assignmenttttttt.xlsx
Export Summary This document was exported from Numbers. Each table was converted to an Excel worksheet. All other objects on each Numbers sheet were placed on separate worksheets. Please be aware that formula calculations may differ in Excel. Numbers Sheet NameNumbers Table NameExcel Worksheet Name Introduction Table 1Introduction Information Table 1Information Draft statements Table 1Draft statements Analyses 1 Table 1Analyses 1 TB, ATB, & AJEs Table 1TB, ATB, & AJEs Analyses 2 Table 1Analyses 2 Financial Statements Table 1Financial Statements Introduction ACCT210 Comprehensive Group Assignment Can be done in groups of 2 or 3 students Due in 2 parts - See Below No Late assignments will be accepted (E-mail copy is required by the due date.) Background: You are the new Controller for RD Co. RD operates a fleet of mobile oilfield equipment throughout the Western Canadian Basin and is headquartered in Red Deer. The company's year-end is December 31 and you have joined the Company as the 2018 financial statements were being finalized. RD follows IFRS. The previous Controller had no trouble accounting for routine transactions but had trouble with more complex transactions and was let go. Your initial research and discussions with other employees have provided you with the attached information that will support your adjustment of RD draft financial statements. Once adjusted, your financial statements should be in accordance with IFRS. You have to complete and submit any required adjusting journal entries to RD's parent company and to post those entries to the adjusted Trial Balance (tab "TB, ATB, & AJEs) (PART 1) Once reviewed and returned to you, you will need to calculate and post appropriate income tax journal entries, and then create financial statements (PART 2). Required: Part 1:Prepare and post the necessary adjusting entries to correct the draft statements. No entry is required for the recording of the correct income tax expense. Round your journal entry amounts to the nearest dollar. For this assignment, "posting" refers to entering the amount on the "TB, ATB, & AJE's" worksheet. Items 2 - 6 on the Information page need to be addressed in Part 1. All support should be documented on the "Analysis 1" worksheet and all entries "posted". Part 2:After Part 1 is submitted, you will receive an updated workbook that includes the correct entries posted to the "TB, ATB, & AJEs" worksheet. Calculate and post the required Income Tax entry and then draft required financial statements. All supporting work is to be included on "Analysis 2" worksheet. Marks will be deducted if your opening and ending trial balances don't balance. Calculate the appropriate income tax expense and record the necessary ajusting entries. Prepare the financial statements, including EPS, in accordance with IFRS. Comparative statements are not required. Prepare your financial statements as follows: For the financial statements, use Excel in 10 point font with no decimal places. I highly recommend linking all relevant cells, rather than retyping data. It will save you significant time and greatly reduce the likelihood of errors. The financial statement balances should be linked from the "TB, ATB, & AJEs" worksheet and/or from supporting work on the "Analysis 2" worksheet. The entries on the "TB, ATB, & AJEs" worksheet should be linked to the entries on "Analysis 1" or "Analysis 2" worksheet, as relevant. You must email me your excel files of this group assignment by the due date. Under no circumstances use any other groups' files. This will result in a mark of "0" and a plagiarism report on your student file. &"Helvetica Neue,Regular"&12&K000000&P Information Interview Information and Notes for Preparation of Adjusting Journal Entries, EPS and Financial Statements 1.No property or equipment was sold in 2020. 2.On June 30, 2020 RD entered into a lease with a manufacturer, acquiring tank farm equipment for storing fracking fluids, diesel and gasoline. After exploring financing alternatives, RD determined that the leasing option was best. Ownership of the tank farm equipment passes to RD at the end of the lease term. Lease terms: First payment date6/30/20 Term10years Payment amount (annual)$ 26,000 RD's incremental borrowing rate is6.0% The useful life of the tank farm is 12years. RD uses straight-line depreciation with no residual value. RD includes Depreciation Expense in Operating and Maintenance Expenses. The previous Controller had debited the first payment to Prepaid expense and credited cash and then, at year-end, amortized 1/2 of the prepaid amount to SG&A expense. 3.Discussions with the operations manager revealed the company will incur a significant cost at the end of the tank farm useful life to dismantle and remove the tanks. The operations manager and a corporate finance consultant provided the following estimates related to the dismantling: Costs to dismantle and remove$ 80,000 Relevant disount rate6.0% The prior Controller did not account for this future cost, arguing it had nothing to do with current operations and should be accounted for when the dismantling and removal actually takes place. Use of the tanks over the next12years is not expected to effect the disposal cost. 4.On January 1, 2020 issued a bond and retired its note payable. Bond information Face value$ 100,000 Coupon rate6.0% Term5years Net proceeds$ 106,000 Interest will be paid semi-annually on June 30 and December 31. At the investor's option, each $1,000 bond is convertible into 50 common shares of the company. Your investigation into similar bond issues showed that had the company issued the debt without the conversion option, the market rate of interest on the bond would have been 7.5%. In accounting for the issuance of the debt, the prior controller debited cash for the full proceeds, credited Bond payable on the balance sheet for the face value, and credited the difference to the income statement (Gain on bond issue). The June 30 and December 31 interest payments were coded to Interest Expense. 