Chapter 1
Recognition and Measurement
17
b) Arrange the items in the liquidity order that is commonly presented on the balance sheet
under ASPE.
AP-8A (
4
)
Calypso Ltd. had opening retained earnings of $150,000 on January 1, 2016, had net income
of $250,000 and paid dividends of $80,000. Prepare the statement of changes in equity for the
company’s December 31, 2016 year-end to show the change in retained earnings only.
AP-9A (
5
)
Serpico Ltd. has purchased a 25-m crane from Crane Co. for a total of $600,000. The sale was
finalized on March 26, 2016 when Serpico provided a clear credit check and paid the first
installment of $200,000 with the terms of the sale being FOB destination. The Crane was
shipped from London, Ontario to Edmonton, Alberta and arrived on April 1. Crane Co. has a
March 31, 2016 year-end. What amount, if any, of the total revenue should be recognized by
Crane Co. on the March 31 financial statements? Evaluate the situation against each of the five
revenue recognition criteria for sale of goods.
