1.Explain (with reasons) whether managers are included as users of financial statements.

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, 2009for $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 company's 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 supervisor's instructions.

B.What are the ethical factors in this situation?

C.Would you recommend that Santos follow the supervisor's directives?

D.What alternatives might be available to Santos if she decides not to follow the supervisor's 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 salesperson's report for September shows the following:

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)

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