Bonucci Corporation had the following information available at the end of fiscal 2021. Bonucci Inc. Statement of Financial Position As at June 30 2020 $0 2021 $30,480 Cash Accounts receivable FV-NI investments Inventory 20,340 36,000 42,000 14,400 1,080 900 114.720 210,000 420,000 16,200 24.000 50,400 Prepaid rent 8,400 Prepaid insurance 2,520 Supplies 1,200 Total current assets 133,200 Land 150.000 Buildings 420,000 Accumulated depreciation - (126,000) buildings Fauipment (105,000) 480,000 630,000 latian Buildings (105,000) 480,000 (134,400 Accumulated depreciation (126,000 buildings Equipment 630,000 Accumulated depreciation - 156,000 ) equipment Patents 108.000 (54,000) 108,000 (48,000) $1.045,320 $14,400 24,000 7,200 1,200 6,000 Accumulated amortization patents Total assets $1.105,200 Temporary bank overdraft $0 Accounts payable 26,400 Income taxes payable Salaries and wages payable 6,000 Short-term notes payable (trade) 12.000 12,000 58,800 84.000 30,000 450,000 200 000 Total current liabilties 50,400 Long-term notes payable 172,000 (non-trade) Deferred tax liability 36,000 Bonds payable 450,000 Total Income taxes payable 7.200 1.200 12.000 58,800 6,000 Salaries and wages payable 6.000 Short-term notes payable 12.000 (trade) Total current liabilties 50,400 Long-term notes payable 72,000 (non-trade) Deferred tax liability 36,000 Bonds payable 450,000 84.000 30.000 450,000 622.800 608,400 312,000 184,800 285,000 137,520 $1,045,320 Total liabilities Common shares Retained Earnings Total liabilities and shareholders' equity $1,105,200 Bonucci Inc. Statement of Earnings Year ended June 30, 2021 $1.392,000 Bonucci Inc. Statement of Earnings ded June 30, 2021 1897.600) Bonucci Inc. Statement of Earnings Year ended June 30, 2021 3 $1,392,000 Sales revenue (897,600 6 494,400 Costs of goods sold Gross margin Operating expenses Selling expenses 47.040 Administrative expenses 149,640 Salaries and wages 110,400 expense Depreciation and 48,600 amortization expense Total operating expenses (355,680) 138,720 Earning from operations Other revenues/expenses disposal of land 9,600 138,720 Earning from operations Other revenues/expenses Gain on disposal of land 9,600 7,680 (32,820) Investment income (50,100) Interest expense 105,900 Earning before incomes taxes 35,280 $70.620 Income tax expense Net income Additional information: 1. Investment income generated by FV-NI investments includes dividend income of $2,400 and a gain on disposal of investments of $5,280. 2. Bonucci follows IFRS and chooses to classify interest and dividends received as well as interest paid as operating activities and dividends paid as financing activities . 10/22 points) 1. Investment income genera $2.400 and a gain on disposal of investments of $5,280. 2. Bonucci follows IFRS and chooses to classify interest and dividends received as well as interest paid as operating activities and dividends paid as financing activities . Question 10 (22 points) Prepare the statement of cash flow for Bonucci Corporation for fiscal 2021 using the direct method. Ignore any additional disclosures. 3 6 On December 31, 2019, Kernan Corp. (KC), a publicly accountable entity entered into an 8-year lease with Ross Finance Corp. (RFC) to acquire computer hardware having a fair value of $1,500,000. KC has negotiated with RFC a residual value guarantee of $150,000. KC has determined internally that at a minimum, the equipment will realize $100,000 when sold by Ross at the lease termination. The rate implicit in the lease required by RFC is 6% which is known to both RFC and KC. This rate is only marginally higher than KC's incremental borrowing rate of 5%. The equipment is estimated to have a useful life of 10 years and KC uses the straight-line method of depreciation for computer equipment. Question 11 (2 points) Provide a detailed calculation to prove that the amount of the annual lease payment to be charged by the Lessor would be $213,583 (Note: first payment is due at the inception of the lease with subsequent payments due on the first day of each year of the lease) Question 12 (10 points) Prepare all journal entries for Kernan Corp (the Lessee) for: (i ) December 31, 2019 (ii) December 31, 2020 6 AY 8 : 4: 13/7 points) loss Finance Corp (the Lessor) for December 31, 2019 Question 13 (7 points) Prepare all journal entries for Ross Finance Corp (the Lessor) for December 31, 2019 and December 31, 2020 Question 14 (2 points) piscuss how would the accounting for the lease by Kerran Corp. (tre les de Vifit reported under Accounting Standards for Priate Enterprise Noten indlastbicas Question 14 (2 points) Discuss how would the accounting for the lease by Kernan Corp. (the lessee) be different if it reported under Accounting Standards for Private Enterprise (Note: no calculations are required for this