,Solution manual for Accounting Principles Volume 2 8th Canadian Edition
by Jerry J. Weygandt
Hello all ,
We have all what you need with best price
Our email :
Our website :
testbanks-store.com
,Weygandt, Kieso, Kimmel, Trenholm, Warren, Novak Accounting Principles, Eighth Canadian Edition
CHAPTER 11
Financial Reporting Concepts
Learning Objectives
Describe the purposes and advantages of maintaining
1. Explain the importance of having a conceptual framework of
accounting, and list the key components.
2. Explain the objective of financial reporting, and define the
elements of the financial statements.
3. Apply the fundamental and enhancing qualitative
characteristics of the conceptual framework to financial
reporting situations.
4. Apply the recognition and measurement criteria of the
conceptual framework to financial reporting situations.
5. Apply the foundational concepts, assumptions, and
constraints of the conceptual framework to financial reporting
situations. led
Solutions Manual 11.1 Chapter 11
Copyright © 2019 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission is prohibited.
, Weygandt, Kieso, Kimmel, Trenholm, Warren, Novak Accounting Principles, Eighth Canadian Edition
Summary of Questions by Learning Objectives and Bloom’s Taxonomy
Item LO BT Item LO BT Item LO BT Item LO BT Item LO BT
Questions
1. 1 C 6. 3 C 11. 3,4 C 16. 4 AN 21. 3,5 C
2. 2 K 7. 3 K 12. 4 C 17. 4 K 22. 5 C
3. 2 C 8. 3 C 13. 4 K 18. 4 C 23. 5 C
4. 2 K 9. 3 C 14. 4 K 19. 4 AN 24. 5 C
5. 3 K 10. 3 K 15. 4 AN 20. 2,5 C
Brief Exercises
1. 1 AP 5. 4 AP 9. 4 AP 13. 4 AP 17. 5 C
2. 2 AP 6. 4 AP 10. 4 AP 14. 4,5 C
3. 3 AP 7. 4 AP 11. 4 AP 15. 5 C
4. 4 AP 8. 4 AP 12. 4 AP 16. 5 C
Exercises
1. 2 C 4. 4 AP 7. 4 C 10. 4 AP 13. 4,5 C
2. 3 C 5. 4 K 8. 4 AP 11. 1,5 C 14. 4,5 AP
3. 3 AP 6. 4,5 AN 9. 4 AP 12. 2,4,5 AP
Problems
1. 1,2,3,4,5 AP 3. 4 AP 5. 4 AP 7. 4 AP 9. 5 AP
2. 2,3,4 AP 4. 2,4 AP 6. 4 AP 8. 2,3,4,5 AN
Solutions Manual 11.2 Chapter 11
Copyright © 2019 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission is prohibited.
,Weygandt, Kieso, Kimmel, Trenholm, Warren, Novak Accounting Principles, Eighth Canadian Edition
Summary of Legend: The following abbreviations will appear throughout
the solutions manual file.
LO Learning objective
Bloom's
BT Taxonomy
K Knowledge
C Comprehension
AP Application
AN Analysis
S Synthesis
E Evaluation
Difficulty: Level of difficulty
S Simple
M Moderate
C Complex
Time: Estimated time to complete in minutes
AACSB Association to Advance Collegiate Schools of Business
Communication Communication
Ethics Ethics
Analytic Analytic
Tech. Technology
Diversity Diversity
Reflec. Thinking Reflective Thinking
CPA CM CPA Canada Competency Map
Ethics Professional and Ethical Behaviour
PS and DM Problem-Solving and Decision-Making
Comm. Communication
Self-Mgt. Self-Management
Team & Lead Teamwork and Leadership
Reporting Financial Reporting
Stat. & Gov. Strategy and Governance
Mgt. Accounting Management Accounting
Audit Audit and Assurance
Finance Finance
Tax Taxation
Solutions Manual 11.3 Chapter 11
Copyright © 2019 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission is prohibited.
