2022 Final Exam W22(2) Marks Recommended Available Maximum Time Grade (minutes) Chap 20 Lease 22 35 Chap 19 Pension 16 26 Chap 18 Income Tax 18 29 Chap 22 Cashflows (2 Parts) 32 60 88 150 �1 Long...

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2022 Final Exam W22(2) Marks Recommended Available Maximum Time Grade (minutes) Chap 20 Lease 22 35 Chap 19 Pension 16 26 Chap 18 Income Tax 18 29 Chap 22 Cashflows (2 Parts) 32 60 88 150 �1 Long Ltd., a private corporation adhering to ASPE, enters into a non-cancellable lease agreement on July 1, 2020, to lease equipment from Fong Ltd. The following data are relevant to the lease agreement: 1 The term of the lease is 4 years, with no renewal option. Payments of $ 126,807 are due on June 30 of each year, with the first payment due June 30, 2021. 2 The fair value of the equipment on July 1, 2020 is $ 420,000. The equipment has an economic life of 6 years with no residual value. 3 Long depreciates similar equipment it owns on a straight-line basis. 4 Long's incremental borrowing rate is 10%. The lessee is aware that the lessor used an implicit rate of 8% in calculating the lease payments. 5 Present value factor for 4 periods at 8% is 3.31213; at 10%, 3.16986. Instructions a) What type of lease this is for Long? What is your rationale? b) Prepare the journal entries on Long's books that relate to the lease agreement for the following dates. Round all amounts to the nearest dollar. Include a partial amortization schedule. i. Wednesday, July 01, 2020 ii. 31-Dec-20 iii. 30-Jun-21 iv. 31-Dec-21 �1 �2 Long Ltd., a private corporation adhering to ASPE, enters into a non-cancellable lease agreement on July 1, 2020, to lease equipment from Fong Ltd. The following data are relevant to the lease agreement: The term of the lease is 4 years, with no renewal option. Payments of $ 126,807 are due on June 30 of each year, with the first payment due June 30, 2021. The fair value of the equipment on July 1, 2020 is $ 420,000. The equipment has an economic life of 6 years with no residual value. Long depreciates similar equipment it owns on a straight-line basis. Long's incremental borrowing rate is 10%. The lessee is aware that the lessor used an implicit rate of 8% in calculating the lease payments. Present value factor for 4 periods at 8% is 3.31213; at 10%, 3.16986. What type of lease this is for Long? What is your rationale? Prepare the journal entries on Long's books that relate to the lease agreement for the following dates. Round all amounts to the nearest dollar. Include a partial amortization schedule. �3 �4 On January 1, 2020, Prune Ltd. reported the following balances relating to their defined benefit pension plan: Defined benefit obligation Fair value of plan assets Other data related to the pension plan for 2020 are: Current service cost Contributions to the plan Benefits paid Actual return on plan assets Interest (discount) rate Instructions a) Calculate the defined benefit obligation at December 31, 2020. b) Calculate the fair value of plan assets at December 31, 2020. c) Calculate pension expense for 2020. d) Prepare the journal entries to record the pension expense and the contributions for 2020. �1 $3,200,000 3,200,000 140,000 204,000 220,000 192,000 9% �2 Harrow Corp. purchased equipment for $ 180,000 on January 2, 2020, its first day of operations. For book purposes, the equipment will be depreciated straight-line over three years with no residual value. Pre-tax accounting incomes and taxable incomes are as follows: 2020 2021 Pre-tax accounting income 124,000 140,000 Taxable income 100,000 140,000 The reversible difference between pre-tax accounting income and taxable income is due solely to the use of CCA for tax purposes. Instructions a) Prepare the adjusting journal entries to record income taxes for all three years (expense, deferred tax assets/liabilities, etc.), assuming that the enacted income tax rate for all three years is 30%. �1 Harrow Corp. purchased equipment for $ 180,000 on January 2, 2020, its first day of operations. For book purposes, the equipment will be depreciated straight-line over three years with no residual value. Pre-tax accounting incomes and taxable incomes are as follows: 2022 150,000 174,000 The reversible difference between pre-tax accounting income and taxable income is due solely to the use of CCA for tax purposes. Prepare the adjusting journal entries to record income taxes for all three years (expense, deferred tax assets/liabilities, etc.), assuming that the enacted income tax rate for all three years is 30%. �2 Prepare the adjusting journal entries to record income taxes for all three years (expense, deferred tax assets/liabilities, etc.), assuming that the enacted income tax rate for all three years is 30%. �3 Part A - Indirect Method 22 The following information is taken from Green Lake Corporation's financial statements. Green Lake adheres to ASPE: December 31 2020 Cash $92,000 Accounts receivable 95,000 Allowance for doubtful accounts -4,500 Inventory 145,000 Prepaid expenses 7,500 Land 93,000 Buildings 287,000 Accumulated depreciation -35,000 Patents, net of accumulated amortization 20,000 Total Assets $700,000 Accounts payable $90,000 Accrued liabilities 54,000 Bonds payable 125,000 Common shares 100,000 Retained earnings 346,000 Treasury shares, at cost -15,000 Total Liabilities & Shareholders’ Equity $700,000 For 2020 Year Net income $53,300 Depreciation expense 22,000 Amortization of patents 7,000 Cash dividends declared and paid 20,000 Gain or loss on disposal of patents none Instructions Prepare a statement of cash flows (indirect method) for Green Lake Corporation for calendar 2020. �1 �2 December 31 2019 $27,000 80,000 -3,100 175,000 6,800 60,000 244,000 -13,000 35,000 $611,700 $84,000 63,000 60,000 100,000 312,700 -8,000 $611,700 �3 �4 �1 Part B - Direct Method Presented below is the latest income statement of Mandolin Ltd.: Sales Cost of goods sold Gross profit Operating expenses Income before income taxes Income taxes Net income In addition, the following information related to net changes in working capital is available: Cash Accounts receivable (net) Inventories Salaries payable (operating expenses) Accounts payable Income tax payable Mandolin Ltd. also reports that depreciation expense for the year was $ 20,550 and that the deferred tax liability account increased $ 3,900. Instructions Prepare a schedule calculating the net cash flow from operating activities that would be shown on a statement of cash flows using the direct method. �2 10 Marks $570,000 337,500 $232,500 127,500 105,000 42,000 $63,000 Debit Credit $18,000 12,000 $29,100 9,000 13,500 4,500 �3
Answered Same DayApr 18, 2022