part). Bonucci Corporation had the following information available at the end of fiscal 2021. Bonucci Inc. Statement of Financial Position As at June 30 2020 $0 2021 $30,480 Cash Accounts receivable FV-NI investments Inventory 20,340 36,000 42,000 14,400 1,080 900 114.720 210,000 420,000 16,200 24.000 50,400 Prepaid rent 8,400 Prepaid insurance 2,520 Supplies 1,200 Total current assets 133,200 Land 150.000 Buildings 420,000 Accumulated depreciation - (126,000) buildings Fauipment (105,000) 480,000 630,000 latian Buildings (105,000) 480,000 (134,400 Accumulated depreciation (126,000 buildings Equipment 630,000 Accumulated depreciation - 156,000 ) equipment Patents 108.000 (54,000) 108,000 (48,000) $1.045,320 $14,400 24,000 7,200 1,200 6,000 Accumulated amortization patents Total assets $1.105,200 Temporary bank overdraft $0 Accounts payable 26,400 Income taxes payable Salaries and wages payable 6,000 Short-term notes payable (trade) 12.000 12,000 58,800 84.000 30,000 450,000 200 000 Total current liabilties 50,400 Long-term notes payable 172,000 (non-trade) Deferred tax liability 36,000 Bonds payable 450,000 Total Income taxes payable 7.200 1.200 12.000 58,800 6,000 Salaries and wages payable 6.000 Short-term notes payable 12.000 (trade) Total current liabilties 50,400 Long-term notes payable 72,000 (non-trade) Deferred tax liability 36,000 Bonds payable 450,000 84.000 30.000 450,000 622.800 608,400 312,000 184,800 285,000 137,520 $1,045,320 Total liabilities Common shares Retained Earnings Total liabilities and shareholders' equity $1,105,200 Bonucci Inc. Statement of Earnings Year ended June 30, 2021 $1.392,000 Bonucci Inc. Statement of Earnings ded June 30, 2021 1897.600) Bonucci Inc. Statement of Earnings Year ended June 30, 2021 3 $1,392,000 Sales revenue (897,600 6 494,400 Costs of goods sold Gross margin Operating expenses Selling expenses 47.040 Administrative expenses 149,640 Salaries and wages 110,400 expense Depreciation and 48,600 amortization expense Total operating expenses (355,680) 138,720 Earning from operations Other revenues/expenses disposal of land 9,600 138,720 Earning from operations Other revenues/expenses Gain on disposal of land 9,600 7,680 (32,820) Investment income (50,100) Interest expense 105,900 Earning before incomes taxes 35,280 $70.620 Income tax expense Net income Additional information: 1. Investment income generated by FV-NI investments includes dividend income of $2,400 and a gain on disposal of investments of $5,280. 2. Bonucci follows IFRS and chooses to classify interest and dividends received as well as interest paid as operating activities and dividends paid as financing activities . 10/22 points) 1. Investment income genera $2.400 and a gain on disposal of investments of $5,280. 2. Bonucci follows IFRS and chooses to classify interest and dividends received as well as interest paid as operating activities and dividends paid as financing activities . Question 10 (22 points) Prepare the statement of cash flow for Bonucci Corporation for fiscal 2021 using the direct method. Ignore any additional disclosures. 3 6 On December 31, 2019, Kernan Corp. (KC), a publicly accountable entity entered into an 8-year lease with Ross Finance Corp. (RFC) to acquire computer hardware having a fair value of $1,500,000. KC has negotiated with RFC a residual value guarantee of $150,000. KC has determined internally that at a minimum, the equipment will realize $100,000 when sold by Ross at the lease termination. The rate implicit in the lease required by RFC is 6% which is known to both RFC and KC. This rate is only marginally higher than KC's incremental borrowing rate of 5%. The equipment is estimated to have a useful life of 10 years and KC uses the straight-line method of depreciation for computer equipment. Question 11 (2 points) Provide a detailed calculation to prove that the amount of the annual lease payment to be charged by the Lessor would be $213,583 (Note: first payment is due at the inception of the lease with subsequent payments due on the first day of each year of the lease) Question 12 (10 points) Prepare all journal entries for Kernan Corp (the Lessee) for: (i ) December 31, 2019 (ii) December 31, 2020 6 AY 8 : 4: 13/7 points) loss Finance Corp (the Lessor) for December 31, 2019 Question 13 (7 points) Prepare all journal entries for Ross Finance Corp (the Lessor) for December 31, 2019 and December 31, 2020 Question 14 (2 points) piscuss how would the accounting for the lease by Kerran Corp. (tre les de Vifit reported under Accounting Standards for Priate Enterprise Noten indlastbicas Question 14 (2 points) Discuss how would the accounting for the lease by Kernan Corp. (the lessee) be different if it reported under Accounting Standards for Private Enterprise (Note: no calculations are required for this part).