,Weygandt, Kieso, Kimmel, Trenholm, Warren, Novak Accounting Principles, Eighth Canadian Edition
ASSIGNMENT CLASSIFICATION TABLE
Brief Problems Problems
Learning Objectives Questions Exercises Exercises Set A Set B
1. Explain the 1 1 9 1 1
importance of having a
conceptual framework
of accounting, and list
the key components.
2. Explain the objective 2, 3, 4, 2 1, 10 1, 2, 4, 7 1, 2, 4, 7
of financial reporting, 20
and define the
elements of the
financial statements.
3. Apply the fundamental 5, 6, 7, 8, 3 2, 3, 1, 2, 7 1, 2, 7
and enhancing 9, 10, 11,
qualitative 21
characteristics of the
conceptual framework
to financial reporting
situations.
4. Apply the recognition 11, 12, 4, 5, 6, 7, 4, 5, 6, 7, 1, 2, 3, 4, 1, 2, 3, 4,
and measurement 13, 14, 8, 9, 10, 8, 9, 10, 5, 6, 7, 8 5, 6, 7, 8
criteria of the 15, 16, 11, 12, 11, 13,
conceptual framework 17, 18, 13, 14 14
to financial reporting 19,
situations.
5. Apply the foundational 20, 21, 14, 15, 6, 11, 12, 1, 8, 9 1, 8, 9
concepts, 22, 23, 16, 17 13, 14
assumptions, and 24
constraints of the
conceptual framework
to financial reporting
situations.
Solutions Manual 11.4 Chapter 11
Copyright © 2019 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission is prohibited.
,Weygandt, Kieso, Kimmel, Trenholm, Warren, Novak Accounting Principles, Eighth Canadian Edition
ASSIGNMENT CHARACTERISTICS TABLE
Problem Difficulty Time
Number Description Level Allotted
(min.)
1A Identify violations of the components of the Complex 45-50
conceptual framework.
2A Identify objective of financial reporting, elements Moderate 35-40
of the financial statements, and revenue and
expense recognition–earnings approach.
3A Identify contract components and prepare journal Moderate 20-25
entries–contract-based approach, multiple
performance obligations.
4A Identify elements of the financial Moderate 15-20
statements–contract-based approach revenue
transactions.
5A Identify revenue recognition criteria and prepare Moderate 20-25
journal entries–earnings approach.
6A Identify contract components and prepare journal Moderate 25-30
entries–contract-based approach, right of return.
7A Determine transaction price with variable Complex 35-40
consideration and prepare journal
entries–contract-based approach.
8A Identify concept or assumption violated and Moderate 30-35
prepare entries.
9A Explain assumptions and concepts – going Moderate 15-20
concern, full disclosure.
1B Identify violations of the components of the Complex 45-50
conceptual framework.
2B Identify objective of financial reporting, elements Moderate 35-40
of the financial statements, and revenue and
expense recognition.
3B Identify contract components and prepare journal Moderate 20-25
entries–revenue recognition contract-based
approach, multiple performance obligations.
4B Identify elements of the financial Moderate 15-20
statements–earnings approach, revenue
transactions.
5B Identify revenue recognition criteria and prepare Moderate 20-25
journal entries–earnings approach.
6B Identify contract components and prepare journal Moderate 25-30
entries– revenue recognition contract-based
approach, right of return.
7B Determine transaction price with variable Complex 35-40
consideration and prepare journal
entries–contract-based approach.
8B Identify elements, assumptions, constraints, and Moderate 30-35
recognition and measurement criteria.
9B Comment on application of accounting Moderate 15-20
assumptions and concepts.
Solutions Manual 11.5 Chapter 11
Copyright © 2019 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission is prohibited.
, Weygandt, Kieso, Kimmel, Trenholm, Warren, Novak Accounting Principles, Eighth Canadian Edition
BLOOM’S TAXONOMY TABLE
Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End-of-
Chapter Material.
Learning Objectives Knowledge Comprehension Application Analysis Synthesis Evaluation
1. Explain the BE11.1 Q11.1 P11.1A
importance of E11.11 P11.1B
having a conceptual
framework of
accounting, and list
the key
components.
