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Chapter: 16- Investments -Problem: 3 >> In this group activity, you will compare the accounting for bonds payable with the accounting for a long-term investment in bonds. Time permitting, your instructor may also ask you to compare this with the accounting for an investment in bonds held for trading purposes.
Answer Preview: Accounting for Bonds Payable: When a company issues bonds to raise capital, it creates a liability on its balance sheet known as "Bonds Payable." The …

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, Chapter: 14- Corporations: Additional Topics and IFRS -Problem: 9 >> What are discontinued operations? Why is it important to report discontinued operations separately from profit or loss from continuing operations?
Answer Preview: Discontinued operations refer to a segment of a company's business that has been either sold or is being prepared for sale. These operations are consi…

, Chapter: 16- Investments -Problem: 6 >> For public companies, what are the differences between the accounting for bonds purchased for trading and bonds held to earn interest revenue?
Answer Preview: The accounting treatment for bonds purchased for trading and bonds held to earn interest revenue can differ for public companies. These differences pr…

, Chapter: 11- Financial Reporting Concepts -Problem: 8 >> Identify and explain the four enhancing qualitative characteristics of accounting information.
Answer Preview: In accounting, the qualitative characteristics of financial information are the attributes that make financial statements useful and relevant to their …

, Chapter: 15- Non-Current Liabilities -Problem: 6 >> Peter Furlong has just approached a venture capitalist for financing for his sailing school. The lenders are willing to lend Peter $120,000 in exchange for a note payable at a high-risk interest rate of 7%. The note is payable over three years in blended payments of $22,520. Payments are made semi-annually on October 31 and April 30. Peter receives the $120,000 on May 1, 2014, the first day of his
Answer Preview: (a) Record the Issue of the Note Payable on May 1: On May 1, 2014, Peter receives the $120,000 loan. Here's the journal entry: Debit: Cash or Bank A/c …

, Chapter: 14- Corporations: Additional Topics and IFRS -Problem: 10 >> Ruby Red Rental Corporation had the following balances in its shareholders’ equity accounts at January 1, 2014:Ruby Red had the following transactions and events during 2014:Instructions Prepare a statement of changes in shareholders’ equity at December 31, 2014.
Answer Preview: Beginning Balances: Accumulated other comprehensive income (loss): ($25,000) Contributed Surplus-Rea…

, Chapter: 17- The Cash Flow Statement -Problem: 2 >> Andrew Peller Limited is a leading producer and marketer of quality wines in Canada, with wineries in British Columbia, Ontario, and Nova Scotia. The company’s March 31, 2012, balance sheet reported current assets of $137.4 million and current liabilities of $102.5 million, including bank indebtedness (negative cash balance) of $57.5 million. Andrew Peller Limited reported a profit for fiscal 2012
Answer Preview: (a) Increase or Decrease in Cash: To calculate the increase or decrease in cash during the year, we need to consider the change in cash and cash equiv…

, In this group activity, you will compare the accounting for bonds payable with the accounting for a long-term investment in bonds. Time permitting, your instructor may also ask you to compare this with the accounting for an investment in bonds held for trading purposes.
Answer Preview: Let's break down each comparison: Accounting for Bonds Payable vs. Long-Term Investment in Bonds: Bonds Payable: Issuer's Perspective : The company is…

, Chapter: 15- Non-Current Liabilities -Problem: 17 >> What is off –balance sheet financing? Why are long-term operating leases considered to be a form of off – balance sheet financing?
Answer Preview: Off-balance sheet financing refers to a financial arrangement in which a company is able to obtain funds or assets without recording them directly on its balance sheet. This can be done through variou…

, Chapter: 17- The Cash Flow Statement -Problem: 3 >> Using the data presented for Pesci Ltd. in E17–2, prepare the operating activities section of the cash flow statement using the direct method.Data From E17-2:Pesci Ltd. is a private company reporting under ASPE. Its income statement and changes in current assets and current liabilities for the year are reported below:
Answer Preview: To prepare the operating activities section of the cash flow statement using the direct method, we n…

