Question 1

Computer question

Frank Well Work Ltd. (FWWL) offers oilfield operation services to the oil and gas industry in Alberta and Texas. FWWL owns no natural resource properties itself, but assists in exploration activities through cementing and stimulation services. The company prepares its financial statements in accordance with ASPE.

The company has prepared draft financial statements (Exhibit 1-1). However, some transactions during the year have not been properly reflected in the financial statements (Exhibit 1-2). Additional information on financial statement elements is provided in Exhibit 1-3.
FWWL is required, as part of its bond agreement, to maintain a minimum level of retained earnings of $120 million, and a maximum debt-to-equity ratio of 1.3-to-1. In the debt-to-equity ratio, the numerator is "total liabilities."

Since a number of the transactions that have not been processed affect debt and/or equity, the CFO is concerned that these key financial targets continue to be met.

Requirements:

1. Record journal entries to account for the transactions and information described in Exhibits 1-2and 1-3.

2. Using Accpac, prepare the balance sheet, the statement of income, and the statement of retained earnings.

Procedure:

a. In Accpac, select Frank Well Work Ltd. All data in Exhibit 1-1 is already recorded.

b. Record the transactions from Requirement 1 as journal entries in a batch. Post the batch.

c. Prepare the financial statements. For the report, use the following files:

Balance sheet: quikbal3_fa3.xls

Statement of income: quikinc3_fa3.xls

Statement of retained earnings : re_state_fa3.xls

d. Print each report into a file.

3. Evaluate the key financial targets and suggest action for the coming year if there are concerns.

Question 2

Estimated time to complete:

Case analysis question

Case 12-1, Dry Clean Depot Limited, pages 734-735

For guidance on cases analysis for FA3, refer to Module 1 and "How to analyze a case" under the Resources tab.

Required:

Perform the following tasks for this case:

1. Provide an overall assessment of the corporate financial reporting objectives.
2. Provide an assessment of the accountant's ethical responsibilities in the case situation.
3. Analyze the issues and provide recommendations as to the appropriate accounting treatment.

Begin this segment with a list of the issues.

Question 3

Estimated time to complete

Provisions are liabilities of uncertain timing or amount, such as warranties or lawsuits. Companies must provide a change statement for  provisions (opening balance, reconciled to closing balance). Accounting policy information may be contained in two or more disclosure notes: in the summary of significant accounting policies and in a specific note dealing with the provision.

Required:
1. Identify a set of IFRS-compliant annual financial statements for 2009 or 2010 and provide information in rows 1 to 4 in the table below.
2. Extract and copy the note disclosure related to ONE provision to rows 5 and 6 in the table below.
3. Interpret the information contained in each line item of the change statement, using your own words (row 7 in the table below). Also describe accounting policy and additional information.

Your response should be no longer than 500 words, excluding the disclosure notes themselves.