CullumberEquipment Ltd. wanted to expand into New Brunswick and was impressed by the provincial government's grant program for new industry. Once it was sure that it would qualify for the grant program, it purchased property in downtown Saint John on June 15, 2020. The property cost $237,000andCullumberspent the next two months gutting the building and reconstructing the two floors to meet the company's needs. The building has a useful life of 20 years and an estimated residual value of $64,800. In late August 2020, the company moved into the building and began operations. Additional information follows:

1- The property was assessed at $200,000, with $164,000allocated to the land.

2- Architectural drawings and engineering fees related to the construction cost $18,200.

3- The company paid $18,800to the contractor for gutting the building and $107,000for construction.Cullumberexpects that these improvements will last for the remainder of the life of the building.

4- The provincial government contributed $78,000toward the building costs.

Assuming that the company uses the cost reduction method to account for government assistance, answer the following:

1- What is the cost of the building onCullumberEquipment's statement of financial position at August 31, 2020, its fiscal year end?

Cost of Building = 108660 or 186660. both are correct

2- What is the effect of this capital asset on the company's income statement for the company's year ended August 31, 2021?

Net effect on income statement= 2193, -2193, 6093, -6093. All are correct

Assuming the company uses the deferral method to account for government assistance, answer the following:

1- What is the cost of the building onCullumberEquipment's statement of financial position at August 31, 2020?

Cost of Building= ?$ 108660 is not a correct answer.

2- What is the effect of this capital asset on the company's income statement for the company's year ended August 31, 2021?

Net effect on income statement= 2193, -2193, 6093, -6093. All are correct

Compare the statement of financial position and income statement presentations for the two alternative treatments for government assistance for the fiscal year ended August 31, 2021.

Cullumber Equipment Ltd. (Partial) Statement of Financial Position August 31, 2021 $ Cullumber Equipment Ltd. (Partial) Income StatementDeferral Method: Cullumber Equipment Ltd. (Partial) Statement of Financial Position $ $ Cullumber Equipment Ltd. (Partial) Income Statement\fOperating Income Net Income / (Loss) Operating Expenses Other Expenses Other Revenues Gross Prot/(Loss) Cullumber Equipment Ltd. (Partial) Income Statement Cullumber Equipment Ltd. ial) Statement of Financial Position Cullumber Equipment Ltd. (Partial) Income Statement to D Revenue - Government Grants Depreciation Expense Selling Expenses ber Equipment Ltd. ment of Financial Position Interest Revenues Interest Expense Office Equipment Expense Gain on Sale of Building VTotal Shareholders' Equity Current Assets Long-Term Investments Current Liabilities Total Intangible Assets Total Current Liabilities Short-Term Investments Intangible Assets Total Assets Shareholders' Equity Total Current Assets Total Property, Plant and Equipment Property, Plant and Equipment Total Liabilities and Shareholders' Equity v nent Ltd. Cash Accounts Receivable Buildings Machinery Accumulated Depreciation Land Equipment Common Shares Notes Payable Deferred Revenue - Government Grant Accounts Payable