1.The Sunwapta Sports Association is an NFPO. It commenced operations on December 1, 2020. Its purpose is to provide sports activities, training, transportation, and facilities for children and youth in a rural Canadian municipality. It had a small amount of activity during 2020. At December 31, 2020, its statement of financial position was as follows:

Current Assets Cash$7,000Current Liabilities Deferred contributions5,000Net Assets Operating fund2,000$7,000

The deferred contributions at December 31, 2020 will be used to cover 2021 operating expenses. The following events occurred during 2021.

• On January 1, 2021, Donor A contributed $2,500,000 cash to the association. The terms of the contribution stipulated that the amount may be used to purchase land and buildings for sports facilities. Any remainder must be invested. The interest earned can be used to subsidize future capital fund purchases.
• A director and two staff were hired on January 1, 2021.
• On January 1, 2021, land and buildings were purchased for $1,000,000 cash. The building was valued at 80 percent of the purchase price. It will be depreciated over 40 years on the straight-line basis. It has no residual value. No capital purchases are planned for the next several years.
• $1,500,000 of Donor As donation has been invested in guaranteed investment certificates. No interest has been paid in 2021. At December 31, 2021, $60,000 of interest revenue has accrued.
• A $225,000 grant from the province was received on August 31. One-half of this is 2021 revenue. The other half is 2022 revenue.

The director has provided a schedule of cash receipts and disbursements for the year ended December 31, 2021 as follows:

Receipts Donation donor A$2,500,000 Grant province225,000$2,725,000Expenses Land and buildings1,000,000 Salaries and benefits48,000 Transportation20,0001,068,000Excess of receipts over disbursements1,657,000Cash and cash equivalents at start of year7,000Cash and cash equivalents at end of year$1,664,000Represented by Cash in bank$164,000 GICs1,500,000$1,664,000

Required:

a. Prepare a statement of operations and statement of changes in net assets for the year ended December 31, 2021 and a statement of financial position at December 31, 2021. Assume the restricted fund method is used and separate funds are maintained for operating and capital funds. (25 marks)

b. Repeat the instructions in a., assuming the deferral method and the same two funds. (15 marks)