Part A:
1. Refer to Appendix III at the end of the textbook for the December 31, 2020, balance sheet for Recipe Unlimited Corporation, a Canadian food company based in Concord, Ontario. What types of assets does Recipe have?

2. To what level of significance are the dollar amounts rounded on the financial statements?
3. Prove the accounting equation for Recipe at December 31, 2020.
4. Assume that the personal home of one of the owners of Recipe (a shareholder) is valued at over $2,000,000. Should it be included as an asset on the balance sheet for Recipe? Why or why not?
5. Identify a potential internal user who would be interested in Recipe’s statements and explain their interest.

Part B:
6. Refer to Appendix III at the end of the textbook for the December 31, 2020, balance sheet for Spin Master, a Canadian global toy and entertainment company based in Toronto. Identify the following for Spin Master at December 31, 2020:
a. Total assets
b. Total net assets
Prove the accounting equation for Spin Master at December 31, 2020.
7. Notice that the balance sheet provides data for two years. Why do you think information has been presented for both December 31, 2020 and December 31, 2019?
8. Identify a potential external user who would be interested in Spin Master’s statements and explain their interest.

Transcribed Image Text:

This appendix includes financial statement information from Spin Master Corporation, Recipe Unlimited Corporation, and Indigo Books & Music Inc. All of this information is taken from their annual reports. An annual report is a summary of the financial results of a company's operations for the year and its future plans. It is directed at external users of financial information, but also affects actions of internal users. An annual report is also used by a company to showcase itself and its products. Many include attractive pictures, diagrams, and illustrations related to the company. But the financial section is its primary objective. This section communicates much information about a company, with most data drawn from the accounting information system. This appendix includes the auditor's report and financial statements for Spin Master Corp., Recipe Unlimited Corporation, and Indigo Books & Music Inc. Links are provided. for readers to refer to the full annual reports, including the notes to the financial statements. There are questions at the end of each chapter that refer to information in this appendix. We encourage readers to spend extra time with these questions as they are especially useful in reinforcing and showing the relevance and diversity of financial reporting. More current financial information about these and other Canadian corporations can be found online at www.sedar.com.