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ACC514 - Ch13-16

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ACC 514
Gwen Roberts

ACC514 SPRING/SUMMER 2013 Ch13 – Non-financial & Current Liabilities Notes Payable Interest Bearing Issuance: Cash PV Notes Payable PV Year-end adjust: Interest Expense PV * % * n/12 Interest Payable PV * % * n/12 Mature: Notes Payable Interest Payable Cash Zero interest Bearing Note Payable Issuance: Cash PV Notes Payable PV Year-end adjust: Interest Expense PV * % * n/12 Interest Payable PV * % * n/12 Mature: Notes Payable Cash Asset Retirement Obligations  Nuclear  Oil & gas  Mining  Landfills 1. Buying Asset: Drilling platform XX Cash XX 2. To recognize ARO: Drilling platform PV Asset Retirement Obligation PV 3. Year-end adjustment: Amortization Expense Accumulated Amortization 4. Interest Expense: Interest Expense (IFRS) PV * % Asset Retirement Obligation PV * % ACC514 SPRING/SUMMER 2013 5. Settlement: Asset Retirement Obligation est. cost of dismantling Gain on settlement of ARO Cash Actual cost dismantling Product Guarantees & Warranty Expense Approach (warranty sold together) Warranty expense recognition (time of sale): no entry made Actual warranty costs Warrant expense Warranty liability Year-end adjusting: Warranty liability Cash/warranty Revenue Approach (warranty sold separately, IFRS approach) – straight line Initial sale: Cash Sales Unearned warranty revenue Recognize warranty revenue: Unearned warranty revenue Warranty revenue Recognize warranty cost Unearned contract expense Accounts payable Premiums & Rebates 1. Purchase prize @ cost: Inventory of premium prize Cash 2. Sell # units of inventory @ $__: Cash Sales 3. Actual redemption of units: Cash (# redemption units / #units) x $rebate receive Premium expense Inventory of premium prize (# redemption units/#units) x cost 4. Adjusting entry: Premium expense Est. liability for premiums ACC514 SPRING/SUMMER 2013 Ch14 – Bonds PE GAAP = straight line IFRS = effective interest Bond issuance: Cash PV Bonds Payable PV Semi-annual interest payment: Bond Interest Expense interest component Bonds Payable principal component Cash coupon payment Notes issued for property, goods & services Purchase item: Item item value Cash item value Interest payment days: Interest expense item value x % Bond payable Cash payment Year-end adjustment (non payment): Bond interest expense Bond Payable Interest payable Extinguish debt: Bond payable (debt – unamortized) Cash cancelled at Loss on redemption ACC514 SPRING/SUMMER 2013 Ch15 – Shareholder Equity 2 types: contributed capital & earned capital Issuance Cash 5000 Common shares 5000 Subscription - Shares not issued until full subscription price received - Equity: Common shares subscribed - Current asset: subscription receivable - SHARE CAPITAL only credit when subscription paid in FULL 500 shares sold on subscription for $20 each. 50% due as initial payment. SOLD: Subscription Receivable 10,000 Common shares subscribed 10,000 INITIAL PMT: Cash
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