ABC Co. uses IFRS.

Required:

1. Determine the amount of impairment loss (using the rational entity impairment model).
2. Prepare the entry to record the impairment loss.
3. Prepare the journal entry to record the 2020 depreciation.
4. Assume the carrying value of the equipment, after recording 2020 depreciation, at December 31, 2020 is $69000 and that the carrying value of the equipment would have been $70750 if no impairment had been taken in 2019. The recoverable amount of the equipment at December 31, 2020 is $70000. Prepare the journal entry to record the impairment recovery for 2020.

Bridgeport Inc. has a defined benefit plan for its employees. On December 31, 2019 the company’s records showed the following information related to the plan:

All employees are expected to receive benefits under the plan. The company’s actuary provided the following information as at December 31, 2020:

New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect.

Calculate pension expense for Bridgeport Inc. for 2020, assuming ASPE is used.

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New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect.

Calculate pension expense for Bridgeport Inc. for 2020, assuming IFRS is used.

ABC's balance sheet includes the following asset, at December 31, 2019 after annual depreciation has been recorded:

       Equipment......................................................... $95000

       Less: accumulated depreciation....................... (25000)

       Net Book value ................................................. $70000

After performing its annual review for impairment, ABC obtains the following data:

       Equipment’s value in use.................................. $58000

       Equipment’s fair value less disposal costs.......... 62000

The remaining useful life of the asset at January 1, 2020 is 5 years. ABC. applies straight-line depreciation to its equipment assets and the equipment has a $5000 residual value. ABC uses IFRS.

Required:

1. Determine the amount of impairment loss (using the rational entity impairment model).
2. Prepare the entry to record the impairment loss.
3. Prepare the journal entry to record the 2020 depreciation.
4. Assume the carrying value of the equipment, after recording 2020 depreciation, at December 31, 2020 is $50600 and that the carrying value of the equipment would have been $57000 if no impairment had been taken in 2019. The recoverable amount of the equipment at December 31, 2020 is $56000. Prepare the journal entry to record the impairment recovery for 2020.

(LO 3, 4 ) (Accounting for an Operating Lease) On January 1, 2020, a machine was purchased for $900,000 by Young Co. The machine is expected to have an 8-year life with no salvage value. It is to be depreciated on a straight-line basis. The machine was leased to St. Leger Inc. for 3 years on January 1, 2020, with annual rent payments of $150,955 due at the beginning of each year, starting January 1, 2020. The machine is expected to have a residual value at the end of the lease term of $562,500, though this amount is unguaranteed. Instructions

A. How much should Young report as income before income tax on this lease for 2020?

B. Record the journal entries St. Leger would record for 2020 on this lease, assuming its incremental borrowing rate is 6% and the rate implicit in the lease is unknown.

C. Suppose the lease was only for one year (only one payment of the same amount at commencement of the lease), with a renewal option at market rates at the end of the lease, and St. Leger elects to use the short-term lease exception. Record the journal entries St. Leger would record for 2020 on this lease.

a) Colbert sells 3D printer systems. Recently, Colbert provided a special promotion of zero-interest financing for 2 years on any new 3D printer system. Assume that Colbert sells Lyle Cartright a 3D system, receiving a $5,000 zero-interest-bearing note on January 1, 2020. The cost of the 3D printer system is $4,000. Colbert imputes a 6% interest rate on this zero-interest note transaction. Prepare the journal entry to record the sale on January 1, 2020, and compute the total amount of revenue to be recognized in 2020.

b) Colbert sells 20 nonrefundable $100 gift cards for 3D printer paper on March 1, 2020. The paper has a standalone selling price of $100 (cost $80). The gift cards expiration date is June 30, 2020. Colbert estimates that customers will not redeem 10% of these gift cards. The pattern of redemption is as follows.

Prepare the 2020 journal entries related to the gift cards at March 1, March 31, April 30, and June 30.

