Fassbender Inc. has just started a small corporation that buys and sells booths for trade shows across Canada. The bank has lent Fassbender $50,000 and needs the 2022 financial statements to determine whether they will renew the loan. Fassbender will prepare the financial statements on his own, as there are not that many transactions. Fassbender Inc.s shares do not trade on the stock exchange. Booths can be sold for anywhere between $20,000 to $200,000.

Fassbender Capital. 50,000

Bank Loan 50,000

On September 15th Aurora Inc. signed a contract with Fassbender Inc. for a booth and set up. The cost of the booth $80,000 and a selling price for the booth and set is $120,000. On September 25th Aurora Inc. paid $25,000 to secure the delivery of the booth. On October 20th Fassbender Inc. delivers the booth to Aurora Inc. with terms FOB shipping point. On November 1st Aurora Inc. is supposed to pay Fassbender Inc. the balance due. Fassbender Inc. sets up the booth on November 5th. On November 10th Fassbender Inc. received the money for setting up the booth. The estimated fair value to set up the booth is $2,500. The estimated fair value of the booth is $122,500.

On November 1st Aurora Inc. informs Fassbender Inc. that they will be not be able to pay their account that is due. The two parties enter into an agreement that the account will be converted into a non-interest bearing promissory note to be repaid in one year from now. Fassbender Inc. borrows fund at a rate of 4%. Aurora Inc. has various loans at 6% interest. The companys year end is December 31st.

A. Which GAAP should Fassbender Inc use? Support your answer. (2 marks)

B. Name two key stakeholders of the company and what their objectives are (4 marks)

C. From an ethics point of view, explain any concerns you may have or that might arise with this case, (4 marks)

D. List all the performance obligations? (2 marks)

E. Explain when the revenue should be recognized for each performance obligation assuming the company uses ASPE. Support your answer by explaining why it should be recognized at the time you selected. Be sure to use GAAP to support your answer. (6 marks)

F. Prepare the journal entries for 2022 and 2023. If there is no entry be sure to state no entry. In your answer do not use the discount on notes account. (17 marks)

G. If the company followed IFRS use the 5 step approach and apply each step to the question? (5 marks)