COMMERCE/BUSINESS 453

FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 1

Consideration for 80% interest $ 5,000,000

Implied value of 20% NIC 1,250,000
Implied value of 100% interest 6,250,000
Net book value at acquisition 6,000,000
Acquisition differential 250,000
Allocated to:
Building $ 220,000
Inventory (100,000) 120,000
Goodwill $ 130,000

Amortization/impairment:
At acq'n 2015-2017 2018 Balance
Building $ 220,000 (33,000) (11,000) $ 176,000
Inventory (100,000) 100,000 -
Goodwill 130,000 (30,000) (12,000) 88,000
$ 250,000 $ 37,000 (23,000) $ 264,000

Eliminations:
Intercompany dividends $ 64,000
Sales/cost of sales, downstream 120,000
Intercompany receivable/payable 40,000

Realized/unrealized gains and losses:

Gross Income Tax Net
INVENTORY
Opening, downstream $ 30,000 (12,000) $ 18,000
Ending, downstream 28,800 (11,520) 17,280

CAPITAL ASSET, upstream

On Jan 1, 2015 (10,000) $ 4,000 (6,000)
Amortization adjustment -- 2015 2,000 (800) 1,200
On Dec 31, 2015 (8,000) 3,200 (4,800)
Amortization adjustment -- 2016 2,000 (800) 1,200
On Dec 31, 2016 (6,000) 2,400 (3,600)
Amortization adjustment -- 2017 2,000 (800) 1,200
On Dec 31, 2017 (4,000) $ 1,600 (2.400)
Calculation of consolidated net income:

Parent's net income $ 1,200,000

Intercompany dividends (64,000)
Realized from opening inventory 18,000
Unrealized in ending inventory (17,280)
Subsidiary's net loss (600,000)
Amortization of acquisitioin differential (23,000)
Realized from capital asset sale (1,200) (624,200)
$ 512,520

Calculation of ending consolidated retained earnings:

Parent's ending retained earnings $ 11,900,000

Unrealized in ending inventory (17,280)
Subsidiary's ending retained earnings $ 8,900,000
Less: at acquisition 5,000,000
3,900,000
Amortization/impairment of acquisition differential 14,000
Unrealized from equipment sale 2,400
3,916,400
Less: 20% NCI 783,280 3,133,120
$ 15,015,840

Calculation of NCI at December 31, 2017:

Share capital $ 1,000,000
Retained earnings 8,900,000
Unrealized loss from capital asset sale 2,400
Acquisition differential 264,000
$ 10,166,400
NCI at 20% $ 2,033,280

Calculation of consolidated total assets:

Parent's total assets $ 29,000,000

Unrealized gain in ending inventory (28,800)
FIT on unrealized gain in ending inventory 11,520
Intercompany receivable (40,000)
Investment in subsidiary, at cost (5,000,000)
Subsidiary's total assets 11,100,000
Acquisition differential on building 176,000
Goodwill 88,000
Unrealized loss from capital asset sale 4,000
FIT on unrealized loss from capital asset sale (1,600)
$ 35,309,120
Proof (not required(
Consolidated liabilities ($5,000,000 + $1,200,000 - $40,000) $ 6,160,000
Common shares (as per parent) 12,100,000
Consolidated retained earanings 15,015,840
Noncontrolling interest 2,033,280
$ 35,309,120
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 2

Consideration for 70% interest $ 14,000,000

Fair value of 30% NCI 5,400,000
Fair value of 100% interest 19,400,000
Net book value at acquisition 13,200,000
Acquisition differential 6,200,000
Allocated to:
Inventory (120,000)
Equipment 1,000,000
Bonds payable 480,000
Intangibles 1,200,000 2,560,000
Goodwill $ 3,640,000

Allocation of goodwill:
Parent NCI Total
Fair value of business $ 14,000,000 $ 5,400,000 $ 19,400,000
Fair value of identifiable net assets 11,032,000 4,728,000 15,760,000
Goodwill $ 2,968,000 $ 672,000 $ 3,640,000

Amortization/impairment:
At acquisition 2011-2013 2014 Balance
Inventory (120,000) $ 120,000 $ - $ -
Equipment 1,000,000 (250,000) (100,000) 650,000
Bonds payable 480,000 (150,000) (60,000) 270,000
Intangibles 1,200,000 (250,000) (100,000)
(350,000) 500,000
2,560,000 (530,000) (610,000) 1,420,000
Goodwill -- parent 2,968,000 (600,000) (1,000,000) 1,368,000
Goodwill -- NCI 672,000 (150,000) (400,000) 122,000
3,640,000 (750,000) (1,400,000) 1,490,000
$ 6,200,000 (1,280,000) (2,010,000) $ 2,910,000

Eliminations:
Intercompany dividends $ 560,000
Sales/cost of sales, upstream 1,200,000
Rental revenue/expense 600,000
Receivable/payable (for rent) 100,000

Realized/unrealized gains and losses:

INVENTORY Gross Profit Income taxes Net
Opening, upstream $ 320,000 (96,000) $ 224,000
Ending, upstream $ 192,000 (57.600) $ 134,400

EQUIPMENT, downstream
On January 1, 2012 $ 200,000 (60,000) 140,000
Amort'n adjustment for 2012 (40,000) 12,000 (28,000)
On December 31, 2012 160,000 (48,000) 112,000
Amort'n adjustment for 2013 (40,000) 12,000 (28,000)
On December 31, 2013 120,000 (36,000) 84,000
Amort'n adjustment for 2014 (40,000) 12,000 (28,000)
On December 31, 2014 $ 80,000 (24,000) $ 56,000
Calculation of CNI:
Parent's net income $ 3,270,000
Less: Dividends from subsidiary (560,000)
Realized from equipment sale 28,000
Goodwill impairment (parent's share) (1,000,000)
Subsidiary's net income $ 2,860,000
Realized from opening inventory 224,000
Unrealized in ending inventory (134,400)
Amortization of acquisition differential (610,000) 2,339,600
NCI share of goodwill impairment (400,000)
Consolidated net income 3,677,600
NCI share (30% of $2,339,600 less 100% of $400,000) 301,880
Parent's share of CNI $ 3,375,720

Calculation of CRE:
OPENING ENDING
Parent's RE $ 14,250,000 $ 17,120,000
Goodwill impairment (600,000) (1,600,000)
Unrealized re equip sale (84,000) (56,000)
Suvsidiary's RE $ 3,420,000 $ 5,480,000
Less: at acquisition 3,200,000 3,200,000
220,000 2,280,000
Amortizaion of acq'n diff (530,000) (1,140,000)
Unrealized in inventory (224,000) (134,400)
(534,000) 1,005,600
Less: 30% NCI 160,200 (373,800) (301,680) 703,920
$ 13,192,200 $ 16,167,920

PARROT LIMITED AND SUBSIDIARY

CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
for the year ended December 31, 2014

Sales ($12,600,000 + $21,680,000 -$1,200,000) $ 33,080,000

Cost of sales ($7,640,000 + $13,120,000 - $1,200,000 - $320,000 + $192,000 + $100,000) 19,532,000
13,548,000
Other revenue ($1,400,000 - $560,000 - $600,000) 240,000

Amortization expense ($940,000 + $2,160,000 + $100,000 - $40,000) 3,160,000

Interest expense ($350,000 + $300,000 + $60,000) 710,000
Other expenses ($300,000 + $2,040,000 - $600,000) 1,740,000
Income tax expense ($1,500,000 + $1,200,000 + $96,000 - $57,600 + $12,000) 2,750,400
Impairment of intangibles (350,000) 350,000
Goodwill impairment ($1,400,000) 1,400,000
Total expenses 10,110,400
Consolidated net income 3,677,600
Less: NCI share 301,880
Parent's share ov CNI 3,375,720
Opening consolidated retained earnings 13,192,200
Dividends declared (400,000)
Ending consolidated retained earnings $ 16,167,920
Calculation of NCI at December 31, 2014:
Share capital $ 8,000,000.0
Contributed surplus 2,000,000
Retained earnings 5,480,000
Unrealized in ending inventory (134,400)
Acquisition differential 1,420,000
$ 16,765,600

NCI share at 30% $ 5,029,680

Nci share of goodwill 122,000
$ 5,151,680

If the NCI share of goodwill was proportional to that of the parent, it would be equal to
30%/70% x $1,368,000 or $586, 286 and the total goodwill would be 100%/70% x $1,368,000 or
$1,954,286 which is also equal to $1,368,000 + $586,286.
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 3

Calculation of NCI at acquisition:

NBV at acquisition $ 1,000,000
Fair value differences:
Land $ 50,000
Capital assets 100,000
Long -tem debt 50,000 200,000
Fair value of identifiable net assets $ 1,200,000