2. Explain the Q11.2 Q11.3 E11.5 P11.8A
objective of financial Q11.4 Q11.11 E11.10 P11.8B
reporting, and BE11.2 Q11.20 P11.1A
E11.1 P11.2A
define the elements
E11.2 P11.4A
of the financial E11.4 P11.1B
statements. P11.2B
P11.4B
3. Apply the Q11.5 Q11.6 E11.3 P11.8A
fundamental and Q11.7 Q11.8 P11.1A P11.8B
enhancing Q11.10 Q11.9 P11.2A
BE11.3 Q11.11 P11.1B
qualitative
Q11.21 P11.2B
characteristics of E11.2
the conceptual E11.4
framework to
financial reporting.
4. Apply the Q11.13 Q11.11 BE11.4 E11.13 Q11.15
recognition and Q11.14 Q11.12 BE11.5 E11.14 Q11.16
measurement Q11.17 Q11.18 BE11.6 P11.1A Q11.19
E11.5 BE11.14 BE11.7 P11.2A E11.6
criteria of the
E11.7 BE11.8 P11.3A P11.8A
conceptual E11.11 BE11.9 P11.4A P11.8B
framework to BE11.10 P11.5A
financial reporting BE11.11 P11.6A
situations. BE11.12 P11.7A
BE11.13 P11.1B
BE11.14 P11.2B
E11.4 P11.3B
E11.8 P11.4B
E11.9 P11.5B
E11.10 P11.6B
E11.12 P11.7B
5. Apply the Q11.20 BE11.16 E11.10 E11.6
foundational Q11.21 BE11.17 E11.12 P11.8A
concepts, Q11.22 E11.11 E11.13 P11.7B
Q11.23 E11.13 E11.14
assumptions, and
Q11.24 P11.1A
constraints of the BE11.14 P11.9A
conceptual BE11.15 P11.1B
framework to P11.9B
financial reporting
situations.
Broadening Your BYP11.3 BYP11.4 BYP11.1
Perspective BYP11.5 BYP11.2
Solutions Manual 11.6 Chapter 11
Copyright © 2019 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission is prohibited.
,Weygandt, Kieso, Kimmel, Trenholm, Warren, Novak Accounting Principles, Eighth Canadian Edition
ANSWERS TO QUESTIONS
1. The conceptual framework is a coherent system of interrelated objectives
and fundamentals that can lead to consistent standards and that prescribe
the nature, function, and limits of financial accounting statements. It guides
choices about what to present in financial statements, how to report
economic events, and how to communicate such information.
LO 1 BT: C Difficulty: S Time: 5 min. AACSB: None CPA: cpa-t001 CM: Reporting
2. (a) The main objective of financial reporting is to provide information that is
useful for decision-making. More specifically, the conceptual framework
states that the objective of general-purpose financial reporting is to
provide financial information that is useful to present and potential
investors, lenders, and other creditors in making decisions about a
business.
(b) The objective identifies the specific users to ensure that a range of
possible points of view are included in fulfilling the needs of users but
cannot be all things to all users.
LO 2 BT: K Difficulty: S Time: 5 min. AACSB: None CPA: cpa-t001 CM: Reporting
3. (a) Stewardship refers to the responsibility of management to acquire and
use company resources in the best way possible.
(b) The objective of financial reporting is to provide users with useful
financial information. Users look for information in the financial
statements about a company’s ability to earn a profit and generate future
cash flows. Using the financial statements helps users assess
stewardship.
LO 2 BT: C Difficulty: S Time: 5 min. AACSB: None CPA: cpa-t001 CM: Reporting
4. Under IFRS the elements of assets, liabilities, equity, revenue, and expenses
are included, as they are in ASPE. Under revenues, IFRS includes gains
and under expenses, IFRS includes losses. Under ASPE, gains and losses
are defined in separate categories from revenues and expenses but have
similar basic definitions to those under IFRS.
LO 2 BT: K Difficulty: S Time: 5 min. AACSB: None CPA: cpa-t001 CM: Reporting
Solutions Manual 11.7 Chapter 11
Copyright © 2019 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission is prohibited.
