Corin Biotech Ltd. (CBL) started operations in January 2020. CBL reports under IFRS and uses the Cost Model, not the Revaluation Model. The following activities occurred during the year: 1. On January 31, 2020, the shareholder, John Ahaz, contributed a parcel of land, located in Burnaby, in return for 1,000 common shares. The land's appraised value was $100,000. The value of the common shares is unknown. 2. During the year, John hired several employees to conduct research and development. The following amounts were expended during the year: $88,200 for conceptual formulation and design of possible new products. $110,000 for evaluation of product alternatives. Of the $110,000 of expenditures, $77,000 were attributable to a clearly defined product, Product X, which is technically feasible. Management has indicated its intention to produce and market the product. The future market for the product is clearly defined and John is convinced that he can do an initial public offering to raise enough money to complete the product for sale. Product X is expected to begin generating revenue early next year. 3. On July 1, 2020, CBL paid $80,000 to acquire a machine from a Kelowna company. To deliver the machine to Vancouver, the CBL paid the delivery company $3,150, including GST. Still on July 1, CBL paid an engineer $900 to install the machine. 4. On November 30, 2020, CBL decided to exchange its Burnaby land for a parcel of land located in Vancouver. The appraised value of the Vancouver land was $136,000 while the appraised value of the Burnaby land was unknown. CBL paid $15,000 as part of the transaction. The transaction lacks commercial substance. 5. On December 1, 2020, CBL paid $400 to repair a broken lamp on the machine. At the same time, CBL paid $2,200 to make the machine more efficient, which would save fuel costs in the future. Assume that CBL depreciates the machine on a straight-line basis over 5 years, prorated monthly. The residual value of the machine is expected to be $1,040. REQUIRED 1. Prepare all of the relevant journal entries for the above activities. Your entries should include any relevant adjusting journal entry(ies) at December 31, 2020, CBL's year-end. 2. Reproduce the following table in your answer. Complete the table with the applicable account balances: Amount ($) Balance Sheet accounts as of December 31, 2020 Machine Accumulated Depreciation - Machine Deferred Development Costs Burnaby Land Vancouver Land CIS accounts for the year ended December 31, 2020 Research Expense Development Expense Depreciation Expense - Machine Other comprehensive income (loss) 3. What is meant by commercial substance" as it pertains to non-monetary transactions? 4. Assume that for item #4 of the given information, CBL entered the transaction as previously described but the transaction was considered to have commercial substance. What would be the appropriate journal entry
