On January 1, 2020, ABC Co. paid $800,000 to acquire common shares of XYZ Co., which

represented 30% of XYZ Co.’s shares outstanding. The value of XYZ’s net assets was

$1,850,000 on that date. The excess of the purchase price over ABC’s share of XYZ’s net assets

is attributed to unrecorded intangibles with a 20-year life. XYZ earned net income and

comprehensive income of $400,000 in 2020 and paid dividends of $80,000. The investment in

XYZ had a fair value of $1,025,000 at December 31, 2020. XYZ incurred a net loss and

comprehensive loss of $425,000 in 2021 and paid no dividends. At December 31, 2021, the fair

value of the investment was $720,000 and the recoverable amount was $765,000. Assume that

ABC follows IFRS.

Prepare all the journal entries that ABC is required to make related to the XYZ shares in

2020 and 2021, assuming ABC has no significant influence over XYZ, and uses the FV-NI

model for the investment

Prepare all the journal entries that ABC is required to make related to the XYZ shares in

Stevens Ltd is the leading retailer of Gym equipment. The following information occurred during May 2020. Stevens Ltd had an opening inventory balance of $8,400,000.

May:

1            Returned to the suppliers $80,000 of the opening inventory and received cash.

12          Purchased additional inventory on credit from the supplier for $12,000,000.

18          Sold inventory for $6,000,000 cash (Cost price to Stevens Ltd $2,400,000).

19          Paid the suppliers the account from 12 May.

31          The closing stocktake at year-end revealed an inventory balance of $17,800,000.

Required:

1. Record the above information for the month of May 2020 in the general journal using the perpetual inventory method. Narrations are not required. Ignore GST.

2. Record the above information for the month of May 2020 in the general journal using the physical inventory method. Narrations are not required. Ignore GST.

3. Present the Income Statement extract for Stevens Ltd using the periodic inventory method for the month ended 31 May 2020.

4. Briefly explain two advantages of the perpetual inventory method for Stevens Ltd.

Bridgeport Corporation ended its first fiscal year on December 31, 2020, reporting a pretax income for accounting purposes of $2,538,000. All of Bridgeport’ products were sold with a two-year warranty included. Bridgeport recorded $626,000 of warranty expense for accounting purposes in 2020, including $376,000 of actual warranty costs incurred during the year plus $250,000 in estimated warranty liability for the remainder of the warranty period. Estimated liabilities are not deductible for tax purposes. Bridgeport was subject to a 25% income tax rate and follows IFRS.

Calculate Bridgeport Ltd.’s taxable income and income tax payable for 2020.

Taxable Income $

Income Taxes Payable $

Prepare the journal entries to record the 2020 current and deferred income taxes. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit (To record current tax expense.) (To record deferred tax expense.)

McCombs Contractors received a contract to construct a mental health facility for $2,500,000. Construction was begun in 2020 and completed in 2021. Cost and other data are presented below:

2020 2021

Costs incurred during the year $1,500,000 $1,300,000

Estimated costs to complete 1,200,000 0

Billings during the year 1,200,000 1,300,000

Cash collections during the year 1,000,000 1,500,000

Part 1: Assume that McCombs recognizes revenue on this contract over time according to percentage of completion. Required: Compute the amount of gross profit recognized during 2020 and 2021.

Part 2: Assume that McCombs recognizes revenue on this contract over time according to percentage of completion. Required: Prepare all journal entries to record costs, billings, collections, and profit (loss) recognition. Round your answers to the nearest whole dollar.

Part 3: Assume that McCombs recognizes revenue upon project completion. Required: Compute the amount of gross profit recognized by McCombs during 2020 and 2021.

On 1 July, 2018 Bundoora Ltd acquires 25 percent of the issued capital of Preston Ltd for a cash consideration of $150,000. At the date of acquisition, the share capital and retained earnings of Preston Ltd are as follows: Share capital $120,000 and Retained earnings $480,000 (Total Shareholders’ equity $600,000). Additional information:  For the year ending 30 June 2019 Preston Ltd records an after-tax profit of $50,000 from which it pays a dividend of $30,000.  For the year ending 30 June, 2020 Preston Ltd records an after-tax loss of $30,000. On 30 June 2020, Preston Ltd declares dividends of $10,000.  Bundoora Ltd has a number of subsidiaries. Required: (i) Prepare the journal entries using both the cost and equity methods of accounting in context of parent entity for the investment in Preston Ltd for each of the years ended 30 June 2019 to 2020. (ii) Calculate the carrying amount of the investment in Preston Ltd at 30 June 2020.

On 1 July, 2018 Bundoora Ltd acquires 25 per cent of the issued capital of Preston Ltd for a cash consideration of $150,000. At the date of acquisition, the share capital and retained earnings of Preston Ltd are as follows: Share capital $120,000 and Retained earnings $480,000 (Total Shareholders’ equity $600,000). Additional information:  For the year ending 30 June, 2019 Preston Ltd records an after tax profit of $50,000 from which it pays a dividend of $30,000.  For the year ending 30 June, 2020 Preston Ltd records an after tax loss of $30,000. On 30 June 2020, Preston Ltd declares dividends of $10,000.  Bundoora Ltd has a number of subsidiaries.

Required:

(i) Prepare the journal entries using both the cost and equity methods of accounting in context of parent entity for the investment in Preston Ltd for each of the years ended 30 June 2019 to 2020.

(ii) Calculate the carrying amount of the investment in Preston Ltd at 30 June 2020.

On 1 July, 2018 Bundoora Ltd acquires 25 per cent of the issued capital of Preston Ltd for a cash consideration of $150,000.

At the date of acquisition, the share capital and retained earnings of Preston Ltd are as follows: Share capital $120,000 and Retained earnings $480,000 (Total Shareholders' equity $600,000).

Additional information:

§ For the year ending 30 June, 2019 Preston Ltd records an after tax profit of $50,000 from which it pays a dividend of $30,000.

§ For the year ending 30 June, 2020 Preston Ltd records an after tax loss of $30,000. On 30 June 2020, Preston Ltd declares dividends of $10,000.

§ Bundoora Ltd has a number of subsidiaries.

Required:

(i)                Prepare the journal entries using both the cost and equity methods of accounting in context of parent entity for the investment in Preston Ltd for each of the years ended 30 June 2019 to 2020.                                                                           

(ii)             Calculate the carrying amount of the investment in Preston Ltd at 30 June 2020.

Accounting

On June 1, 2020, Shebandowan Investors Inc. issued a $4,800,000, 12%, three-year bond. Interest is to be paid semiannually beginning December 1, 2020. Assume that the market rate of interest is 13%. Use TABLE 14A.1 and TABLE 14A.2. (Use appropriate factor(s) from the tables provided.) Required: Part 1 Record the following entries: (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)

a. Issuance of the bonds on June 1, 2020

b. Payment of interest on December 1, 2020

c. Adjusting entry to accrue bond interest and discount amortization on January 31, 2021

d. Payment of interest on June 1, 2021 Assume Shebandowan Investors Inc. has a January 31 year-end.

Part 2

Show how the bonds will appear on the balance sheet under non-current liabilities at January 31, 2022. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)