, Chapter: 18- Financial Statement Analysis -Problem: 18 >> If you were an investor interested in buying the shares of a company with growth potential, would you look for a company that had high or low price-earnings and payout ratios? If you were interested in buying the shares of a company with income potential, would your answer change? Explain.
Answer Preview: If I were an investor interested in buying shares of a company with growth potential, I would typically look for a company with high price-earnings (P…

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, Chapter: 18- Financial Statement Analysis -Problem: 7 >> What base amount is usually assigned a 100% value in a vertical analysis of (a) the balance sheet and (b) the income statement?
Answer Preview: In vertical analysis, also known as common-size analysis, financial statements are p…

, In this group activity, you will be forming a new corporation and making decisions about the number of shares to be issued to the founding shareholders as well as to an individual who becomes a shareholder at a later date. You will also prepare a corporate income statement and balance sheet for this corporation.
Answer Preview: Forming the Corporation To start, we'll need to decide on a few key details about the corporation, such as its name, business purpose, and location. O…

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, Pavlina borrowed $15,000 from the bank and signed a three-year, 6% instalment note payable with fixed principal payments. She wants to know how to calculate what the annual fixed principal payment will be. Explain.
Answer Preview: An installment note payable with fixed principal payments is a type of loan where the borrower (in this case, Pavlina) agrees to make equal payments o…

, Compare the rights of preferred shareholders with common shareholders. Include in your answer the areas in which preferred shares are given priority over common shares.
Answer Preview: Preferred shareholders and common shareholders are two different classes of ownership in a company, and they possess different rights and privileges. Here's a comparison of their rights, including the …

, Chapter: 18- Financial Statement Analysis -Problem: 19 >> Name the ratio(s) that should be used to help answer each of the following questions.(a) How efficient is a company at using its assets to produce sales? (b) What is the company’s ability to pay its obligations immediately without selling inventory? (c) How long does it take to purchase inventory, sell it on account, and collect the cash? (d) How many dollars of profit were earned for each dollar
Answer Preview: Here are the ratios that can help answer each of the questions: (a) Asset Turnover Ratio: This ratio …

, Chapter: 16- Investments -Problem: 8 >> When is it appropriate for a public company to report gains and losses on fair value adjustments in other comprehensive income?
Answer Preview: The reporting of gains and losses on fair value adjustments in other comprehensive income (OCI) for a public company is typically determined by accoun…

, Chapter: 15- Non-Current Liabilities -Problem: 6 >> A local company has just approached a venture capitalist for financing to develop a ski hill. On April 1, 2013, the venture capitalist loaned the company $1 million at an interest rate of 5%. The loan is repayable over four years in fixed principal payments. The first payment is due March 31, 2014. The ski hill operator’s year end will be December 31.Instructions (a) Record the issue of the note p
Answer Preview: Let's break down each part of the question step by step: (a) Record the issue of the note payable on April 1, 2013: On April 1, 2013, the company received a loan of $1 million from the venture capital…

, Chapter: 13- Introduction to Corporations -Problem: 9 >> What is the difference between non-cumulative and cumulative preferred shares? What are the differences among convertible, redeemable, and retractable preferred shares?
Answer Preview: Preferred shares are a type of ownership stake in a company, typically offering certain rights and privileges that differ from common shares. There are several variations of preferred shares based on …

, Chapter: 17- The Cash Flow Statement -Problem: 1 >> You are provided with the following transactions that took place during a recent fiscal year:Instructions Assuming the company is reporting under IFRS, complete the above table for each of the following requirements, assuming none of the transactions were previously accrued. The first one has been done for you as an example.(a) Classify each transaction as an operating activity (O), an investing a
Answer Preview: Here's the completed table for each of the requirements: (a) Classification Paid wages to employees. - Operating Activity (O) Sold land for cash, at a gain. - Investing Activity (I) Acquired land by i…

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, Chapter: 17- The Cash Flow Statement -Problem: 24 >> How is it possible for a company to report positive net cash from operating activities but have a negative free cash flow?
Answer Preview: it's possible for a company to report positive net cash from operating activities while having a negative free cash flow. To understand how this can h…