Answer To: 2022 Final Exam W22(2) Marks Recommended Available Maximum Time Grade (minutes) Chap 20 Lease 22 35...

Prince answered on Apr 18 2022
92 Votes
Part A
    Part A - Indirect Method
    The following information is taken from Green Lake Corporation's financial statements. Green Lake
adheres to ASPE:
    Particular    2020    2019
    Cash     92,000    27,000
    Accounts receivable     95,000    80,000
    Allowance for doubtful accounts -    -4,500    -3,100
    Inventory     145,000    175,000
    Prepaid expenses     7,500    6,800
    Land     93,000    60,000
    Buildings     287,000    244,000
    Accumulated depreciation     -35,000    -13,000
    Patents, net of accumulated amortization     20,000    35,000
    Total Assets     700,000    611,700
    Accounts payable     90,000    84,000
    Accrued liabilities     54,000    63,000
    Bonds payable     125,000    60,000
    Common shares     100,000    100,000
    Retained earnings     346,000    312,700
    Treasury shares, at cost     -15,000    -8,000
    Total Liabilities & Shareholders’ Equity     700,000    611,700
    For 2020 Year
    Net income     53,300
    Depreciation expense     22,000
    Amortization of patents     7,000
    Cash dividends declared and paid     20,000
    Gain or loss on disposal of patents    0
    Instructions
    Prepare a statement of cash flows (indirect method) for Green Lake Corporation for calendar
Solution of Part A
    Green Lake Corporation
    Cash Flow Statement
    For the year ended 31st Dec 2020
    Particular    Amount    Amount
    Cash Flow from Operating Activities
    Net income         $53,300.00
    Add: Non-Cash Expenses
    Depreciation...
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