1. Explain (with reasons) whether managers are included as users of financial statements. (2 Marks) 2. Describe the responsibility that management has regarding the preparation of financial statements. (2 Marks) 3. A business sells a non-current asset (3 Marks) (a) for less than (b) for more than its statement of financial position value. Under IFRS, how will the difference between the asset value in the statement of financial position and the amount received on the sale of the asset be disclosed in the statement of comprehensive income? 4. A company bought a machine on July 1, 2009, for $50,000. At that date, it was estimated to have a useful life of five years and a residual value of $5,000 at the end of its useful life. On December 31, 2012, the company sold the machine for $25,000. How will this sale be accounted for in the companys financial statements? (2 Marks) 5. You are accountant at Global Consulting. The marketing manager is excited about the success of their new marketing campaign. She boasts, We spent $1 million on marketing in 2016 and we have already seen an increase in sales of 5% this year! When you show her the financial statements, she exclaims, You have made a big mistake! I want to see $1 million recorded under assets for our investment in marketing! Required: Explain to manager whether money spent on marketing should be recorded as an asset on the balance sheet. Be sure to explain your reasoning based on the definition of an asset. (3 Marks) 6. Sue Santos is a new entry-level accountant for a snowboard manufacturer. At the end of fiscal period, Santos is advised by supervisor to include as revenue for the period any orders that have been submitted online but have not yet been shipped. Santos is also advised to include as revenue any orders where payment has already been received but where shipment is still pending. Required: A. Identify relevant accounting principles that Santos should be aware of in view of the supervisors instructions. B. What are the ethical factors in this situation? C. Would you recommend that Santos follow the supervisors directives? D. What alternatives might be available to Santos if she decides not to follow the supervisors directions? (4 Marks) 7. You have worked with XYZ consulting as the marketing manager for a number of years. Each of your salespeople must submit a monthly report detailing money they spent while consulting business on behalf of XYZ Consulting. Each item on the monthly report must be coded as to the effect on assets, liabilities and equity. As marketing manager, one of your duties is to review the monthly reports. One salespersons report for September shows the following: Date Description of Transaction Amount of Transaction Effect on Assets Effects on Liabilities Effect on Equity AUG. 28 Delivered market strategy report for a key customer $150,000 Increase Cash No effect Increased Revenue SEPT.10 Purchased new desk for the office to be paid in October $1500 No effect Increased accounts payable Increased office expense SEPT.2-10 Took clients for Lunch and paid cash $680 Decreased Cash Increased owner investment OCT.5 Paid for September cell phone usage $130 Decreased Cash Increased Expenses Required- Using the elements of the critical thinking model described on the inside front cover, respond, focussing on the following key areas: A. What problems are identified in the September report? B. What is the goal of the monthly report and what is the purpose of your review? C. What assumptions have been made or principles need to be considered in presenting the transactions? D. What are the key factors and how do we rely on the facts to identify errors in the report? E. How will you address the issues you have found with the salesperson? (5 Marks) 8. Robert Kaplan and David Norton (2004) state that intangible assets almost never create value by themselves. The value of intangible assets is strong only if the intangible assets support the strategy the company is pursuing. For example, consider McDonalds, which pursues a low-cost strategy. Staff training and knowledge related to process improvements (such as just-in-time [JIT] inventory management and total quality management [TQM]) will be valuable for a company like McDonalds, since this intangible resource supports the overall strategy of cost leadership. Describe an example of an intangible asset that might be valuable to each of the following companies: A. Dell Computers B. Canadian Tire C. Lululemon Athletica (a high-quality athletic clothing company) D. Walmart E. Tim Hortons F. Research In Motion (4 Marks) 9. Problem 3.5 and problem 4.7 from Book (5 Marks)