NCI @ 30% $ 360,000

Consideration for 70% interest $ 980,000

Assigned value of 30% NCI 360,000
Value of business 1,340,000
Net book value at acquisition 1,000,000
Acquisition differential 340,000
Allocated to:
Land $ 50,000
Capital assets 100,000
Long -tem debt 50,000 200,000
Goodwill $ 140,000

Amortization/impairment:
At acq'n 2015-2017 2018 Balance
Land $ 50,000 - (50,000) -
Capital assets 100,000 (30,000) (10,000) 60,000
Long -tem debt 50,000 (30,000) (10,000) 10,000
200,000 (60,000) (70,000) 70,000
Goodwill 140,000 - (40,000) 100,000
$ 340,000 (60,000) (110,000) 170,000

Eliminations:
Intercompany dividends $ 21,000
Sales/cost of sales (downstream) 600,000
Sales/cost of sales (upstream) 200,000
Realized/unrealized gains and losses:
Gross Income Tax Net
INVENTORY
Opening, downstream $ 40,000 (14,000) $ 26,000
Opening, upstream 25,000 (8,750) 16,250
Ending, downstream 50,000 (17,500) 32,500
Ending, upstream 40,000 (14,000) 26,000

CAPITAL ASSET, downstream

On Jan 1, 2016 $ 30,000 (10,500) $ 19,500
Amortization adjustment -- 2016 (5,000) 1,750 (3,250)
On Dec 31, 2016 25,000 (8,750) 16,250
Amortization adjustment -- 2017 (5,000) 1,750 (3,250)
On Dec 31, 2017 20,000 (7,000) 13,000
Amortization adjustment -- 2018 (5,000) 1,750 (3,250)
On Dec 31, 2018 $ 15,000 (5,250) $ 9,750

Calculation and allocation of CNI:

Parent's net income $ 100,000
Intercompany dividend income (21,000)
Realized from opening inventory 26,000
Unrealized in ending inventory (32,500)
Realized from capital asset sale 3,250
Goodwill impairment (40,000)
Subsidiary's net income $ 120,000
Amortization of acq'n differential (70,000)
Realized from opening inventory 16,250
Unrealized in ending inventory (26,000) 40,250
Consolidated net income 76,000
NCI share (30% of $40,250) 12,075
Parent's share $ 63,925

Calculation of ending consolidated retained earnings:

Parent's ending retained earnings $ 600,000
Unrealized in ending inventory (32,500)
Unrealized from sale of capital asset (9,750)
Goodwill impairment (40,000)
Subsidiary's ending retained earnings $ 700,000
Less: at acquisition 600,000
100,000
Amortization of acq'n differential (130,000)
Unrealized in ending inventory (26,000)
(56,000)
Less: NCI @ 30% 16,800 (39,200)
$ 478,550
Noncontrolling interest at December 31, 2018:
Share capital $ 400,000
Retained earnings 700,000
Unrealized in ending inventory (26,000)
Unamortized acquisition differential 70,000
$ 1,144,000

NCI share at 30% $ 343,200

ANSWERS:
a) CNI (as calculated above) $ 76,000
NCI share of CNI (as above) $ 12,075
Parent's share of CNI $ 63,925

b) Parent's capital assets $ 900,000

Subsidiary's capital assets 750,000
From acquisition differential 60,000
Unrealized re cap asset sale (15,000)
$ 1,695,000

c) NCI (as calculated above) $ 343,200

d) Ending CRE (as calculated above) $ 478,550

COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 4

Consideration for 80% interest $ 12,000,000

Implied value of 20% NCI 3,000,000
Implied value of 100% interest 15,000,000
NBV at acquisition 7,000,000
Acquisition differntial 8,000,000
Allocated to:
Inventory 500,000
Building 3,000,000
Long-term debt 500,000 4,000,000
Goodwill $ 4,000,000

Amortization/impairment:
At acq'n 2014-17 2018 Balance
Inventory $ 500,000 (500,000) $ -
Building 3,000,000 (2,000,000) (500,000) 500,000
Long-term debt 500,000 (200,000) (50,000) 250,000
Goodwill 4,000,000 (400,000) (1,200,000) 2,400,000
$ 8,000,000 (3,100,000) (1,750,000) $ 3,150,000

Eliminations:
Intercompany investment income (as calculated below) $ 213,500
Sales/cost of sales 1,500,000

Realized/unrealized gains and losses:

INVENTORY Gross Income Tax Net
Opening, downstream $ 75,000 (22,500) $ 52,500
Ending, downstream 90,000 (27,000) 63,000

LAND, upstream (2015) $ 500,000 (150,000) $ 350,000

EQUIPMENT, upstream
On January 3, 2018 $ 800,000 (240,000) $ 560,000
Amort'n adjustment for 2018 (200,000) 60,000 (140,000)
At December 31, 2018 $ 600,000 (180,000) $ 420,000

Calculation of investment income:

Subsidiary's net income $ 2,100,000
Amortization/impairment of acq'n differential (1,750,000)
Realized from land sale 350,000
Unrealized from equipment sale (560,000)
Realized through amortization adjustment 140,000
$ 280,000
Parent's share at 80% $ 224,000
Realized from opening inventory 52,500
Unrealized in ending inventory (63,000)
$ 213,500

Calculation of CNI:
Parent's share of CNI (equal to Parent's NI) $ 3,400,000
NCI share of CNI
Subsidiary's net income $ 2,100,000
Amortization/impairment of acq'n differential (1,750,000)
Realized from land sale 350,000
Unrealized from equipment sale (560,000)
Realized through amortization adjustment 140,000
$ 280,000
NCI share at 20% 56,000
Consolidated net income $ 3,456,000
 PIRATE INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
for the year ended December 31, 2018

Sales ($26,000,000 + $13,000,000 - $1,500,000) $ 37,500,000

Gain on sale of land ($700,000 + $500,000) 1,200,000
Gain on sale of equipment ($800,000 - $800,000) -
Investment income ($800,000 - $213,500) 586,500
39,286,500
Cost of sales ($15,000,000 + $6,000,000 - $1,500,000 - $75,000 + $90,000) 19,515,000
Admin/selling expenses ($4,280,000 + $2,800,000 + $50,000) 7,130,000
Amortization expense ($3,700,000 + $2,000,000 + $500,000 - $200,000) 6,000,000
Goodwill impairment ($1,200,000) 1,200,000
Income tax expense ($1,120,000 + $900,000 + $22,500 - $27,000 + $150,000 - $240,000 + $60,000) 1,985,500
35,830,500
Consolidated net income 3,456,000
Less: NCI share of CNI (as calculated above) (56,000)
Parent's share of CNI 3,400,000
Opening retained earnings (as per parent) 12,375,000
Dividends (as per parent) (3,000,000)
Ending retained earnings (as per parent) $ 12,775,000

c) Only the parent's share of goodwill would be recorded:

80% of $2,400,000 $ 1,920,000

d) Investment at acquisition $ 12,000,000

Share of increase in sub's RE
Subsidiary's ending RE $ 5,100,000
Less: at acquisition (2,000,000)
3,100,000
Unrealized: upstream
From equipment sale (420,000)
2,680,000
Amort'n/imp since acquisition (4,850,000)
(2,170,000)
Less 20% NCI 343,000 (1,736,000)
Unrealized : downstream
Inventory (63,000)
Investment account balance $ 10,201,000

OR

Share capital $ 4,000,000

Contributed surplus 1,000,000
Retained earnings 5,100,000
Unrealized: upstream
From equipment sale (420,000)
Unamortized acquisition differential 3,150,000
12,830,000
Less NCI @ 20% 2,566,000
10,264,000
Unrealized : downstream
Inventory (63,000)
Investment account balance $ 10,201,000

e) Investment in Sailor Ltd. $ 1,680,000

Investment income from Sailor Inc. $ 1,680,000
(To record share of income from subsidiary)

Investment income from Sailor Inc. $ 1,400,000

Investment in Sailor Inc. $ 1,400,000
(To record parent's share of amortization/investment of acq'n differential for 2018)
Investment in Sailor Ltd. $ 280,000
Investment income from Sailor Inc. $ 280,000
(To record gain on intercompany land sale realized in 2018)

Investment income from Sailor Inc. $ 448,000

Investment in Sailor Inc. $ 448,000
(To record parent's share of unrealized gain on intercompany equipment sale)

Investment in Sailor Ltd. $ 112,000

Investment income from Sailor Inc. $ 112,000
(To record realization of gain on equipment sale duirng 2018)

Investment in Sailor Ltd. $ 52,500

Investment income from Sailor Inc. $ 52,500
(To record realized gain from sale of opening inventory)

Investment income from Sailor Inc. $ 63,000

Investment in Sailor Inc. $ 63,000
(To record unrealized gain in ending inventory)

OR

Investment in Sailor Ltd. $ 213,500

Investment income from Sailor Inc. $ 213,500
(To record adjusted investment income from subsidiary for 2018)
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 5

