A number of independent situations are set out below. 

1. Truro TV Superstore Inc. received 20 52" XZT widescreen televisions from its supplier in New York, shipped on an FOB destination basis. The contract price was US$500 each. The exchange rate on the day of receipt was US$1.00 = C$0.99. 

2. Regina Chromatography Inc.’s year-end is December 31. On November 30, 2020, it entered into a non-cancellable contract to purchase 1,000 litres of solvent at a price of $2.50 per litre, for delivery on January 5, 2021. Prior to year-end, and due to a recent glut in supply, Regina’s supplier reduced the price to $1 per litre. While solvent is an essential component in the lucrative, high-margin, chromatography business, it is a relatively low-cost component, accounting for less than 1% of the process cost. 

3. Prince Albert Amusement Inc. has a long-term loan facility with Saskabank that becomes payable on demand in the event of default. One of the loan covenants stipulates that Prince Albert will ensure that its year-end current ratio does not fall below 1.5:1. In early December, the company anticipated that its current ratio would be less than the required minimum at its year-end of December 31, 2022. Prince Albert discussed this matter with Saskabank and on December 29, 2022, the bank agreed to waive this covenant until December 31, 2023. Prince Albert’s current ratio at December 31, 2022, was 1.3:1. 

4. A customer of Red Deer Heavy Equipment Ltd. was injured on the company’s premises when a shipping crate fell on him. The injured party is suing the company for $500,000 for pain and suffering and loss of income. Red Deer’s solicitors advise that the company will almost certainly be found liable. Based on previous verdicts, counsel estimates that there is a 60% probability that the courts will award $300,000, and a 40% probability that the judgment will be $200,000. 

5. A former employee of Edmonton Bison Inc. fired for incompetence has sued the company for wrongful dismissal. The plaintiff is seeking $100,000 in damages. Edmonton’s lawyers advise that the lawsuit has a 10 to 20% probability of success and that, if successful, the plaintiff will be awarded between $10,000 and $20,000.

Required: 

For each of the above situations, assuming that the entity reports its financial results in accordance with IFRS, describe how the event should be dealt with in the financial statements of the underlined entity and explain why. Prepare all required journal entries.