Gray Corp. is a Canadian company that focuses on real estate, renewable power, and manufacturing of large infrastructure. Gray follows IFRS and has a December 31 year end. Alex Lang is the newly appointed controller at Gray. The CFO, Jaye Wilson, has asked Alex to analyze the purchases Gray has made during the year to ensure that they are properly recorded on the 2020 financial statements. Gray uses the fair value model for its investment properties. The following documents are attached:

Appendix I: Information about new purchases in 2020

Appendix II: Email from Jaye Wilson

Complete the tasks in the Excel Task file

Please read all question and fill answer in excel yellow blanks boxes only.

Appendix I: Information about new purchases in 2020 Information about new purchases in 2020 O 25 Two new office buildings were purchased: Office building #1 cost $2,000,000. Marketing, accounting, legal, and the executive's teams moved into the building in 2020. Legal costs were $50,000, repairs and maintenance costs were $15,000, and property transfer taxes were $30,000. o Office building #2 cost $1,300,000. It was purchased to rent to long-term commercial tenants and earn rental income. Legal costs were $35,000, repairs and maintenance were $15,000, and property transfer taxes were $8,000. A second production plant was purchased for $550,000 in order to accommodate the large infrastructure that Gray produces. The production plant was operational as soon as it was purchased. Vacant land was purchased for $150,000 in the North end of Halifax. Land value in this area of the city is increasing each year and Gray's plan is to hold the property for a number of years and then sell when it is offered the right price. Legal costs were $10,000 and property transfer taxes were $6,000. Appendix II: Email from Jaye Wilson Subject: Other investment properties 2021 transactions. To: Alex Lang, Controller From: Jaye Wilson, CFO Hi Alex, As you know, on January 1, 2021, Gray purchased an additional investment property that holds a manufacturing plant which Gray leases out to another company. This property was initially recorded at $1,300,000. To date, no other adjustments have been made to this account. The appraised value of this property as at December 31, 2021, is $1,280,000. The manufacturing plant has a useful life of 20 years. We also have land that had a carrying value of $85,000 as at December 31, 2020. This land had an original cost of $72,000 when purchased in 2018. On December 15, 2021, we sold this land for $92,000 because we were offered a really good price. The realtor agreed to a reduced flat rate commission of 2% of the selling price. To date this sale has not yet been recognized. Thanks, Jaye 1. M Task 1 Using the information in Appendix I, determine if the new purchases during 2020 meet the criteria to be classified as investment properties at the time of purchase. In addition, calculate the total and initial cost of the property that will be used to recognize each property Instructions: In Column B, indicate whether the item in Column A would be classified as an investment property in 2020 by selecting "Yes" or "No" from the drop-down list. In Column C, select the rationale that best explains your answer in Column B from the drop-down list. In Column D, enter the corresponding amount that would be initially classified as an investment property. Round all amounts to the nearest dollar. If the item 4 should not be classified as an investment property in 2020, enter "O". 5 A B C D 1 Item Classified as an investment property? Rationale Total amount 17 Land and office 2 18 building #1 Land and office 3 19 building #2 20 4 Production plant 21 6 Vacant land 22 Column B drop- down options Yes No Column C drop-down options Gray plans to hold this for long-term appreciation. It is owned by Gray and used for earning rental income in the short term. Gray plans to hold this for short-term appreciation. It is owned by Gray and leased out to commercial tenants. It is an owner-occupied building. The future use of the property is undetermined. Task 1 Task 2 Edy you need to edit, it's safer to stay in E F G H 9 G21 X face A B 4 Task 2 D It is now January 3, 2022. Gray holds two additional investment properties: a manufacturing plant that was purchased in 2021 and land that was 6 purchased in 2018 Alex is preparing the December 31, 2021 year-end financial statements Using Appendix II, prepare the year-end journal entries for these two 8 investment properties detailed. 10 Instructions: In Column A select the appropriate account name from the drop-down 12 list. An account name may be used once or not at all for each journal In Column B, enter the corresponding debit amount. Round all amounts 14 to the nearest dollar In Column C, enter the corresponding credit amount. Round all amounts 16 to the nearest dollar 18 . All rows in the table may not be needed to complete the journal entry. If no journal entry is needed, check the "No journal entry required' box at 20 the top of the table as your response. 