Consideration for 90% interest 1,260,000

Market value of 10% NCI 135,000
Fair value of 100% interest 1,395,000
Net book value at acquisition 1,200,000
Acquisition differential 195,000
Allocated to:
Accounts receivable (20,000)
Inventory (10,000)
Land 10,000
Equipment 20,000
Patents 80,000
Long-term debt 20,000 100,000
Goodwill $ 95,000

Allocation of goodwill between parent and NCI:

Parent NCI Total
Value of business $ 1,260,000 $ 135,000 $ 1,395,000
Share of identifiable net assets 1,170,000 130,000 1,300,000
Goodwill $ 90,000 $ 5,000 $ 95,000

Amortization/impairment schedule:
At acq'n 2011-2013 2014 Balance
Accts receivable (20,000) $ 20,000 $ - $ -
Inventory (10,000) 10,000 - -
Land 10,000 - (10,000) -
Equipment 20,000 (12,000) (4,000) 4,000
Patents 80,000 (30,000) (10,000) 40,000
Long-term debt 20,000 (12,000) (4,000) 4,000
100,000 (24,000) (28,000) 48,000
Goodwill -- parent 90,000 (20,000) (15,000) 55,000
Goodwill -- NCI 5,000 (2,000) (1,000) 2,000
95,000 (22,000) (16,000) 57,000
$ 195,000 (46,000) (44,000) $ 105,000

Eliminations:
Investment income (intercompany)
Sales/cost of sales, upstream 100,000
Receivable/payable (for inventory sales) 25,000
Rental revenue/expense 150,000
Dividends receivable/payable 27,000

Realized/unrealized gains and losses:

INVENTORY Gross Profit Income Tax Net
Opening, upstream $ 20,000 (7,000) $ 13,000
Ending, upstream 10,000 (3,500) 6,500

LAND, downstream
On October 1, 2014 $ 25,000 (8,750) $ 16,250

EQUIPMENT. downstream
On April 1, 2013 50,000 (17,500) 32,500
Amort'n adj for 2013 (7,500) 2,625 (4,875)
On Dec 31, 2013 42,500 (14,875) 27,625
Amort'n adj for 2014 (10,000) 3,500 (6,500)
On Dec 31, 2014 32,500 (11,375) 21,125
Calculation and allocation of CNI:

Parent's share of CNI (equal to parent's NI) $ 500,000

NCI share of CNI:
Sitka's net income $ 100,000
Amortization of acquisition differential (28,000)
Realized from opening inventory 13,000
Unrealized in ending inventory (6,500)
$ 78,500
NCI share at 10% $ 7,850
NCI share of goodwill impairment (1,000) 6,850
Consolidated net income $ 506,850

a) Investment income from Sitka

Sitka's net income $ 100,000
Amortization of acquisition differential (28,000)
Realized from opening inventory 13,000
Unrealized in ending inventory (6,500)
78,500
Less: NCI share at 10% (7,850)
70,650
Unrealized from land sale (16,250)
Realized from amortization adjustment 6,500
Parent's share of goodwill impairment (15,000)
$ 45,900

PONDEROSA PLANTATIONS INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at December 31, 2014

Cash ($59,025 + $50,000) $ 109,025

Accounts receivable ($130,000 + $220,000 - $25,000 - $27,000) 298,000
Inventories ($200,000 + $160,000 - $10,000) 350,000
Other current assets ($140,000 + $80,000) 220,000
Land ($100,000 + $140,000 - $25,000) 215,000
Buildings (net) ($400,000 + $300,000) 700,000
Equipment (net) ($800,000 + $650,000 + $4,000 - $32,500) 1,421,500
Investment in Sitka (eliminates to zero) -
Future income tax asset ($3,500 + $8,750 + $11,375) 23,625
Patents ($40,000) 40,000
Goodwill ($57,000) 57,000
$ 3,434,150

Accounts payable ($120,000 + $100,000 - $25,000) $ 195,000

Dividends payable ($100,000 + $30,000 - $27,000) 103,000
Other liabilities ($680,000 + $230,000 - $4,000) 906,000
Common shares (as per parent) 1,000,000
Retained earnings (as per parent) 1,100,000
Noncontrolling interest (as calculated above) 130,150
$ 3,434,150
NCI at December 31, 2014:
Share capital $ 800,000
Retained earnings 440,000
Unrealized gain in ending inventory (6,500)
Acquisition differential 48,000
$ 1,281,500

NCI @ 10% $ 128,150

NCI share of goodwill 2,000
$ 130,150

PONDEROSA PLANTATIONS INC AND SUBSIDIARY

CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
for the year ended December 31, 2014

Sales (1,500,000 + 1,000,000 - 100,000) $ 2,400,000

Investment income from Sitka (45,900 - 45,900) -
Rental revenue (150,000 - 150,000) -
Gain on sale of land (25,000 - 25,000 + 40,000 - 10,000)) 30,000 c) i)
Gain on sale of equipment (50,000) 50,000 c) ii)
2,480,000

Cost of sales (600,000 + 600,000 - 100,000 - 20,000 + 10,000) 1,090,000 c) iii)

Amortization expense (180,000 + 110,000 + 4,000 - 10,000) 284,000 c) iv)
Rental expense (240,000 + 150,000 - 150,000) 240,000
Other expenses (50,900 + 40,000 + 10,000 + 4,000) 104,900
Income tax expense (200,000 + 40,000 + 7,000 - 3,500 - 8,750 + 3,500) 238,250 c) v)
Goodwill impairment ($15,000 + $1,000) 16,000
1,973,150
Consolidated net income 506,850 c) vi)
Less: NCI share (6,850)
Parent's share of consolidated net income 500,000
Opening retained earnings 800,000
Dividends declared (200,000) c) vii)
Ending retained earnings $ 1,100,000

It was not necessary to prepare a consolidated statement of income and retained earnings but if you
did not do so, your calculations should have been the same is in the lines on the statement above.

The gain on sale of land must be adjusted to treat the gain on the intercompany sale as unrealized and
to adjust the gain on the sale by the subsidiary so that the gain is based on the cost of the land to the group.

The equipment sale during the year was not the intercompany sale descrubed in the quesiton; that sale
occurred in the previous year.
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 6

Net book value at acquisition $ 700,000

Fair value differences:
Inventories (20,000)
Capital assets 100,000
Intangibles 100,000
Provision for warranties (10,000)
Long-term debt (20,000) 150,000
Fair value of ident net assets at acq'n $ 850,000
NCI at 25% $ 212,500

Consideration for 75% interest $ 750,000

Value assigned to NCI 212,500
Value assigned to business 962,500
Net book value at acquisition 700,000
Acquisition differential 262,500
Allocated to:
Inventories (20,000)
Capital assets 100,000
Intangibles 100,000
Provision for warranties (10,000)
Long-term debt (20,000) 150,000
Goodwill (parent's share only) $ 112,500

Amortization/impairment:
At acq'n 2014-2015 2016 Balance
Inventories (20,000) $ 20,000 $ - $ -
Cap assets 100,000 (30,000) (20,000) 50,000
Intangibles 100,000 (37,500) (25,000) 37,500
Prov for warranties (10,000) 10,000 - -
Long-term debt (20,000) 12,000 8,000 -
150,000 (25,500) (37,000) 87,500
Goodwill 112,500 (40,000) (30,000) 42,500
$ 262,500 (65,500) (67,000) $ 130,000

Eliminations:
Intercompany investment income (as calculated below) $ 49,625
Sales/cost of sales, downstream 500,000
Sales/cost of sales, upstream 100,000
Receivables/payables (for inventory) 125,000
Management fee revenue/expense 120,000
Dividends receivable/payable 75,000

Realized/unrealized gains and losses:

INVENTORY Gross Inc Tax Net
Opening, downstream $ 40,000 (12,000) $ 28,000
Ending, downstream 50,000 (15,000) 35,000
Ending, upstream 30,000 (9,000) 21,000
CAPITAL ASSETS, upstream
On January 1, 2016 $ 30,000.0 (9,000) $ 21,000
Amort'n adj, 2016 (5,000) 1,500 (3,500)
On December 31, 2016 $ 25,000 (7,500) $ 17,500

Calculation of investment income:

Subsidiary's net income 170,000
Amortization of acquisition differential (37,000)
Unrealized from sale of euqipment (21,000)
Realized through acq'n adjustment 3,500
115,500
Less NCI @ 25% 28,875
86,625
Realized from opening inventory, downstream 28,000
Inrealized in ending inventory, downstreeam (35,000)
Goodwill impairment (30,000)
Intercompany investment income $ 49,625

Calculation of CNI:
Parent's share of CNI (equal to parent's net income) $ 200,000
NCI share of CNI
Subsidiary's net income $ 170,000
Amortization of acquisition differential (37,000)
Unrealized from sale of euqipment (21,000)
Realized through acq'n adjustment 3,500
$ 115,500
NCI share at 25% 28,875
CNI $ 228,875