, Weygandt, Kieso, Kimmel, Trenholm, Warren, Novak Accounting Principles, Eighth Canadian Edition
Questions (Continued)
5. The two fundamental qualitative characteristics of financial information are
relevance and faithful representation.
Accounting information has relevance if it makes a difference in a decision.
Relevant information has predictive value or confirmatory value. Faithful
representation shows the economic reality of events rather than just their
legal form. Faithful representation is achieved if the information is complete,
neutral, and free from material error. Complete information includes all
information necessary to show the economic reality of the transaction.
Accounting information is neutral if it is free from bias intended to attain a
predetermined result or encourage a particular behaviour. Accounting
estimates must also be based on the best available information and be
reasonably accurate to be considered free from material error.
LO 3 BT: K Difficulty: S Time: 5 min. AACSB: None CPA: cpa-t001 CM: Reporting
6. (a) The concept of materiality means that an item may be so small that
failure to follow generally accepted accounting principles will not
influence the decision of a reasonably careful investor or creditor. For
example, the expensing of a $20 calculator would not technically be in
accordance with GAAP since the calculator will probably have a useful
life beyond one year. However, the cost is so insignificant that it will
have no impact on users’ decisions and therefore, this GAAP deviation
is not considered to be material. In addition, the cost constraint supports
the expensing of the calculator. Materiality is also the criterion used in
deciding whether or not an element deserves to be disclosed separately
within the body of the financial statements or in the notes to the financial
statements.
(b) To be relevant to a financial statement user, a transaction or amount
must make a difference to the user when making a decision. If an
omission or misstatement does not influence a user, it is said to be
immaterial or not material. Materiality is not only a matter of size, but
also has to do with the nature of the omission or misstatement (for
instance, illegal acts or contingent liabilities).
LO 3 BT: C Difficulty: M Time: 10 min. AACSB: None CPA: cpa-t001 CM: Reporting
Solutions Manual 11.8 Chapter 11
Copyright © 2019 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission is prohibited.
by Jerry J. Weygandt
Hello all ,
We have all what you need with best price
Our email :
Our website :
testbanks-store.com
,Weygandt, Kieso, Kimmel, Trenholm, Warren, Novak Accounting Principles, Eighth Canadian Edition
CHAPTER 11
Financial Reporting Concepts
Learning Objectives
Describe the purposes and advantages of maintaining
1. Explain the importance of having a conceptual framework of
accounting, and list the key components.
2. Explain the objective of financial reporting, and define the
elements of the financial statements.
3. Apply the fundamental and enhancing qualitative
characteristics of the conceptual framework to financial
reporting situations.
4. Apply the recognition and measurement criteria of the
conceptual framework to financial reporting situations.
5. Apply the foundational concepts, assumptions, and
constraints of the conceptual framework to financial reporting
situations. led
Solutions Manual 11.1 Chapter 11
Copyright © 2019 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission is prohibited.
, Weygandt, Kieso, Kimmel, Trenholm, Warren, Novak Accounting Principles, Eighth Canadian Edition
Summary of Questions by Learning Objectives and Bloom’s Taxonomy
Item LO BT Item LO BT Item LO BT Item LO BT Item LO BT
Questions
1. 1 C 6. 3 C 11. 3,4 C 16. 4 AN 21. 3,5 C
2. 2 K 7. 3 K 12. 4 C 17. 4 K 22. 5 C
3. 2 C 8. 3 C 13. 4 K 18. 4 C 23. 5 C
4. 2 K 9. 3 C 14. 4 K 19. 4 AN 24. 5 C
5. 3 K 10. 3 K 15. 4 AN 20. 2,5 C
Brief Exercises
1. 1 AP 5. 4 AP 9. 4 AP 13. 4 AP 17. 5 C
2. 2 AP 6. 4 AP 10. 4 AP 14. 4,5 C
3. 3 AP 7. 4 AP 11. 4 AP 15. 5 C
4. 4 AP 8. 4 AP 12. 4 AP 16. 5 C
Exercises
1. 2 C 4. 4 AP 7. 4 C 10. 4 AP 13. 4,5 C
2. 3 C 5. 4 K 8. 4 AP 11. 1,5 C 14. 4,5 AP
3. 3 AP 6. 4,5 AN 9. 4 AP 12. 2,4,5 AP
Problems
1. 1,2,3,4,5 AP 3. 4 AP 5. 4 AP 7. 4 AP 9. 5 AP
2. 2,3,4 AP 4. 2,4 AP 6. 4 AP 8. 2,3,4,5 AN
Solutions Manual 11.2 Chapter 11
Copyright © 2019 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission is prohibited.
