Review and Practice
Assignment 1 (Session 3 — Spring)
This assignment requires you to apply the knowledge you have gained in FA3 through to the end of Module 5 and in your previous financial accounting courses. It is estimated that this assignment should take approximately six hours to complete. It is graded out of 50 marks — 20 marks for Question 1, 8 marks for Question 2, and 22 marks for Question 3. It is worth 5% of your final grade.
A. If this is your first time using the Online Learning Environment, check out the Course Orientation and the quick tutorials in the Support Centre. You will find general assignment FAQs in your
Assignment/Quiz Submission area.
B. Prepare your answers to these assignment questions in Word and save them as one Word document on your hard drive. For the recommended format and filename, see the
Assignment/Quiz Submission/FAQ area. If this assignment Word file involves pasting Excel.xls sections, or other files, you are strongly advised to refer to How To/Use Software/Excel and/or
How To/Use Software/Word, to ensure you successfully submit your completed assignment.
C. When your file is complete and you are ready to submit it for marking, select your FA3
Assignment/Quiz Submission area. For help, refer to the quick tutorial “Submit your assignment.”
Follow these steps to ensure that your marker receives your assignment:
Select the Grade Centre link.
Select the exclamation mark (!).
In the section “Your work,” select the file. If you can view the unmarked assignment, it is okay. If you are unable to view the assignment, contact your CGA affiliate office for help.
D. For Excel data files, you must download and unzip the data files for the course. Access the data files through the Data files link under the Course Modules tab, then follow the instructions for downloading and saving the files.
E. For questions involving mathematical calculations, you must show your calculations to receive maximum marks. For questions with computer components, follow the given procedure.
F. Adopt a consistent approach to rounding in your calculations. Here are some general guidelines:
Round all currency numbers to two decimals.
For $ million, you may omit decimals. For example, $18,824.68 × 542 =
$10,202,976.56. You may round this to $10,202,977.
If the unit is in thousands of dollars, calculate it as $18.82 (thousand) × 542 =
If you are asked to state the result of the multiplication in $ million, you would respond $10.20 million.
Round all other numbers to a minimum of four decimal places (unless otherwise directed in the question). For example, if a share is trading at a price per share of
$27.25 and has earnings per share of $3.89, then the stock has a priceearnings ratio of $27.25 ÷ $3.89 = 7.0051 and an earningsprice ratio of $3.89 ÷ $27.25 =
0.1428 or 14.28%.
When in doubt, err on the side of greater accuracy.
Question 1 (20 marks)
Estimated time to complete: 2¼ hours
Blue Communications Limited is a public company whose shares are traded on the TSX. The company is a diversified Canadian communications company whose core operations include cable, Internet, and satellite distribution systems. The consolidated statement of shareholders’ equity is presented in Exhibit 11 and extracts from various disclosure notes are presented in Exhibit 12.
Based on the information in this question and the course material, answer the following questions:
1. What characteristics must the convertible bonds display in order to justify the accounting treatment followed on initial recognition? (2 marks)
2. How was the portion of the bonds assigned to debt on initial recognition valued? (2 marks)
3. There is no interest expense on the convertible