Calculation of NCI at December 31, 2016:

Share capital $ 400,000
Retained earnings 600,000
Unrealized from sale to parent (17,500)
Acquisition differential 87,500
$ 1,070,000
NCI @ 25% $ 267,500

PARK CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
for the year ended December 31, 2016

Sales and other revenue ($3,000,000 + $2,100,000 - $500,000 - $100,000 - $120,000)) $ 4,380,000
Investment income ($100,000 + $20,000 - $49,625) 70,375
4,450,375
Cost of goods sold ($2,200,000 + $1,400,000 - $500,000 - $100,000
- $40,000 + $50,000 + $30,000) 3,040,000
Amortization expense ($200,000 + $150,000 + $20,000 - $5,000) 365,000
Other expenses ($400,000 + $300,000 + $25,000 - $8,000 - $120,000) 597,000
Income tax expense ($100,000 + $100,000 + $12,000 - $15,000 - $9,000 + $1,500) 189,500
Goodwill impairment ($30,000) 30,000
Consolidated net income 228,875
Less: NCI share (28,875)
Parent's share of CNI 200,000
Opening CRE 700,000
Dividends (100,000)
Ending CRE $ 800,000
Investment account balance at December 31, 2016:
Subsidiary's share capital $ 400,000
Subsidiary's retained earnings 600,000
Unrealized gain from sale to parent (17,500)
Acquisition differential 87,500
1,070,000
Less: NCI share 267,500
802,500
Unrealized gain in ending inventory (35,000)
Goodwill 42,500
$ 810,000
OR
Balance at acquisition $ 750,000
Subsidiary's retained earnings $ 600,000
Less: at acquisition 300,000
300,000
Unrealized from sale to parent (17,500)
Amortization of acquisition differential (62,500)
220,000
Less: NCI @ 25% 55,000 165,000
Unrealized gain in enidng inventory (35,000)
Goodwill impairment (70,000)
$ 810,000
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 7

a) Oct 15/14 Inventory $ 237,000

Accounts payable (Pesos) $ 237,000
(To record purchase of components from Mexican supplier(

Dec 1/14 Accounts receivable (Rand) $ 498,000

Sales $ 498,000
(To record sale to Azanian customer)

Dec 14/14 Accounts payable (Pesos) $ 4,800

Exchange gains $ 4,800
(To revalue payable on settlement date)

Exchange losses $ 12,600

Forward contract $ 12,600
(To value forward contract on settlement date)

Cash (Pesos) $ 232,200

Forward contract 12,600
Cash $ 244,800
(To record settlement with the bank on the Peso forward contract)

Accounts payable (Pesos) $ 232,200

Cash (Pesos) $ 232,200
(To record settlement with the supplier)

Dec 31/14 Exchange losses $ 32,000

Accounts receivable (Rand) $ 32,000
(To revalue receivable at year-end)

Forward contract $ 8,000

Exchange gains $ 8,000
(To revalue forward contract at year-end)

b) Accounts receivable (2,000,000 @ $0.233) $ 466,000

Forward contract (2,000,000 @ [$0.226 - $0.222]) $ 8,000
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 8

a) Sept 1/17 Inventory $ 148,750

Accounts payable (Euros) $ 148,750
(To record purchase of components from German supplier)

Nov 1/17 Accounts payable (Euros) $ 750

Exchange gain $ 750
(To revalue payable on settlement date)

Exchange loss $ 2,000

Forward contract $ 2,000
(To revalue forward contract on settlement date)

Cash (Euros) $ 148,000

Forward contract 2,000
Cash $ 150,000
(To record settlement of forward contract with bank)

Accounts payable (Euros) $ 148,000

Cash (Euros) $ 148,000
(To record settlement with the supplier)

Dec 31/17 Forward contract $ 3,750

Unrealized exchange gains (OCI) $ 3,750
(To value forward contract at year-end)

b) Forward contract (250,000 @ ($1.465 - $1.45) $ 3,750 DR

Accumulated other comprehensive income $ 3,750 CR
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 9

For ease of reference, the forward contract for US$200,000 is referred to

as forward contract #1 and the forward contract for US$150,000 is referred to as
forward contract #2.

June 30/13 Forward contract #1 $ 4,527

Exchange gain (OCI) $ 4,527
(To revalue forward contract at quarter end)

Forward contract #2 $ 3,469

Exchange gain (OCI) $ 3,469
(To revalue forward contract at quarter end)

Sept 30/13 Market research expense $ 206,186

Accounts payable (US$) $ 206,186
(To record cost to date of market research)

Exchange loss (OCI) $ 5,630

Forward contract #1 $ 5,630
(To revalue forward contract on transaction date)

Market research expense $ 1,102

Exchange loss (OCI) $ 1,102
(To clear OCI on transaction date)

Exchange loss (OCI) $ 1,753

Forward contract #2 $ 1,753
(To revalue forward contract on quarter end)

Oct 31/13 Exchange loss $ 2,148

Accounts payable $ 2,148
(To revalue payable on settlement date)

Exchange loss $ 1,091

Forward contract #1 $ 1,091
(To revalue forward contract on settlement date)

Cash (US$) $ 208,333

Forward contract #1 $ 2,193
Cash $ 210,526
(To record settlement with bank)

Accounts payable (US$) $ 208,333

Cash (US$) $ 208,333
(To record payment to supplier)
Dec 31/13 Forward contract #2 $ 3,545
Exchange gain (OCI) $ 3,545
(To revalue forward contract at year-end)

Market research expense $ 159,574

Accounts payable (US$) $ 159,574
(To record cost to date of market research

Exchange loss (OCI) $ 5,261

Market research expense $ 5,261
(To clear OCI on transaction date)

Jan 30/14 Exchange loss $ 7,092

Accounts payable (US$) $ 7,092
(To revalue payable on settlement date)

Forward contract #2 $ 1,832

Exchange gain $ 1,832
(To revalue forward contract on settlement date)

Cash (US$) $ 166,667

Forward contract #2 $ 7,092
Cash $ 159,574
(To record settlement of forward contract with bank)

Accounts payable (US$) $ 166,667

Cash (US$) $ 166,667
(To record payment to supplier)

Fwd contract #1 Fwd contract #2

$ 4,527 $ 5,630 $ 3,469 $ 1,753
2,193 1,091 3,545
$ 6,720 $ 6,720 1,832 7,092
$ 8,845 $ 8,845
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 10

Journal Entries (not required):

June 30/16 Forward contract $ 1,800

Exchange gains/losses (OCI) $ 1,800
(To value forward contract at June 30, 2013)

July 15/16 Merchandise inventory $ 123,600

Accounts payable (US$) $ 123,600
(To record purchase of merchandise from US supplier)

Exchange gains/losses (OCI) $ 1,200

Forward contract $ 1,200
(To revalue forward contract on transaction date)

Exchange gains/losses (OCI) $ 600

Merchandise inventory $ 600
(To close out OCI on transaction date)

Oct 15/16 Exchange loss $ 600

Accounts payable (US$) $ 600
(To revalue accounts payable on settlement date)

Exchange loss $ 1,200

Forward contract $ 1,200
(To revalue forward contract on settlement date)

Cash (US$) $ 124,200

Forward contract $ 600
Cash (Can$) $ 124,800
(To complete forward contract with bank)

Accounts payable (US$) $ 124,200

Cash (US$) $ 124,200
(To settle with supplier)

Solution:

a) i) Transaction has not yet occurred $ -

ii) Forward contract $ 1,800 DR

iii) Accumulated OCI (1,800) CR

b) i) None; transaction has not yet occurred $ -

ii) Loss on accounts payable $ 600

Loss on forward contract $ 1,200 $ 1,800 LOSS
c) Amount recorded at spot rate $ 123,600
Adjustment from OCI (600) $ 123,000
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 11

a) € Rate Can$
Net monetary assets, Jan 1, 2013 500,000 1.31 655,000
Sales 1,500,000 1.37 2,055,000
Purchases (920,000) 1.37 (1,260,400)
Selling expenses (100,000) 1.37 (137,000)
Other expenses (60,000) 1.37 (82,200)
Interest expense (10,000) 1.43 (14,300)
Income tax expense (100,000) 1.37 (137,000)
Dividends (120,000) 1.40 (168,000)
Capital asset additions (800,000) 1.40 (1,120,000)
(208,900)
Net monetary assets, Dec 31, 2013 (110,000) 1.46 (160,600)
Exchange gain 48,300

Petticoat plc
Translated Income Statement
for the year ended December 31, 2013

Sales 1,500,000 1.37 2,055,000

Opening inventory 300,000 1.31 393,000

Purchases 920,000 1.37 1,260,400
Ending inventory (420,000) 1.43 (600,600)
Cost of sales 800,000 1,052,800
Gross profit 700,000 1,002,200

