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Case Facts: Background Turner Corporation ( TC ) is a private corporation that manufactures luxury travel trailers in Diamond Valley, Alberta. The company was founded
Case Facts: Background Turner Corporation TC is a private corporation that manufactures luxury travel trailers in Diamond Valley, Alberta. The company was founded by family members Noah, Oliver, Mia, and Elizabeth Turner. Noah and Oliver are brothers, and both have engineering degrees from the University of Calgary, whereas their sister, Mia, obtained her Bachelor of Commerce degree from St Francis Xavier University and performs all of the sales and marketing duties for the company. Elizabeth is the siblings mother and does the payroll and bookkeeping. Elizabeth took a few accounting courses in the eighties at SAIT but left before graduating to start her family. Mr Turner the father sadly passed away ten years ago. It was his insurance proceeds that enabled the family to start the business in honour of their late fatherhusband Each living family member currently owns of the voting common shares of TC The family has decided that expansion is necessary to keep up with the demand for the luxury trailers. The plan is to raise capital by going public. The family would keep an overall controlling interest. Each family member will maintain a interest in TC TC prepared its financial statements in accordance with ASPE but now requires that its financial statements be prepared pursuant to IFRS in anticipation of going public. The family decided that it would be prudent to hire a CPA. You, CPA, were hired as the new manager of financial reporting for TC In your first week, Noah has asked you to consider the information supplied by his mother, review the extracts from the preliminary consolidated financial statements prepared by his mother along with the single entity statements for TC Small Parts and Willow Design and prepare a memo for the family that you will present at the next shareholder meeting. Extracts from these statements are summarized in an Excel spreadsheet. You have also been supplied with the balance sheets for all three entities just prior to the acquisition date ie December Professionally prepared appraisal reports have been obtained to support the fair values of the net assets of both Small Parts and Willow Design. Information from Noah Turner, P Eng., TC Shareholder: Noah has indicated to you that his mother prepared the draft consolidated financial statements based on her recollection of what she learned at SAIT but also said, to be truthful, I love my mother, but I do not believe she has prepared the consolidated statements correctly. Mom added together of both the balance sheets of Small Parts and Willow Design to TCs balance sheet. Perhaps the amounts added to the statements of TC should only be the proportionate ownership interest. Adding together does not seem to be accurate considering we acquired less than of the shares. We also acquired the net assets of Princess Trailers on June You can get the details from my mother. We would appreciate an explanation of the proper financial reporting for this acquisition. To be able to move forward with our expansion, the consolidated financial statements need to be accurate for the upcoming audit. We do not have the knowledge or expertise to do this so detailed explanations of how you prepared the consolidated financial statements with supporting calculations for any necessary revisions to the amounts on moms consolidated balance sheet plus any possible alternative reporting standards are needed for our next shareholders meeting. If you need to choose between two viable options for reporting, please choose the method that will increase the return on asset ratio. If you provide revised calculated amounts, please provide a detailed explanation of how you arrived at the revised amounts including your rationale for choosing the method used for the calculation. TC is planning to engage in foreign currency transactions in What effect, if any, will these transactions have on TCs financial statements? I really appreciate the time and effort needed to prepare this memo and the huge impact your decisions will have on our future as a public company. Please do not hold back on your analysis or comments. The detail is absolutely needed for us to understand the accounting requirements under IFRS and how they differ from ASPE. Additional Facts Provided by Elizabeth Turner mother bookkeeper: Elizabeth said to you if my memory serves me correctly, you need to add together the financial statements of any equity investments that TC controls or has significant influence over. My financial accounting instructor said consolidated financial statements are required for public companies but not private companies. I could be wrong though. Also, I have no idea how to account for the shares we did not acquire in Small Parts. Someone mentioned noncontrolling interest so I included it on the preliminary consolidated
Case Facts:
Background
Turner Corporation TC is a private corporation that manufactures luxury travel trailers in Diamond Valley, Alberta. The company was founded by family members Noah, Oliver, Mia, and Elizabeth Turner. Noah and Oliver are brothers, and both have engineering degrees from the University of Calgary, whereas their sister, Mia, obtained her Bachelor of Commerce degree from St Francis Xavier University and performs all of the sales and marketing duties for the company. Elizabeth is the siblings mother and does the payroll and bookkeeping. Elizabeth took a few accounting courses in the eighties at SAIT but left before graduating to start her family. Mr Turner the father sadly passed away ten years ago. It was his insurance proceeds that enabled the family to start the business in honour of their late fatherhusband Each living family member currently owns of the voting common shares of TC
The family has decided that expansion is necessary to keep up with the demand for the luxury trailers. The plan is to raise capital by going public. The family would keep an overall controlling interest. Each family member will maintain a interest in TC
TC prepared its financial statements in accordance with ASPE but now requires that its financial statements be prepared pursuant to IFRS in anticipation of going public.
The family decided that it would be prudent to hire a CPA. You, CPA, were hired as the new manager of financial reporting for TC In your first week, Noah has asked you to consider the information supplied by his mother, review the extracts from the preliminary consolidated financial statements prepared by his mother along with the single entity statements for TC Small Parts and Willow Design and prepare a memo for the family that you will present at the next shareholder meeting.
Extracts from these statements are summarized in an Excel spreadsheet. You have also been supplied with the balance sheets for all three entities just prior to the acquisition date ie December Professionally prepared appraisal reports have been obtained to support the fair values of the net assets of both Small Parts and Willow Design.
Information from Noah Turner, P Eng., TC Shareholder:
Noah has indicated to you that his mother prepared the draft consolidated financial statements based on her recollection of what she learned at SAIT but also said,
to be truthful, I love my mother, but I do not believe she has prepared the consolidated statements correctly. Mom added together of both the balance sheets of Small Parts and Willow Design to TCs balance sheet. Perhaps the amounts added to the statements of TC should only be the proportionate ownership interest. Adding together does not seem to be accurate considering we acquired less than of the shares.
We also acquired the net assets of Princess Trailers on June You can get the details from my mother. We would appreciate an explanation of the proper financial reporting for this acquisition.
To be able to move forward with our expansion, the consolidated financial statements need to be accurate for the upcoming audit.
We do not have the knowledge or expertise to do this so detailed explanations of how you prepared the consolidated financial statements with supporting calculations for any necessary revisions to the amounts on moms consolidated balance sheet plus any possible alternative reporting standards are needed for our next shareholders meeting. If you need to choose between two viable options for reporting, please choose the method that will increase the return on asset ratio. If you provide revised calculated amounts, please provide a detailed explanation of how you arrived at the revised amounts including your rationale for choosing the method used for the calculation.
TC is planning to engage in foreign currency transactions in What effect, if any, will these transactions have on TCs financial statements?
I really appreciate the time and effort needed to prepare this memo and the huge impact your decisions will have on our future as a public company. Please do not hold back on your analysis or comments. The detail is absolutely needed for us to understand the accounting requirements under IFRS and how they differ from ASPE.
Additional Facts Provided by Elizabeth Turner mother bookkeeper:
Elizabeth said to you if my memory serves me correctly, you need to add together the financial statements of any equity investments that TC controls or has significant influence over. My financial accounting instructor said consolidated financial statements are required for public companies but not private companies. I could be wrong though. Also, I have no idea how to account for the shares we did not acquire in Small Parts. Someone mentioned noncontrolling interest so I included it on the preliminary consolidated
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