,Weygandt, Kieso, Kimmel, Trenholm, Warren, Novak Accounting Principles, Eighth Canadian Edition
Summary of Legend: The following abbreviations will appear throughout
the solutions manual file.
LO Learning objective
Bloom's
BT Taxonomy
K Knowledge
C Comprehension
AP Application
AN Analysis
S Synthesis
E Evaluation
Difficulty: Level of difficulty
S Simple
M Moderate
C Complex
Time: Estimated time to complete in minutes
AACSB Association to Advance Collegiate Schools of Business
Communication Communication
Ethics Ethics
Analytic Analytic
Tech. Technology
Diversity Diversity
Reflec. Thinking Reflective Thinking
CPA CM CPA Canada Competency Map
Ethics Professional and Ethical Behaviour
PS and DM Problem-Solving and Decision-Making
Comm. Communication
Self-Mgt. Self-Management
Team & Lead Teamwork and Leadership
Reporting Financial Reporting
Stat. & Gov. Strategy and Governance
Mgt. Accounting Management Accounting
Audit Audit and Assurance
Finance Finance
Tax Taxation
Solutions Manual 11.3 Chapter 11
Copyright © 2019 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission is prohibited.
,Weygandt, Kieso, Kimmel, Trenholm, Warren, Novak Accounting Principles, Eighth Canadian Edition
ASSIGNMENT CLASSIFICATION TABLE
Brief Problems Problems
Learning Objectives Questions Exercises Exercises Set A Set B
1. Explain the 1 1 9 1 1
importance of having a
conceptual framework
of accounting, and list
the key components.
2. Explain the objective 2, 3, 4, 2 1, 10 1, 2, 4, 7 1, 2, 4, 7
of financial reporting, 20
and define the
elements of the
financial statements.
3. Apply the fundamental 5, 6, 7, 8, 3 2, 3, 1, 2, 7 1, 2, 7
and enhancing 9, 10, 11,
qualitative 21
characteristics of the
conceptual framework
to financial reporting
situations.
4. Apply the recognition 11, 12, 4, 5, 6, 7, 4, 5, 6, 7, 1, 2, 3, 4, 1, 2, 3, 4,
and measurement 13, 14, 8, 9, 10, 8, 9, 10, 5, 6, 7, 8 5, 6, 7, 8
criteria of the 15, 16, 11, 12, 11, 13,
conceptual framework 17, 18, 13, 14 14
to financial reporting 19,
situations.
5. Apply the foundational 20, 21, 14, 15, 6, 11, 12, 1, 8, 9 1, 8, 9
concepts, 22, 23, 16, 17 13, 14
assumptions, and 24
constraints of the
conceptual framework
to financial reporting
situations.
Solutions Manual 11.4 Chapter 11
Copyright © 2019 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission is prohibited.
,Weygandt, Kieso, Kimmel, Trenholm, Warren, Novak Accounting Principles, Eighth Canadian Edition
ASSIGNMENT CHARACTERISTICS TABLE
Problem Difficulty Time
Number Description Level Allotted
(min.)
1A Identify violations of the components of the Complex 45-50
conceptual framework.
2A Identify objective of financial reporting, elements Moderate 35-40
of the financial statements, and revenue and
expense recognition–earnings approach.
3A Identify contract components and prepare journal Moderate 20-25
entries–contract-based approach, multiple
performance obligations.
4A Identify elements of the financial Moderate 15-20
statements–contract-based approach revenue
transactions.
