Winter Fun Incorporated (WFI) has been operating since the 1990s. It owns and operates over 25 ski clubs across Canada. WFI also owns and operates ski shops where customers can rent or buy ski equipment.
WFI has a bank loan with Relink Bank. WFI had a tough year in 20X5 with its first-ever loss of $400,000 due to low snowfall and resultant lower-than-normal guest revenues. WFI needed to increase its financing with the bank and now the bank requires a minimum current ratio to be maintained.

You have recently been hired as an accounting consultant to assist WFI’s board of directors. You have been asked to advise on the appropriate accounting treatment for events that have occurred during 20X5. The board has asked that you explain fully your analysis for your recommendations and quantify wherever possible. WFI has a 31 December year-end. The incremental borrowing rate for WFI is 8%. WFI uses IFRS for financial reporting.
1. WFI’s ski clubs are very popular and have a wait list for memberships. Potential members can pay a $500 nonrefundable fee to obtain a spot on the wait list for a membership. The average time on the wait list is three to five years. Once a membership spot becomes available, the $500 is deducted from the initiation fee. Members are required to pay a $10,000 initiation fee to join the club. In addition, they pay an annual fee of $2,000, which is due 1 September for the following ski season. Members can bring guests to the club. They make a reservation for the guest. The guests pay by credit card on the day they ski. If a guest does not show up, the member is charged the fee.
2. In the summer of 20X5, WFI offered two special promotions to try to increase guest revenue. The first was that guests can buy a special pass for a flat fee of $100, which includes a ski pass for the day and a free lesson for any time within the next year. The cost of the ski pass on its own is $80 and the cost of the lesson is $50 on its own. The second was that WFI distributed 200 coupons in the surrounding area for $5 off a lift pass.
3. WFI purchased a new high-speed chair lift in 20X5. The manufacturer of the lift offered a 0% loan as an incentive to purchase. The lift cost $2.5 million and the loan is due in two years.
4. In 20X5, a guest slipped on ice and was injured in the parking lot of the ski club. The guest sued WFI for damages. Lawyers for WFI say the case has no merit based on past lawsuits. The board has decided to settle the lawsuit to avoid negative publicity. The estimated range for the payment is between $200,000 and $300,000.
5. WFI offers a lifetime warranty on ski equipment it sells at its ski shops. The warranty is not sold separately. Skiing can be dangerous and faulty equipment can result in injury, and in extreme cases death. WFI’s skis are therefore of very high quality and WFI has had very few warranty costs historically. WFI does not record a warranty provision and if and when any skis are serviced or replaced, WFI records an expense.
6. In 20X5, WFI installed new gasoline storage tanks at a number of its resorts. WFI decided to store gas at the ski hill, which is more convenient. The gas is used to operate trucks,
snowmobiles, and equipment to groom the ski hills. The cost to purchase the tanks was $10 million. Government legislation requires that these tanks be replaced in 15 years. The
estimated cost to remove and replace the tanks is $2.5 million. 

7. WFI purchased inventory for one of its ski shops from a U.S. supplier on 4 November 20X5 for US$150,000 with payment due in 30 days. WFI paid the supplier on 28 November
20X5. Relevant Canadian equivalencies include: purchase date: US$1.11 and payment date US$1.19.
8. WFI permits employees to earn 15 fully paid vacation days each year. Previously, unused vacation time was lost. As of 20X5, unused vacation time can be carried over to the next year. By the end of 20X5, seven employees had not taken a portion of their earned vacation days. All of these employees earn a wage of $22/hour and a regular work day is considered 7.5 hours. Seven employees had not used 11 days each and fourteen employees had not used 9 days each. WFI has not recorded anything related to the unused vacation time.

Required:
Take the role of the accounting consultant and prepare the requested report for the board of directors.