Amortization expense 270,000 as below 358,200

Selling expenses 100,000 1.37 137,000
Other expenses 60,000 1.37 82,200
Interest expense 10,000 1.43 14,300
Income tax expense 100,000 1.37 137,000
Exchange gain as above (48,300)
540,000 680,400
Net income for the year 160,000 321,800

Amortization expense:
Original assets 220,000 1.31 288,200
New assets 50,000 1.40 70,000
358,200
Consideration for 75% interest $ 2,700,000
Implied value of 25% NCI 900,000
Implied value of 100% interest 3,600,000
Net book value at acquisition 3,000,000
Acquisition differential 600,000
Allocated to: capital assets 220,000
Goodwill $ 380,000

Amortization of capital assets $ 20,000

Impairment of goodwill 130,000
$ 150,000

Parent's net income $ 626,000

Less: dividends from subsidiary (126,000)
Subisidiary's net income 321,800
Amortization/impairment (@ 1.31) (196,500)
Consolidated net income $ 625,300
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 12

Exchange gain on translation of financial statements:

£ Rate Can$
Net assets, beginning of year 120,000 2.20 264,000
Net income 115,000 2.28 262,200
Dividends (80,000) 2.40 (192,000)
334,200
Net assets, end of year 155,000 2.40 372,000
Exchange gain 37,800

£
Cosnideration for 75% interest 100,000
Implied value of 25% NCI 33,333
Implied value of 100% interest 133,333
Net book value at acquisition 120,000
Acquisition differential = goodwill 13,333

Exhange gain on acquisition differential:

£ Rate Can$
Acquisition differential, beg of year 13,333 2.20 29,333
Goodwill impairment (5,000) 2.28 (11,400)
17,933
Net assets, end of year 8,333 2.40 20,000
Exchange gain 2,067

£ Rate Can$
Opening retained earnings 70,000 2.20 154,000
2016 Net income 115,000 2.28 262,200
2016 Dividends (80,000) 2.40 (192,000)
Ending retained earnings 105,000 224,200
 Street, plc
Translated Balance Sheet
as at December 31, 2016

£ Rate Can$
Cash 485,000 2.40 1,164,000
Accounts receivable 85,000 2.40 204,000
Inventory 120,000 2.40 288,000
Capital assets, net 75,000 2.40 180,000
765,000 1,836,000

Current liabilities 200,000 2.40 480,000

Long-term debt 410,000 2.40 984,000
Common shares 50,000 2.20 110,000
Retained earnings 105,000 as above 224,200
AOCI as above 37,800
1,836,000

Pathways Industries Inc and subsidiary

Consolidated Liabilities and Shareholders' Equity
as at December 31, 2016

Current liabilities ($800,000 + $480,000) $ 1,280,000

Long-term debt ($1,000,000 + $984,000) 1,984,000
Common shares (as per parent) 500,000
Retained earnings (see below) 1,140,100
AOCI (see below) 29,900
Noncontrolling interest (see below) 98,000
$ 5,032,000

Consolidated retained earnings:

Parent's retained earnings $ 1,096,000
Subsidiary's retained earnings $ 224,200
Less: at acquisition 154,000
70,200
Goodwill impairment (5,000 @ 2.28) (11,400)
58,800
Less: NCI at 25% 14,700 44,100
$ 1,140,100

Consolidated AOCI:
From translation of financial statements $ 37,800
From translation of acquisition differentail 2,067
39,867
Less: NCI @ 25$ 9,967
 $ 29,900

NCI at December 31, 2016:

Share capital $ 110,000
Retained earnings 224,200
AOCI from translation of financial statements 37,800
Acquisition differential (8,333 @ 2.240) 20,000
$ 392,000
NCI @ 25% $ 98,000

Proof of total liabilities and equities (not required):

Parent's total assets $ 3,396,000
Subsidiary's total assets 1,836,000
Less: investment in subsidiary (220,000)
Add: Goodwill 20,000
as above $ 5,032,000
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 13

a) £ Rate Can$
Net monetary assets, January 1, 2018 (568,000) 2.10 (1,192,800)
Sales 6,711,000 2.08 13,958,880
Proceeds from sale of land 325,000 2.06 669,500
Purchases (4,780,000) 2.08 (9,942,400)
Selling/admin expenses (1,274,000) 2.08 (2,649,920)
Interest expense (40,000) 2.08 (83,200)
Income tax expense (130,000) see below (269,800)
Dividends declared (100,000) 2.07 (207,000)
Purchase of machine (200,000) 2.09 (418,000)
(134,780)
Net monetary assets, December 31, 2018 (56,000) 2.06 (115,360)
Exchange gain for the year 19,420
Income tax expense:
-- on gain on sale of land 30,000 2.06 61,800
-- on other income for the year 100,000 2.08 208,000
269,800

b) £ Rate Can$
Sales 6,711,000 2.08 13,958,880
Gain on sale of land 125,000 see below 219,500
Opening inventory (698,000) 2.11 (1,472,780)
Purchases (4,780,000) 2.08 (9,942,400)
Ending inventory 706,000 2.07 1,461,420
Amortization expense (320,000) see below (715,200)
Selling and administrative expenses (1,274,000) 2.08 (2,649,920)
Interest expenses (40,000) 2.08 (83,200)
Income tax expense (130,000) as above (269,800)
Exchange gain - as calculated 19,420
Net income 300,000 525,920

Gain on sale of land:

Proceeds 325,000 2.06 669,500
Carrying value (200,000) 2.25 (450,000)
125,000 219,500

Amortization expense:
On original assets 290,000 2.25 652,500
On new assets 30,000 2.09 62,700
 320,000 715,200

c) £ Rate Can$
Cash 212,000 2.06 436,720
Receivables 319,000 2.06 657,140
Inventories 706,000 2.06 1,454,360
Plant and equipment, net 3,200,000 2.06 6,592,000
Land 600,000 2.06 1,236,000
5,037,000 10,376,220
Current liabilities 87,000 2.06 179,220
Long-term debt 500,000 2.06 1,030,000
Common stock 2,000,000 2.25 4,500,000
Retained earnings 2,450,000 see below 5,472,600
Accumulated OCI - see below (805,600)
5,037,000 10,376,220

Retained earnings:
At acquisition 2,200,000 2.25 4,950,000
Net income -- 2017 100,000 2.13 213,000
Dividends declared -- 2017 (50,000) 2.11 (105,500)
Net income -- 2018 205,000 2.08 426,400
Gain (after tax) -- 2018 95,000 2.06 195,700
Dividends declared -- 2018 (100,000) 2.07 (207,000)
2,355,000 5,472,600

Accumulated AOCI from translation gains:

Net assets, January 1, 2017 4,200,000 2.25 9,450,000
Net income -- 2017 100,000 2.13 213,000
Dividends declared -- 2017 (50,000) 2.11 (105,500)
Net income -- 2018 205,000 2.08 426,400
Gain (after tax) -- 2018 95,000 2.06 195,700
Dividends declared -- 2018 (100,000) 2.07 (207,000)
9,972,600
Net assets, December 31, 2018 4,450,000 2.06 9,167,000
Accumulated OCI from translation (805,600)
 - 9,942,400.00
- 2,649,920.00
83200

14,628,380

- 56,002.06
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 14

a) US$ Rate Can$

Net monetary assets, January 1, 2018 (4,100) 1.20 (4,920)
Sales 10,000 1.35 13,500
Purchases (7,000) 1.35 (9,450)
Bond interest expense (480) 1.35 (648)
Other expenses (940) 1.35 (1,269)
Dividends declared (100) 1.27 (127)
Capital asset additions (1,200) 1.30 (1,560)
(4,474)
Net monetary assets, December 31, 2018 (3,820) 1.30 (4,966)
Exchange loss for the year (492)

Vermont Company Limited

Translated Income Statement
for the year ended December 31, 2018
($000s)

Sales $ 10,000 1.35 $ 13,500

Opening inventory 3,600 1.20 4,320
Purchases 7,000 1.35 9,450
Ending inventory (4,200) 1.28 (5,376)
Amortization expense 700 1.20 840
Bond interest expense 480 1.35 648
Other expenses 940 1.35 1,269
Exchange loss - as above 492
Net income for the year $ 1,480 $ 1,857

b) i) Accounts receivable 2,700 1.30 $ 3,510

ii) Plant and equipment (net)

Assets at acquisition 5,300 1.20 $ 6,360
Assets acquired in 2018 1,200 1.30 1,560
6,500 $ 7,920

iii) Bonds payable 6,000 1.30 7,800

c) i) Plant and equipment (net) 6,500 1.30 $ 8,450

ii) Common shares 3,000 1.20 $ 3,600

iii) Retained earnings

At acquisition 2,500 1.20 $ 3,000
2018 net income 1,480 1.35 1,998
2018 dividends (100) 1.27 (127)
3,880 $ 4,871

iv) US$ Rate Can$

Net assets, January 1, 2018 5,500 1.2 $ 6,600
Net income 1,480 1.35 1,998
Dividends declared (100) 1.27 (127)
8,471
Net assets, December 31, 2108 6,880 1.3 8,944
Exchange gain to OCI and AOCI $ 473
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 15

