GlazWorkz International [GWI], Inc., manufactures and supplies glass products for industrial and consumer users all over North America. It set up a new plant costing $37.5 million in Sherbrooke, Quebec on January 1, 2011. Serious concerns for adverse environmental impact had been raised throughout the province. The company hastened to address all of these and assured the community at large that it would take effective measures to minimize all such environmental damages and would eventually restore the site to its natural state. It agreed to bear all costs, both ongoing and future, in order to meet these objectives. The company estimates that it will operate the plant for 25 years acommencing January 1, 2011. GWI uses IFRS, a fiscal year ending December 31 and records all restoration costs to Plant Assets.

All assets are amortized on a straight line basis and on December 31, 2011, it correctly prepared the following journal entry to record the depreciation on its Sherbrooke plant for 2011:

Depreciation expense $1,938,060

Accumulated Amortization - Plant $1,938,060

It also records the interest expense for 2011 as follows:

Interest Expense $876,120

Asset Retirement Obligation

[31] Determine the amount recorded by GWI on January 1, 2011, for the restoration of the property in the future.

a.$10,951,500.

b.$273,787,500.

c.$1,599,138.

d.

$39,978,450.

e.

None of the above.

[32] Determine the annual interest rate used by GWI to discount the future cost of restoration.

a.2% per annum.

b.0.32% per annum.

c.14.6% per annum.

d.

4% per annum.

e.

None of the above.