APPENDIX II

ACCOUNTING ISSUES $$ YEAR ENDED DECEMBER $31,2021$

New International Terminal

During the year, PA constructed a new terminal to allow the airport to offer flights to international destinations. As a result of these activities, PA accounting staff has capitalized $$46,907,000$ in attributable costs, as outlined below.

$\backslash$table$[[$Cost Component,Amount,Description$],[$Land preparation,,$\backslash$table$[[$Preparing the land upon which the terminal would be$],[$built$,$such that it was within code for airport$],[$operations$,$ fuel$],[$storage$,$ etc.$]]],[$Professional fees,$$600,000,$Architectural and engineering fees$],[\backslash$table$[[$Advertising and$],[$promotion activities$]],$$$,78,000,\backslash$table$[[$Advertising in local newspapers to educate the public$],[$onhow their airport improvement fees were being spent$]]],[\backslash$table$[[$Staff time for$],[$working on the$],[$project$]],$$$,383,000,\backslash$table$[[$Employee salaries and benefits attributable to the$],[$property$,$ allocated using timesheets. Includes$],[$$$100,000$ for the fair value of share$-$based payments$],[$with a three$-$year vesting period$]]],[$Interest costs,$$,140,000,\backslash$table$[[$Interest costs related to borrowings used to help$],[$finance operations as a result of the strain on cash flow$],[$caused byconstruction of the terminal$]]],[$Building costs,$$45,328,000,\backslash$table$[[$Costs of materials and construction labour to build$],[$theterminal$]]],[$Training costs,$28,000,\backslash$table$[[$Salary and benefits of the terminal manager for time$],[$spenttraining employees on new systems$]]]]$

On November $1,2021,$ the terminal was substantially complete and PA began servicing international routes.

Events after December $31,2021$

On January $21,2022,10$ jetbridges for the new international terminal were lost in a fire. The fire was due to faulty electrical work. The cost of reconstructing these jetbridges, minus what the insurance company will cover, will be $$8\mathrm{.}4$ million.

At year$-$end, we accrued $$250,000$ in architecture fees for the new international terminal; however, due to out$-$of$-$scope billings, the architecture firm has since submitted an invoice totalling $$400,000.$