IFRS Multiple Choice Question 02

Waterway Industries maintains its accounting records using IFRS.

The company purchases equipment with a price of $420000.

The manufacturer has offered a payment plan that would allow Waterway to make 10 equal annual payments of $51782, with the first payment due one year after the purchase.

How much total interest will Waterway pay on this payment plan?

IFRS Multiple Choice Question 05

Crane Company manufactures exercise equipment.

Recently the vice president of operations of the company has requested construction of a new plant to meet the increasing demand for the company's exercise equipment.

After a careful evaluation of the request, the board of directors has decided to raise funds for the new plant by issuing $3050000 of 9% bonds on March 1, 2017, due on March 1, 2032, with interest payable each March 1 and September 1. At the time of issuance, the market interest rate for similar financial instruments is 8%. What is the selling price of the bonds?

FRS Multiple Choice Question 07

Marigold Corp. uses IFRS for its financial reporting. It produces machines that sell globally. All sales are accompanied by a one-year warranty. At the end of the year, the company has the following data:

4600 units were sold during the year.

The trend over the past five years has been that 3% of the machines were defective in some way and had to be repaired. Of this 3%, half required a full replacement at a cost of $3200 per unit and half were able to be repaired at an average cost of $320.

What is the expected value of the warranty cost provision?