• On January 1, Year 5, Jenstar Corp.
purchased 10% of the outstanding common shares of
Safebuy Company at a cost of $95,000. Safebuy reported net income of $100,000 and
paid dividends of $80,000 for the year ended December 31, Year 5. The fair value of
Jenstar’s 10% interest in Safebuy was $98,000 at December 31, Year 5. On January 10,
Year 6, Jenstar sold its investment in Safebuy for $99,000. Assume that accumulated OCI
for the FVTOCI investment is transferred to retained earnings when the investment is
sold.
A forward contract is an over-the-counter
derivative contract in which two parties
agree that one party, the buyer, will
purchase an underlying asset from the
other party, the seller, at a later date at a
fixed price they agree on when the contract
is signed
Characteristics of a forward contract
include:
• Underlying asset type and quantity to be
traded
• Manner in which the contract will be
executed or settled when it expires
• A fixed price, called the forward price,
at which the underlying will be
exchanged
Assumptions
You get a job that earns 35,000 per year when you graduate
You turn 22 when you start your job
You expect pay raises of 2% per year
Save 20% of your gross income each year
Average returns of 10% per year
How much money will you have when you trun 62
You expect pay raises of 2% per year
Save 20% of your gross income each year
Avera You expect pay raises of 2% per year
Save 20% of your gross income each year
Average returns of 10% per year
ge You expect pay raises of 2% per year
Save 20% of your gross income each year
Average returns of 10% per year returns of 10% per year
94,118 Total capital (TC) Total depreciable property $1,100,000 x 10% = $110,000
Manufacturing labour (ML) = $1,000,000 x 100/75 = $1,333,333 Total labour (TL) = $2,200,000
Adjusted business income = $300,000 + $500,000 = $800,000 M&P profit = MC $94,118 + ML
$1,333,333 x $800,000 = $494,355 TC $110,000 + TL $2,200,000 M&P deduction – 13% x
$494,355 = $64,266Components of the unqualified audit report
LO02 – Explanatory language / emphasis of matter
LO06 – Reports on comparative financial statements
LO07 – Other information
LO03 – Departure from the unqualified report
LO04 – Modified audit report
LO05 – Effect of materiality on the audit reports
Ignore LO08-LO11
Using general terms, explain how a change in control of a corporation can affect the net-capital
losses and the non-capital losses.
Answer:
When there is a change in control, net-capital losses are deemed to have expired. Non-capital
losses may only be used against the business that originated the losses, or against income from
a 'similar' business, provided that the original business is not terminated before the losses are
used, and the original business must be
7-1 Management should focus its evaluation on areas that pose the highest risk to ICFR. All
of the following controls would typically be tested (see Table 7-2):
• Entity-level controls (see Table 7-1).
• Controls over initiating, authorizing, recording, processing, and reporting significant
accounts and disclosures and related assertions embodied in the financial statements.
• Controls over the selection and application of accounting policies that are in conformity
with GAAP.
• Antifraud programs and controls.
• Controls, including IT general controls, on which other controls are dependent.
• Controls over significant nonroutine and nonsystematic transactions, such as accounts
involving judgments and estimates.
Future translation methods
Once the inflation rate subsides and the environment is no longer considered to be hyper-
inflationary, we would discontinue translating SAPI into Canadian dollars using the special
translation method. We would use either the FCT method or the PCT method depending on
SAPI’s functional currency.
Assertion Definition
Occurrence Transactions and events that have been recorded or disclosed have occurred,
and such transactions and events pertain to the entity (sometimes referred to as validity).