5A Identify revenue recognition criteria and prepare Moderate 20-25
journal entries–earnings approach.
6A Identify contract components and prepare journal Moderate 25-30
entries–contract-based approach, right of return.
7A Determine transaction price with variable Complex 35-40
consideration and prepare journal
entries–contract-based approach.
8A Identify concept or assumption violated and Moderate 30-35
prepare entries.
9A Explain assumptions and concepts – going Moderate 15-20
concern, full disclosure.
1B Identify violations of the components of the Complex 45-50
conceptual framework.
2B Identify objective of financial reporting, elements Moderate 35-40
of the financial statements, and revenue and
expense recognition.
3B Identify contract components and prepare journal Moderate 20-25
entries–revenue recognition contract-based
approach, multiple performance obligations.
4B Identify elements of the financial Moderate 15-20
statements–earnings approach, revenue
transactions.
5B Identify revenue recognition criteria and prepare Moderate 20-25
journal entries–earnings approach.
6B Identify contract components and prepare journal Moderate 25-30
entries– revenue recognition contract-based
approach, right of return.
7B Determine transaction price with variable Complex 35-40
consideration and prepare journal
entries–contract-based approach.
8B Identify elements, assumptions, constraints, and Moderate 30-35
recognition and measurement criteria.
9B Comment on application of accounting Moderate 15-20
assumptions and concepts.
Solutions Manual 11.5 Chapter 11
Copyright © 2019 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission is prohibited.
, Weygandt, Kieso, Kimmel, Trenholm, Warren, Novak Accounting Principles, Eighth Canadian Edition
BLOOM’S TAXONOMY TABLE
Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End-of-
Chapter Material.
Learning Objectives Knowledge Comprehension Application Analysis Synthesis Evaluation
1. Explain the BE11.1 Q11.1 P11.1A
importance of E11.11 P11.1B
having a conceptual
framework of
accounting, and list
the key
components.
2. Explain the Q11.2 Q11.3 E11.5 P11.8A
objective of financial Q11.4 Q11.11 E11.10 P11.8B
reporting, and BE11.2 Q11.20 P11.1A
E11.1 P11.2A
define the elements
E11.2 P11.4A
of the financial E11.4 P11.1B
statements. P11.2B
P11.4B
3. Apply the Q11.5 Q11.6 E11.3 P11.8A
fundamental and Q11.7 Q11.8 P11.1A P11.8B
enhancing Q11.10 Q11.9 P11.2A
BE11.3 Q11.11 P11.1B
qualitative
Q11.21 P11.2B
characteristics of E11.2
the conceptual E11.4
framework to
financial reporting.
4. Apply the Q11.13 Q11.11 BE11.4 E11.13 Q11.15
recognition and Q11.14 Q11.12 BE11.5 E11.14 Q11.16
measurement Q11.17 Q11.18 BE11.6 P11.1A Q11.19
E11.5 BE11.14 BE11.7 P11.2A E11.6
criteria of the
E11.7 BE11.8 P11.3A P11.8A
conceptual E11.11 BE11.9 P11.4A P11.8B
framework to BE11.10 P11.5A
financial reporting BE11.11 P11.6A
situations. BE11.12 P11.7A
BE11.13 P11.1B
BE11.14 P11.2B
E11.4 P11.3B
E11.8 P11.4B
E11.9 P11.5B
E11.10 P11.6B
E11.12 P11.7B
5. Apply the Q11.20 BE11.16 E11.10 E11.6
foundational Q11.21 BE11.17 E11.12 P11.8A
concepts, Q11.22 E11.11 E11.13 P11.7B
Q11.23 E11.13 E11.14
assumptions, and
Q11.24 P11.1A
constraints of the BE11.14 P11.9A
conceptual BE11.15 P11.1B
framework to P11.9B
financial reporting
situations.
Broadening Your BYP11.3 BYP11.4 BYP11.1
Perspective BYP11.5 BYP11.2
Solutions Manual 11.6 Chapter 11
Copyright © 2019 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission is prohibited.