On January 1, 2020, Nivtop Corp. leased a machine from Nosnah Inc. The lease agreement calls for
Nivtop to make four annual lease payments of $559,113 each January 1, with the first payment to be
made on January 1, 2020. Nivtop’s incremental borrowing rate is 8%; this is the same rate Nosnah
used to calculate the lease payments. The fair market value of the machine is $2,000,000 and its
expected useful life is 5 years. This is a non-specialized machine.
Nosnah purchased the machine from a vendor on December 31, 2019 for $1,573,000.
Required
a. List the 5 criteria used to determine whether a lease qualifies as finance/sales-type or
operating. Review each criterion to determine which (if any) this lease meets.
b. What type of lease is this for Nivtop?
c. What type of lease is this for Nosnah?
d. Show all of Nivtop’s journal entries relative to this lease at
1) January 1, 2020
2) December 31, 2020
3) January 1, 2021
e. Show all of Nosnah’s journal entries relative to this lease at
1) January 1, 2020
2) December 31, 2020
3) January 1, 2021

On January 1, 2020, Nivtop Corp. leased a machine from Nosnah Inc. The lease agreement calls for
Nivtop to make four annual lease payments of $559,113 each January 1, with the first payment to be
made on January 1, 2020. Nivtop’s incremental borrowing rate is 8%; this is the same rate Nosnah
used to calculate the lease payments. The fair market value of the machine is $2,000,000 and its
expected useful life is 5 years. This is a non-specialized machine.
Nosnah purchased the machine from a vendor on December 31, 2019 for $1,573,000.
Required
a. List the 5 criteria used to determine whether a lease qualifies as finance/sales-type or
operating. Review each criterion to determine which (if any) this lease meets.
b. What type of lease is this for Nivtop?
c. What type of lease is this for Nosnah?
d. Show all of Nivtop’s journal entries relative to this lease at
1) January 1, 2020
2) December 31, 2020
3) January 1, 2021
e. Show all of Nosnah’s journal entries relative to this lease at
1) January 1, 2020
2) December 31, 2020
3) January 1, 2021

On January 1, 2018, Worchester Construction leased International Harvester equipment from Newton LeaseCorp. Newton LeaseCorp purchased the equipment from Wellesley Harvester at a cost of $999,738. Worchester borrowing rate for similar transactions is 10%.

The lease agreement specified four annual payments of $197,000 beginning January 1, 2018, the beginning of the lease, and at each December 31 thereafter through 2020. The useful life of the equipment is estimated to be six years. The present value of those four payments at a discount rate of 10% is $686,910.

On January 1, 2020 (after two years and three payments), the Worchester and Newton agreed to extend the lease term by two years. The market rate of interest at that time was 9%.

Required:

1. Prepare the appropriate entries for Worchester Construction on January 1, 2020, to adjust its lease liability for the lease modification.
2. Prepare all appropriate entries for Newton LeaseCorp on January 1, 2020, to record the lease modification.
3. Prepare all appropriate entries for Worchester Construction on December 31, 2020, related to the lease.
4. Prepare all appropriate entries for on December 31, 2020, related to the lease.

Clearview Window Company manufactures windows for the home-building industry. The window frames are produced in the Frame Division. The frames are then transferred to the Glass Division, where the glass and hardware are installed. The company’s best-selling product is a three-by-four-foot, doublepaned operable window.

The Frame Division also can sell frames directly to custom home builders, who install the glass and hardware. The sales price for a frame is $175. The Glass Division sells its finished windows for $510. The markets for both frames and finished windows exhibit perfect competition.

The standard variable cost of the window is detailed as follows:

*Not including the transfer price for the frame.

Assume that there is no excess capacity in the Frame Division.

Required:

2-d. The Glass Division has been approached by the U.S. Army with a special order for 2,300 windows at $352. Assume the transfer price established in requirement 2-c. above is being used (which is $220).

i.What is the incremental contribution (loss) per window for Clearview Window Company as a whole if this special order is accepted?

ii.From the perspective of Clearview Window Company as a whole, should the special order be accepted or rejected?

2-e. The Glass Division has been approached by the U.S. Army with a special order for 2,300 windows at $352. Assume the transfer price established in requirement 2-c. above is being used (which is $220).

i. What is the incremental contribution (loss) per window for the Glass Division if this special order is accepted?

1. ii.Will an autonomous Glass Division manager accept or reject the special order?