Journal entries (not required): T-Accounts (not required):

1 Cash $ 29,400 Cash Net assets --endowment Registration fees Grant revenue
Registration fees $ 11,600 1 $ 29,400 $ 20,800 2 $ 5,000 1 $ 11,600 1 5 $ 2,500 $ 5,000 1
Grant revenue 5,000 $ 8,600 100 4 1,700 7
Sponsorship revenue 3,500 300 7 $ 4,200
Net assets -- endowment 5,000 $ 12,000
Deferred contributions -- financial aid 300
Deferred contributions -- tournament 4,000 Def contb'n -- financial aid Def contb'n -- tournament Sponsorship revenue Uniforms/equipment
(To record cash receipts for the year) 4 $ 100 $ 300 1 $ 4,000 1 2 $ 350 $ 3,500 1 2 $ 4,000
$ 200 1,500 6 6 1,500
2 Membership expenses $ 1,500 $ 4,650 $ 5,500
Investment 5,000
Administrative expenses 350
Coach training expenses 3,500
Referee fees 3,000 Investment Accounts payable Membership expenses Adminsitrative exp
Sponsorship revenue 350 2 $ 5,000 $ 750 3 2 $ 1,500 2 $ 350
Insurance expense 2,500 3 150
Team photographs expense 600 $ 500
Uniforms and equipment 4,000
Cash $ 20,800
(To record cash disbursements for the year)
Def contrb'n -- ref training Grant rec -- Reg'l Sports Council Coach training exp Referee fees
3 Administrative expenses $ 150 $ 2,500 5 7 $ 2,000 2 $ 3,500 2 $ 3,000
Referee fees 300 3 300
Insurance expense 300 $ 3,300
Accounts payable $ 750
(To record accounts payable at year-end)
Insurance expense Team photo expense
4 Deferred contributions -- financial aid $ 100 2 $ 2,500 2 $ 600
Registration fees $ 100 3 300
(To record $100 of fees paid from financial assistance funds. The $ 2,800
other $300 is paid from the regional sports council grantt. See
Journal entry #7 below.)

5 Grant revenue $ 2,500

Deferred contributions -- referee training $ 2,500
(To transfer grant for referee training to deferred contribution
account as grant is restricted and costs will be incurred next year.
The referee training grant can be taken to revenue as the costs
were incurred this year.)

6 Uniforms and equipment $ 1,500

Sponsorship revenue $ 1,500
(To record the value of donated uniforms)

7 Grant receivable -- regional sports council 2,000

Grant revenue 1,700
Registration fees 300
(To record grant receivable from regional sports council. Only $500
can be claimed for equipment as that is all that was spent. They will
use this money for financial assistance before using the investment
income from the endowment donation as the latter can be carried
forward to next year if not used.)

NEWTON NETBALL ASSOCIATION

OPERATING STATEMENT
for the year ended June 30, 2017

Revenues:
Registration fees $ 12,000
Grant revenue 4,200
Sponsorship revenue 4,650
20,850
Expenses:
Membership fees 1,500
Adminstrative costs 500
Coaches training 3,500
Referee fees 3,300
Insurance expense 2,800
Team photographs 600
Uniforms and equipment 5,500
17,700

Excess of revenue over expenses $ 3,150

NEWTON NETBALL ASSOCIATION

STATEMENT OF FINANCIAL POSITION
as at December 31, 2018

Assets:
Cash $ 8,600
Investments 5,000
Grant receivable 2,000
Total Assets $ 15,600

Liabilities:
Accounts payable $ 750

Deferred contributions:
Tournament 4,000
Financial assistance 200
Referee training 2,500
6,700

Net assets:
Endowment 5,000
Unrestricted 3,150
8,150

Total liabilities, deferred contributions

and net assets $ 15,600
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 16

Journal entries (not required): T-Accounts (not required):

1 Cash $ 567,000 Cash Net assets --endowment Grant revenue Donation revenue
Grant revenue $ 120,000 1 $ 567,000 $ 454,000 2 $ 200,000 1 $ 120,000 1 $ 125,000 1
Donation revenue 125,000 $ 113,000 $ 24,000 7 30,000 5
Deferred contribution -- lease costs 60,000 $ 144,000 $ 155,000
Net assets -- endowment 200,000
Net assets -- donation for land 50,000
Investment income 12,000 Def contrb'n -- lease costs Net assets --donation for land Investment income Salary expense
(To record cash receipts for the year) 5 $ 30,000 $ 60,000 1 $ 50,000 1 4 $ 3,000 $ 12,000 1 2 $ 44,000
$ 30,000 3,000 4 $ 9,000 3 4,000
2 Leasehold improvements $ 60,000 $ 53,000 $ 48,000
Investments -- endowment 200,000
Investments -- donation for land 50,000
Salary expense 44,000 Leasehold improvements Investments Fees expense Rent expense
Fees expense 30,000 2 $ 60,000 $ 200,000 2 $ 30,000 2 $ 30,000
Rent expense 30,000 50,000
Other operating costs 40,000 $ 250,000
Cash $ 454,000
(To record cash disbursements for the year)
Salaries and wages payable Accum amort'n -- leasehold improve Other operating costs Amortization expense
3 Salary expense $ 4,000 $ 4,000 3 $ 12,000 6 2 $ 40,000 6 $ 12,000
Salary payable $ 4,000
(To accrue director's salary for December)

4 Investment income $ 3,000

Net assets -- donation for land $ 3,000 Grant receivable
(To reclassify investment interest earned on donations for 7 $ 24,000
purchase of land)

5 Deferred contribution -- lease costs $ 30,000

Donation revenue $ 30,000
(To recognized donation to offset rental costs for the year)

6 Amortization expense $ 12,000

Accum amort'n -- leasehold improvements $ 12,000
(To amortize leasehold improvements over five years)

7 Grant receivable $ 24,000

Grant revenue $ 24,000
(To record balance of grant revenueto bring total to
90% of total expenses of $160,000)

The Senior Centre

Statement of Revenues and Expenses
for the year ended December 31, 2015

Revenue:
Government grant $ 144,000
Donation revenue 155,000
Investment income 9,000
308,000

Expenses:
Amortization of leasehold improvements 12,000
Salary of executive director 48,000
Fees for program staff 30,000
Rent for the year 30,000
Other operating costs 40,000
160,000

Excess of revenue over expenses 148,000

Invested in net capital assets 48,000
Increase in unrestricted net assets $ 100,000

The Senior Centre

Statement of Financial Position
as at December 31, 2015

Assets:
Cash $ 113,000
Grant receivable 24,000
Investments 250,000
Leasehold improvements, at cost $ 60,000
Accumulated amortization (12,000) 48,000
$ 435,000

Wages and salaries payable $ 4,000

Deferred contributions -- lease costs 30,000

Net assets:
Unrestricted
Invested in capital assets $ 48,000
Other unrestricted 100,000
148,000
Net assets -- donated land 53,000
Net assets -- endowment 200,000 401,000
$ 435,000
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 17

Journal entries (not required): T-Accounts (not required):

1 Cash $ 1,246,000 Cash Net assets -- endowment Ice cleaning equipment Grant revenue Registration fees
Government grant $ 60,000 1 $ 1,246,000 $ 1,223,000 2 $ 100,000 1 5 $ 66,000 $ 60,000 1 12 $ 10,000 $ 70,000 1
Deferred contributions -- arena 400,000 $ 23,000 $ 20,000 11 $ 60,000
Deferred contributions -- arena 520,000 $ 80,000
Registration fees 70,000
Net assets --endowment 100,000
Ice rental and concession revenue 90,000 Def contr'n -- arena Inventory Def contrib'n -- ice cleaning equip Rental/concession revenue Interest income
Interest income 6,000 7 $ 23,000 $ 400,000 1 2 $ 60,000 $ 57,000 14 8 $ 11,000 $ 66,000 5 $ 90,000 1 9 $ 5,000 $ 6,000 1
(To record cash receipts for the year) 520,000 1 13 3,000 $ 55,000 $ 3,000 10
$ 897,000 $ 6,000 $ 4,000
2 Capital asset -- arena $ 920,000
Operating expenses -- minor hockey 90,000
Inventory 60,000 Capital asset -- arena Investments Def contr'n -- maintenance Op expenses -- minor hockey Other operating costs
Other operating costs 50,000 2 $ 920,000 2 $ 100,000 10 $ 3,000 $ 5,000 9 2 $ 90,000 2 $ 50,000
Investments 100,000 $ 2,000 13 2,000 13 1,000
Maintenance expense 3,000 $ 92,000 $ 51,000
Cash $ 1,223,000
(To record cash disbursements for the year)
Accum amort'n -- arena Accum amort'n -- cleaning equip Grant receivable Maintenance expense Amortization expense
3 Amortization expense $ 23,000 $ 23,000 3 $ 11,000 6 11 $ 20,000 2 $ 3,000 3 $ 23,000
Accumulated amortization -- arena $ 23,000 6 11,000
(To record amortization on arena building) $ 34,000