, The following instalment payment schedule is for an instalment note payable:Instructions (a) Is this a fixed principal or blended payment schedule? (b) What is the interest rate on the note? (c) Prepare the journal entry to record the first instalment payment. (d) What are the non-current and current portions of the note at the end of period 2?
Answer Preview: (a) Is this a fixed principal or blended payment schedule? This is a blended payment schedule. In a fixed principal schedule, each payment includes a …

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, Chapter: 18- Financial Statement Analysis -Problem: 13 >> (a) What do solvency ratios measure? (b) What types of users would be most interested in solvency ratios?
Answer Preview: (a) Solvency ratios measure a company's ability to meet its long-term financial obligations and debt …

, Chapter: 15- Non-Current Liabilities -Problem: 13 >> Pavlina borrowed $15,000 from the bank and signed a three-year, 6% instalment note payable with fixed principal payments. She wants to know how to calculate what the annual fixed principal payment will be. Explain.
Answer Preview: An installment note payable with fixed principal payments involves repaying a loan in equal installm…

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, Chapter: 14- Corporations: Additional Topics and IFRS -Problem: 4 >> The following shareholders’ equity accounts are reported by Talty Inc. on January 1:The following selected transactions occurred during the year:Instructions (a) Prepare a chart that shows for each class of shares (1) number of shares, (2) cost of shares, and (3) average cost per share. Enter the January 1 data into the chart. (b) Prepare journal entries for the transactions. Update the chart in (
Answer Preview: Shareholder's Equity Chart: DateCommon SharesPreferred SharesContributed SurplusRetained Earnings Jan. 1500,000 ($4,000,000)4,000 ($36,000)-$1,958,000 …

, Chapter: 16- Investments -Problem: 1 >> The following terms were introduced in this chapter:1. Strategic investments 2. Non-strategic investments 3. Trading investments 4. Debt investments reported at amortized costMatch each term with the following definitions:(a) Debt securities that are held to earn interest income (b) Investments purchased to influence or control another company (c) Debt or equity securities that are bought and held
Answer Preview: here's the matching of the terms with their respective definitions: Strategic investments - (b) Inv…

, Chapter: 16- Investments -Problem: 1 >> Janet, Brian, and Natalie have been approached by Ken Thornton, a shareholder of La Madeleine Ltd., a private company. Ken wants to retire and would like to sell his 1,000 shares in La Madeleine, which represent 20% of all shares issued. La Madeleine is currently operated by Ken’s twin daughters, who each own 40% of the common shares. La Madeleine operates a bakery that specializes in making fancy
Answer Preview: (a) Answers to Janet, Brian, and Natalies Questions: 1. Influence and Accounting for Investment: Yes, the amount of influence you have in the decision-making process for La Madeleine Ltd. would affect …

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, Chapter: 18- Financial Statement Analysis -Problem: 16 >> (a) What do profitability ratios measure? (b) What types of users would be most interested in profitability ratios?
Answer Preview: (a) Profitability ratios measure a company's ability to generate profits relative to its sales, assets, equity, or other financial metrics. These rati…

, Chapter: 17- The Cash Flow Statement -Problem: 4 >> Identify, and describe the differences among, the three types of activities reported in the cash flow statement. Give an example of each.
Answer Preview: The cash flow statement is a financial report that presents the cash inflows and outflows of a company during a specific period. It categorizes cash f…

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, Chapter: 16- Investments -Problem: 2 >> Kroshka Holdings Corporation has several investments in the debt and equity securities of other companies:1. 10-year BCE bonds, purchased to earn interest. 2. 10-year GE bonds, intended to be sold if interest rates go down. 3. 1-year Government of Canada bonds, purchased to earn interest. 4. 180-day treasury bill, intended to be held to earn interest. 5. Bank of Montreal preferred shares, purchase
Answer Preview: (a) Indicate whether each of the above investments is a non-strategic or strategic investment: 10-year BCE bonds, purchased to earn interest. Strategic: These bonds are likely part of Kroshka's long-t…

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13 Reviews for Accounting Principles Part 3 Textbook Questions And Answers