,Weygandt, Kieso, Kimmel, Trenholm, Warren, Novak Accounting Principles, Eighth Canadian Edition
ANSWERS TO QUESTIONS
1. The conceptual framework is a coherent system of interrelated objectives
and fundamentals that can lead to consistent standards and that prescribe
the nature, function, and limits of financial accounting statements. It guides
choices about what to present in financial statements, how to report
economic events, and how to communicate such information.
LO 1 BT: C Difficulty: S Time: 5 min. AACSB: None CPA: cpa-t001 CM: Reporting
2. (a) The main objective of financial reporting is to provide information that is
useful for decision-making. More specifically, the conceptual framework
states that the objective of general-purpose financial reporting is to
provide financial information that is useful to present and potential
investors, lenders, and other creditors in making decisions about a
business.
(b) The objective identifies the specific users to ensure that a range of
possible points of view are included in fulfilling the needs of users but
cannot be all things to all users.
LO 2 BT: K Difficulty: S Time: 5 min. AACSB: None CPA: cpa-t001 CM: Reporting
3. (a) Stewardship refers to the responsibility of management to acquire and
use company resources in the best way possible.
(b) The objective of financial reporting is to provide users with useful
financial information. Users look for information in the financial
statements about a company’s ability to earn a profit and generate future
cash flows. Using the financial statements helps users assess
stewardship.
LO 2 BT: C Difficulty: S Time: 5 min. AACSB: None CPA: cpa-t001 CM: Reporting
4. Under IFRS the elements of assets, liabilities, equity, revenue, and expenses
are included, as they are in ASPE. Under revenues, IFRS includes gains
and under expenses, IFRS includes losses. Under ASPE, gains and losses
are defined in separate categories from revenues and expenses but have
similar basic definitions to those under IFRS.
LO 2 BT: K Difficulty: S Time: 5 min. AACSB: None CPA: cpa-t001 CM: Reporting
Solutions Manual 11.7 Chapter 11
Copyright © 2019 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission is prohibited.
, Weygandt, Kieso, Kimmel, Trenholm, Warren, Novak Accounting Principles, Eighth Canadian Edition
Questions (Continued)
5. The two fundamental qualitative characteristics of financial information are
relevance and faithful representation.
Accounting information has relevance if it makes a difference in a decision.
Relevant information has predictive value or confirmatory value. Faithful
representation shows the economic reality of events rather than just their
legal form. Faithful representation is achieved if the information is complete,
neutral, and free from material error. Complete information includes all
information necessary to show the economic reality of the transaction.
Accounting information is neutral if it is free from bias intended to attain a
predetermined result or encourage a particular behaviour. Accounting
estimates must also be based on the best available information and be
reasonably accurate to be considered free from material error.
LO 3 BT: K Difficulty: S Time: 5 min. AACSB: None CPA: cpa-t001 CM: Reporting
6. (a) The concept of materiality means that an item may be so small that
failure to follow generally accepted accounting principles will not
influence the decision of a reasonably careful investor or creditor. For
example, the expensing of a $20 calculator would not technically be in
accordance with GAAP since the calculator will probably have a useful
life beyond one year. However, the cost is so insignificant that it will
have no impact on users’ decisions and therefore, this GAAP deviation
is not considered to be material. In addition, the cost constraint supports
the expensing of the calculator. Materiality is also the criterion used in
deciding whether or not an element deserves to be disclosed separately
within the body of the financial statements or in the notes to the financial
statements.
(b) To be relevant to a financial statement user, a transaction or amount
must make a difference to the user when making a decision. If an
omission or misstatement does not influence a user, it is said to be
immaterial or not material. Materiality is not only a matter of size, but
also has to do with the nature of the omission or misstatement (for
instance, illegal acts or contingent liabilities).
LO 3 BT: C Difficulty: M Time: 10 min. AACSB: None CPA: cpa-t001 CM: Reporting
Solutions Manual 11.8 Chapter 11
Copyright © 2019 John Wiley & Sons Canada, Ltd. Unauthorized copying, distribution, or transmission is prohibited.