4 Land $ 120,000
Net assets -- donated land $ 120,000 Land Net assets -- donated land Unearned revenue Donation revenue Cost of sales -- concession
(To record donation of land for arena site) 4 $ 120,000 $ 120,000 4 $ 10,000 12 $ 23,000 7 14 $ 57,000
11,000 8
5 Capital asset -- ice cleaning equipment $ 66,000 $ 34,000
Deferred contrib'n -- ice making equip $ 66,000
(To record donation of ice cleaning equipment)
Accounts payable
6 Amortization expense $ 11,000 $ 6,000 13
Accumulated amortization -- ice clean equip $ 11,000
(To record amortization of ice-cleaning equipment)

7 Deferred contribution -- arena $ 23,000

Donation revenue $ 23,000
(To recognize donation to offset amortization of arena)

8 Deferred contribution -- ice cleaning equip $ 11,000

Donation revenue $ 11,000
(To recognize donation to offset amortization of ice cleaning equipment)

9 Interest income $ 5,000

Deferred contibution --maintenance $ 5,000
(To reclassify interest from endowment)

10 Deferred contribution -- maintenance $ 3,000

Investment income $ 3,000
(To recognized deferred contribution to offset maintenance costs)

11 Grant receivable $ 20,000

Grant revenue $ 20,000
(To accrue balance of grant revenue for 2015-2016 season)

12 Registration fees $ 10,000

Unearned revenue $ 10,000
(To reclassify registration fees for next season)

13 Inventory $ 3,000
Operating expenses -- minor hockey 2,000
Other operating costs 1,000
Accounts payable $ 6,000
(To record payables at year-end)

14 Cost of goods sold (concession) $ 57,000

Inventory $ 57,000
(To reduce inventory to value of goods on hand at year-end)

RIFT VALLEY MINOR HOCKEY ASSOCIATION

STATEMENT OF OPERATIONS
for the eighteen months ended June 30, 2016
Revenue:
Government operating grant $ 80,000
Minor hockey registration revenue 60,000
Rental and concession revenue 90,000
Interest income 4,000
Donation revenue 34,000
268,000

Expenses:
Minor hockey operating expenses 92,000
Cost of sales -- concession 57,000
Other operating costs 51,000
Maintenance expense 3,000
Amortization expense 34,000
237,000

Excess of revenue over expenses $ 31,000

 RIFT VALLEY MINOR HOCKEY ASSOCIATION
STATEMENT OF FINANCIAL POSITION
as at June 30, 2016

Assets:
Cash $ 23,000
Grant receivable 20,000
Inventory 6,000
Investments 100,000
Capital assets
Land $ 120,000
Arena 920,000
Equipment 66,000
Accumulated amortization (34,000) 1,072,000
$ 1,221,000

Accounts payable $ 6,000

Unearaned revenues 10,000

Deferred contributions:
Arena $ 897,000
Equipment 55,000
Maintenance 2,000 954,000

Net assets:
Unrestricted $ 31,000
Donated land 120,000
Endowment 100,000 251,000
$ 1,221,000

RIFT VALLEY MINOR HOCKEY ASSOCIATION

STATEMENT OF CHANGES IN NET ASSETS
for the eighteen months ended June 30, 2016

Unrestricted Donated land Endowment Total

Balance, January 1, 2015 $ - $ - $ - $ -
Donation of land - 120,000 - 120,000
Endowment donations - - 100,000 100,000
Excess of revenue over expenses 31,000 31,000
Balance, June 30, 2016 $ 31,000 $ 120,000 $ 100,000 $ 251,000
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 18

Journal entries (not required): T-Accounts (not required):

1 Cash $ 100,000 Cash Net assets -- endowment Net assets -- unrestricted Investment income
Net assets -- endowment $ 100,000 $ 40,000 $ 100,000 2 $ 450,000 $ 5,000 $ 45,000 3
(To record receipt of endowment donations) 1 100,000 250,000 4 100,000 1
3 45,000 10,000 11 550,000
2 Investments $ 100,000 8 280,000 130,000 12
Cash $ 100,000 10 50,000
(To record donation of endowment donations) 25,000

3 Cash $ 45,000
Investment income $ 45,000 Investments Accounts payable Net assets -- in in cap assets Donation revenue
(To record receipt of investment income) $ 450,000 $ 10,000 $ 10,000 $ 200,000 $ 300,000 9
2 100,000 20,000 2,500 8
5 Building $ 250,000 550,000 20,000 60,000 13
Cash $ 250,000 8,000 15
(To record construction costs paid during 2014) 370,500

6 Building $ 50,000 Building Def contr'n -- building Def contr'n -- med care Amortization expense
Deferred contribution -- building $ 50,000 $ 150,000 8 $ 2,500 $ 50,000 13 $ 60,000 $ 25,000 7 $ 11,250
(To record value of donated architect services) 5 250,000 50,000 6 50,000 10 14 8,000
6 50,000 97,500 15,000 19,250
7 Amortization expense $ 11,250 450,000
Accum amort'n -- building $ 11,250
(To record amortization of building for six months)

8 Deferred contribution -- bldg $ 2,500

Donation revenue $ 2,500 Vans Accum amort'n -- vans Accum amort'n -- bldg Program costs
(To recognize deferred contribution with respect to donated $ 40,000 $ 8,000 $ 11,250 7 12 $ 150,000
architects fees -- $100,000 over 20 years for half a year) 8,000 14
16,000
9 Cash $ 280,000
Donations receivable 20,000
Donations receivable $ 300,000
(To record unrestricted donations for the year) Land Donations receivable Def contr'n -- vans Accounts payable
$ 100,000 $ 20,000 $ 8,000 $ 32,000 $ - 3
10 Cash $ 50,000 24,000
Deferred contrib'n -- med care $ 50,000
(To record restricted donations for medical care)

11 Accounts payable $ 10,000

Cash $ 10,000
(To record payment of opening accounts payable)

12 Program costs $ 150,000

Cash $ 130,000
Accounts payable 20,000
(To record program costs incurred during the year)
13 Deferred contributions -- med care $ 60,000
Donation revenue $ 60,000
(To recornize deferred contributions for medical care)

14 Amortization expense $ 8,000

Accum amort'n -- vans $ 8,000
(To record amortization on vans for the year)

15 Deferred contributions -- vans $ 8,000

Donation revenue $ 8,000
(To recognize deferred contributions to offset amortization)

BENEFICENT BADGERS SETT

STATEMENT OF OPERATIONS
for the year ended December 31, 2014

Revenue:
Donation revenue $ 370,500
Investment income 45,000 $ 415,500

Expenses:
Program costs $ 150,000
Amortization of capital assets 19,250 169,250

Excess of revenue over expenses 246,250

Less: invested in capital assets 241,250
Increase in other unrestricted net assets $ 5,000

BENEFICENT BADGERS SETT

STATEMENT OF FINANCIAL POSITION
as at December 31, 2014

Cash $ 25,000
Donations receivable 20,000
Investments 550,000

Land $ 100,000
Building, at cost 450,000
-- accumulated amortization (11,250)
Vans, at cost 40,000
-- accumulated amortization (16,000) 562,750
$ 1,157,750

Accounts payable $ 20,000

Deferred contributions:
-- medical care $ 15,000
-- vans 24,000
-- building 97,500 136,500
Net assets:
Unrestricted
-- invested in capital assets $ 441,250
-- other 10,000
451,250
Endowment 550,000 1,001,250
$ 1,157,750
 BENEFICIENT BADGERS SETT
STATEMENT OF CHANGES IN NET ASSETS
for the year ended December 31, 2014

Unrestricted
Inv in Cap Assets Other Total Endowment Total
Balance, January 1, 2014 $ 200,000 $ 5,000 $ 205,000 $ 450,000 $ 655,000

Excess of revenue over expenses - 246,250 246,250 - 246,250

Invested in capital assests 241,250 (241,250) - - -
Endowment donations - - - 100,000 100,000

Balance, December 31, 2014 $ 441,250 $ 10,000 $ 451,250 $ 550,000 $ 1,001,250

Note: Calculation of amoutn invested in capital assets:

Current year's movement:
Amount spent from unrestricted resources on capital assets $ 250,000
Amortization on assets acquired from unrestricted resources
(either $350,000 / 20 yr x 6 months or $11,250 - $2,500) 8,750
$ 241,250

Balance on statement of financial position at Dec 31/14:

Net book value of capital assets 562,750
Less: deferred contributions related to capital assets:
vans $ 24,000
building 97,500 121,500
$ 441,250

