C2C is a small Canadian public company that services thousands of travelers on an annual basis. The company is a small personal transportation business that has the mission of getting people where they want to go in the cheapest, fastest way possible. C2C offers its customers many modes of transportation, such as taxi (for short trips), bus, and short- haul air trips. C2C only offers trips to certain destinations within Canada and the United States. C2C was founded in 20X2 and became a public company during 20X3. You have recently been hired as a student to assist the controller. It is now 20X4 and you have been asked by your boss to review some information pertaining to an upcoming acquisition of a small company, Blades, that runs out of Vancouver, British Columbia. Blades is currently a private company and follows accounting standards for private enterprises but has never had an audit. The controller obtained a listing of some of the significant accounting policies at Blades. She has asked you to review the policies and provide comments where the policy does not meet the IFRS requirements and what can be done to correct the policy. She has also asked you to ignore any transitional issues in your analysis and does not want you to provide any advice regarding whether the acquisition should move forward.

Background Information: Blades

Blades is a small private company located in Vancouver, British Columbia. Blades was founded in 20X2 by two men, Clarke Walker and Lee Parnes. During 20X3, Clarke passed away, and Lee put the business up for sale. Blades is a transportation company, which earns a similar level of revenue and proit as C2C.

Significant Accounting Polices at Blades

Revenue Recognition At Blades there are several revenue streams. The revenue recognition treatment for each stream is described below:

Short- Haul Customer Transportation Revenue is recognized at the point in time that the customer pays for the light.

Short- Haul Cargo Transportation

In general, the customer is required to pay for the delivery once the item is delivered to its final destination. Under most circumstances, Blades is required to air transport the goods to the destination country and then provide ground transportation from the airport to the final destination ( by truck). Once delivered, the customer is invoiced, and payment is collected within two weeks of delivery. Revenue is recognized once upon collection of the payment.

Property, Plant, and Equipment

Blades’ most significant long- term asset is its aircraft. Blades owns and operates 4 airplanes and leases 10. Blades includes the purchase price and any other costs incurred to get the aircraft ready for light in the cost of the asset with the exception of testing fees, and costs incurred to alter the aircraft to meet environmental regulations ( which are both expensed). Every five years, each aircraft requires a major overhaul. These costs are expensed as incurred. Each aircraft is depreciated on a straight- line basis over 20 years, which is reflective of the asset’s useful life.

At all times, Blades ensures that it has two extra engines on hand (as they tend to have a shorter useful life than the aircraft and will need to be replaced during the asset’s useful life.) These engines are classified as spare parts inventory, which is included in total inventory.

From time to time, Blades contacts a company to construct assets. For example, in 20X4 Blades hired a contractor to construct a new hanger to house the aircraft. At that time, all costs relevant to the construction of the asset were capitalized, with the exception of any interest costs incurred during the construction period. These costs were expensed. Blades owns a small piece of land adjacent to the airport, where it stores chemicals that are required to operate the aircraft. Due to the nature of the storage, the government requires that Blades restore the land at the end of its use. Blades has estimated it will likely incur about a million dollars of expenses to restore the land. This amount is disclosed in the notes to the Financial statements.

Required:

Prepare the requested report.