5.In 2019 RD had consulted with an actuary to consider the creation of a defined benefit pension plan for the company's founder. On January 1, 2020 the company implemented its plan. Based on calculations by the actuarial consultant, past service costs related to the plan were $23,000 and RD paid this amount on January 1, 2020 to a third party trust. The Controller credited cash and debited Prepaid pension expense for the $23,000. The actuary also calculated the following for the Plan for 2020: annual service cost$ 23,000 discount rate7.0% actual return on plan assets$ 1,700 ending DBO$ 48,000 The prior Controller has done no accounting for this plan other than the initial $23,000 payment for past service costs. No other payments have been made during the year. You have chosen to use a Remeasurement Loss - OCI account for unusual items. Having been horribly confused by Pension accounting during your studies, you phoned your old Intermediate Accounting instructor who provided the following guidance: - the $23,000 is both a Past Service Cost and a Contribution - Interest expense should be calculated based on the $23,000 DBO that was created on January 1 - the difference between the ending DBO calculated by the actuary and the DBO based on your calculations must be related to an Actuarial Gain/Loss 6.At January 1, 2020, the company had 115,342 shares. During the year, they had the following share transactions: March 1 issue3,000shares for$ 6,150proceeds September 1 issue6,258shares for$ 12,844proceeds Stock dividend6%declared and issued on December 1 (share price was $2.00) The prior Controller has done no accounting for the stock dividend. 7.The company's current and prior year income tax rate is22% Announced tax rate effective January 1, 201925% The prior Controller determined that the impact of this change doesn't need to be accounted for until 2019. 8. In calculating current year income tax expense, no entries were made by the Controller for future income taxes. The future income tax balance at December 31, 2017 was due to claiming capital cost allowance in excess of depreciation in prior years. The future tax balances are not expected to start reversing until after 2019. NOTE: The Temporary Difference at 12/31/19 can be calculated as Future Tax Liability / Tax Rate 9.RD will claim the maximum CCA possible. You have determined that amount to be $ 48,200 10.Included in SG&A expense are $6,800 of golfing dues which will never be deductible for income tax purposes. 11.The short-term investments are Government of Canada T-bills with a 60 day term. 12.In addition to Depreciation, the following amounts are also treated as non-cash items when completing the cashflow statement: future income tax expense pension expense unpaid bond interest ARO interest &"Helvetica Neue,Regular"&12&K000000&P Draft statements RD Co - Draft Financial Statements RD Co. Balance Sheet As at December 31, 2020 (in Canadian dollars) 20202019 Assets Cash and cash equivalents650,953424,012 Accounts receivable186,090161,573 Prepaid pension expense23,000- Prepaid expenses46,19735,301 Property and equipment374,600306,373 less: accumulated depreciation(118,997)(91,734) Goodwill and intangibles30,20130,201 Other non-current assets19,7784,152 Total assets1,211,822869,878 Liabilities Accounts payable and accrued liabilities63,18737,307 Accrued compensation19,44527,530 Income taxes payable81,59539,637 Customer deposits38,34335,113 Note payable-30,422 Bond payable100,000- Deferred taxes18,80018,800 Common shares234,698215,704 Retained earnings655,754465,365 1,211,822869,878 RD Co. Income Statement Year Ended December 31, 2020 2,020 Revenue1,466,046 Operating & maintenance expenses(759,112) Selling, general and administrative (SG&A) expense(447,242) Other income5,768 Gain on bond issue6,000 Interest income524 Interest expense- 271,984 Income taxes(81,595) Net income190,389 &"Helvetica Neue,Regular"&12&K000000&P Analyses 1 Analyses: Plan assets 23,000 - 1,700 24,700 &"Helvetica Neue,Regular"&12&K000000&P TB, ATB, & AJEs Unadjusted and Adjusted Trial Balance + Adjusting Journal Entries: December 31, 2020 December 31, 2020 Trial balanceCapital leaseProvision (ARO)Bond payableDB pensionStock DividendIncome taxesAdjusted trial balance Cash and cash equivalents639,050639,050 Short term investments11,90311,903 Accounts receivable186,090186,090 Prepaid pension expense23,00023,000 Prepaid expenses46,19746,197 Property and equipment374,600374,600 Accumulated depreciation - P&E118,997118,997 Leased asset- Accumulated depreciation - leased asset- Goodwill and intangibles30,20130,201 Other non-current assets19,77819,778 Accounts payable and accrued liabilities63,18763,187 Interest payable- Accrued compensation19,44519,445 Income taxes payable81,59581,595 Customer deposits38,34338,343 Note payable-- Obligation under capital lease- Asset retirement obligation- Bond payable100,000100,000 Future income tax18,80018,800 Pension liability- Common shares234,698234,698 Contributed surplus- Dividends-- Retained earnings465,365465,365 Revenue1,466,0461,466,046 Operating & maintenance expenses759,112759,112 Selling, general & administrative expense447,242447,242 Pension expense- Other income5,7685,768 Gain on bond issue6,000 6,000 Interest income524524