OR:
Capital assets acquired form unrestricted resources:
Land $ 100,000
Building 350,000
450,000
Less: accumulated amortization on those assets 8,750
$ 441,250
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 19

Journal entries (not required):

OPERATING FUND:

1 Cash $ 150,000
Donation revenue $ 150,000
(To record unrestricted donations received in the year)

4 Furniture and equipment $ 30,000

Deferred contribution $ 30,000
(To record donation of furniture and equipment)

5 Amortization expense $ 6,000

Accumulated amortization $ 6,000
(To record amortization of equipment)

6 Deferred contribution $ 6,000

Donation revenue $ 6,000
(To recognize deferred contribution to offset amortization expense)

7 Cash $ 5,000
Investment income $ 5,000
(To record investment income from investment of unrestricted funds)

10 Operating expenses $ 125,000

Cash $ 125,000
(To record operating expenses for the year)

SCHOLARSHIP FUND:

2 Cash $ 100,000
Donation revenue $ 100,000
(To record restricted donations received in the year)

8 Cash $ 5,000
Investment income $ 5,000
(To record investment income from investment of restricted funds)

9 Accrued interest receivable $ 12,500

Investment income $ 12,500
(To record interest from endowment investment restricted to
scholarships)
 11 Scholarship expense $ 75,000
Cash $ 75,000
(To record cost of scholarships granted during the year)

ENDOWMENT FUND:

3 Cash $ 500,000
Donation revenue $ 500,000
(To record receipt of endowment donations)

3a Investments $ 500,000
Cash $ 500,000
(To record investment of endowment donations)

CANEDCHAR
STATEMENTS OF OPERATIONS
for the year ended December 31, 2016

Operating Scholarship Endowment

Fund Fund Fund
Donation revenue $ 156,000 $ 100,000 $ 500,000
Investment income 5,000 17,500 -
161,000 117,500 500,000
Amortization expense 6,000 - -
Other expenses 125,000 75,000 -
131,000 75,000 -
Excess of revenues over expenses $ 30,000 $ 42,500 $ 500,000

CANEDCHAR
STATEMENT OF FINANCIAL POSITION
as at December 31, 2016

Operating Scholarship Endowment Total

Fund Fund Fund
Cash $ 30,000 $ 30,000 $ - $ 60,000
Accrued investment income 12,500 12,500
Investments - - 500,000 500,000
Capital assets (net of amortization) 24,000 - 24,000
$ 54,000 $ 42,500 $ 500,000 $ 596,500

Deferred contributions $ 24,000 $ - $ - $ 24,000

Net assets 30,000 42,500 500,000 572,500
$ 54,000 $ 42,500 $ 500,000 $ 596,500
b) Cash $ 500,000
Net assets -- endowment $ 500,000
(To record receipt of endowment donations)

Investments $ 500,000
Cash $ 500,000
(To record investment of endowment donations)

Accrued interest receivable $ 12,500

Def contributions -- scholarships $ 12,500
(To accrue interest earned on endowment investments)
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 20

Journal entries (not required):

OPERATING FUND

1 Cash $ 2,430 Cash

Assessments receivable $ 2,430
(To record collection of outstanding assessments)

2 Cash $ 131,530
Assessments receivable 4,470
Assessment revenue $ 136,000
(To record assessment revenue for 2017)

3 Transfer to CRF $ 2,677 Assessments r

Cash $ 2,677
(To transfer 2016 surplus to CRF)

5 Transfer to CRF $ 13,600

Cash $ 13,600
(To transfer 10% of assessments to CRF) Cleaning equ

7 Accounts payable $ 1,680

Cash $ 1,680
(To record payment of opening accounts payable balance)

8 Operating expenses $ 114,680 Accum amort'n -- c

Cash $ 111,990
Accounts payable 2,690
(To record current year's operating expenses)

9 Amortization expense $ 6,000

Accumulated amortization $ 6,000 Deferred contr'n -- e
(To record amortization on cleaning equipment)

10 Cash $ 421
Interest income $ 421
(To record interest income for the year)

11 Cash $ 4,615
Miscellaneous revenues $ 4,615
(To record miscelleous revenues for the year)
 16 Cash $ 12,000
Deferred contrib'n -- energy projects $ 12,000
(To record receipt of grant from city for energy projects)

17 Energy project costs $ 4,800 Net assets -- r

Cash $ 4,800
(To record payment for energy project cost to the end of the year)

18 Deferred contrib'n -- energy projects $ 4,800

Grant revenue $ 4,800
(To recognize deferred contributions to offset costs to date)

CONTINGENCY RESERVE FUND

4 Cash $ 2,677
Transfer from Operating Fund $ 2,677
(To record transfer of 2016 Operating Fund surplus to CRF)

6 Cash $ 13,600
Transfer from Operating Fund $ 13,600
(To record transfer of portion of assessment revenue for 2017)

12 Accounts payable $ 1,650

Cash $ 1,650
(To record payment of opening accounts payable balances)

13 Cash $ 1,150
Interest income $ 1,150
(To record receipt of interest income)

14 Repair expenses $ 10,300

Cash $ 10,300
(To record cash paid for repair costs)

15 Repair expenses $ 3,650

Accounts payable $ 3,650
(To record accounts payable at year-end)

CEDAR CLOSE STRATA COUNCIL

STATEMENT OF OPERATIONS
for the year ended December 31, 2017

OPERATING CONTINGENCY
FUND RESERVE FUND
Revenue:
Assessments $ 136,000 $ -
Interest income 421 1,150
Miscellaneous revenue 4,615 -
Grant revenues 4,800 -
145,836 1,150

Expenses:
Operating costs 114,680 -
Costs of energy project 4,800 -
Amortization of capital assets 6,000 -
Repair costs - 13,950
125,480 13,950
Excess of revenues over expenses 20,356 (12,800)
 CEDAR CLOSE STRATA COUNCIL
STATEMENT OF FINANCIAL POSITION
as at December 31, 2017

OPERATING CONTINGENCY TOTAL

FUND RESERVE FUND
Cash $ 18,176 $ 24,684 $ 42,860
Assessments receivable 4,470 - 4,470
Cleaning equipment, net of amortization 9,000 - 9,000
$ 31,646 $ 24,684 $ 56,330

Accounts payable $ 2,690 $ 3,650 $ 6,340

Deferred contribution -- energy project 7,200 - 7,200

Net assets
Invested in capital assets 9,000 - 9,000
Unrestricted -- other 12,756 - 12,756
21,756 - 21,756
Restricted - 21,034 21,034
21,756 21,034 42,790

$ 31,646 $ 24,684 $ 56,330

CEDAR CLOSE STRATA COUNCIL

STATEMENT OF CHANGES IN NET ASSETS
for the year ended December 31, 2017

OPERATING FUND
Invested in Other Total CONTINGENCY TOTAL
Capital Assets Unrestricted RESERVE FUND
Balance, January 1, 2017 $ 15,000 $ 2,677 $ 17,677 $ 17,557 $ 35,234
Excess of revenue over expenses - 20,356 20,356 (12,800) 7,556
Invested in capital assets (6,000) 6,000 - - -
Interfund transfers - (16,277) (16,277) 16,277 -
$ 9,000 $ 12,756 $ 21,756 $ 21,034 $ 42,790
COMMERCE/BUSINESS 453
FINAL EXAM REVIEW QUESTIONS

SOLUTION TO QUESTION 21

RIFT VALLEY MINOR HOCKEY ASSOCIATION

OPERATING STATEMENTS
for the year ended December 31, 2014

OPERATING CAPITAL ENDOWMENT

FUND FUND FUND
Revenues:
Registration revenue $ 25,000 $ - $ -
Rental and misc revenue 35,000 - -
Grant revenue 100,000 - -
Donation revenue - 1,120,000 50,000
160,000 1,120,000 50,000

Expenses:
Operating expenses 153,000 - -
Amortization expense - 10,000 -
153,000 10,000 -

Excess of revenues over expenses 7,000 1,110,000 50,000

Opening net assets - - -
Ending net assets $ 7,000 $ 1,110,000 $ 50,000

RIFT VALLEY MINOR HOCKEY ASSOCIATION

STATEMENTS OF FINANCIAL POSITION
as at December 31, 2014

OPERATING CAPITAL ENDOWMENT

FUND FUND FUND

Cash $ 65,000 $ - $ -
Grant receivable 10,000 - -
investments - - 50,000
Land - 100,000 -
Building - 960,000 -
Equipment - 60,000 -
Accumulated amortization - (10,000) -
$ 75,000 $ 1,110,000 $ 50,000

Accounts payable $ 8,000 $ - $ -

Unearned revenue 60,000 - -
68,000 - -

Net assets
Unrestricted 7,000 - -
Restricted - 1,110,000 -
Endowment - - 50,000
7,000 1,110,000 50,000

$ 75,000 $ 1,110,000 $ 50,000