21 To record year-end journal entries relating to the two investment 22 properties (land and manufacturing plant). 24 O No journal entry required 25 A B 26 1 Account name Debit amount Credit amount 27 2 283 29 4 30 5 31 6 32 7 33 8 34 Column A drop-down 35 options 36 Accumulated depreciation 37 Cash 38 Depreciation expense Gain in value of investment 39 property - Land Gal VOTUU UTTTVESTETIT 40 property - Manufacturing Gain on sale of investment 41 property - Land 42 Investment property-Land Investment property- 43 Manufacturing plant Loss in value of investment 44 property - Land LUSS T Varu UT TUTVUSTITTUTTI property - Manufacturing 45 Loss on sale of investment 46 property - Land 47 Revaluation gain/loss - OCI 48 49 Task 1 Task 2 o Ready Appendix I: Information about new purchases in 2020 Information about new purchases in 2020 O 25 Two new office buildings were purchased: Office building #1 cost $2,000,000. Marketing, accounting, legal, and the executive's teams moved into the building in 2020. Legal costs were $50,000, repairs and maintenance costs were $15,000, and property transfer taxes were $30,000. o Office building #2 cost $1,300,000. It was purchased to rent to long-term commercial tenants and earn rental income. Legal costs were $35,000, repairs and maintenance were $15,000, and property transfer taxes were $8,000. A second production plant was purchased for $550,000 in order to accommodate the large infrastructure that Gray produces. The production plant was operational as soon as it was purchased. Vacant land was purchased for $150,000 in the North end of Halifax. Land value in this area of the city is increasing each year and Gray's plan is to hold the property for a number of years and then sell when it is offered the right price. Legal costs were $10,000 and property transfer taxes were $6,000. Appendix II: Email from Jaye Wilson Subject: Other investment properties 2021 transactions. To: Alex Lang, Controller From: Jaye Wilson, CFO Hi Alex, As you know, on January 1, 2021, Gray purchased an additional investment property that holds a manufacturing plant which Gray leases out to another company. This property was initially recorded at $1,300,000. To date, no other adjustments have been made to this account. The appraised value of this property as at December 31, 2021, is $1,280,000. The manufacturing plant has a useful life of 20 years. We also have land that had a carrying value of $85,000 as at December 31, 2020. This land had an original cost of $72,000 when purchased in 2018. On December 15, 2021, we sold this land for $92,000 because we were offered a really good price. The realtor agreed to a reduced flat rate commission of 2% of the selling price. To date this sale has not yet been recognized. Thanks, Jaye 1. M Task 1 Using the information in Appendix I, determine if the new purchases during 2020 meet the criteria to be classified as investment properties at the time of purchase. In addition, calculate the total and initial cost of the property that will be used to recognize each property Instructions: In Column B, indicate whether the item in Column A would be classified as an investment property in 2020 by selecting "Yes" or "No" from the drop-down list. In Column C, select the rationale that best explains your answer in Column B from the drop-down list. In Column D, enter the corresponding amount that would be initially classified as an investment property. Round all amounts to the nearest dollar. If the item 4 should not be classified as an investment property in 2020, enter "O". 5 A B C D 1 Item Classified as an investment property? Rationale Total amount 17 Land and office 2 18 building #1 Land and office 3 19 building #2 20 4 Production plant 21 6 Vacant land 22 Column B drop- down options Yes No Column C drop-down options Gray plans to hold this for long-term appreciation. It is owned by Gray and used for earning rental income in the short term. Gray plans to hold this for short-term appreciation. It is owned by Gray and leased out to commercial tenants. It is an owner-occupied building. The future use of the property is undetermined. Task 1 Task 2 Edy you need to edit, it's safer to stay in E F G H 9 G21 X face A B 4 Task 2 D It is now January 3, 2022. Gray holds two additional investment properties: a manufacturing plant that was purchased in 2021 and land that was 6 purchased in 2018 Alex is preparing the December 31, 2021 year-end financial statements Using Appendix II, prepare the year-end journal entries for these two 8 investment properties detailed. 10 Instructions: In Column A select the appropriate account name from the drop-down 12 list. An account name may be used once or not at all for each journal In Column B, enter the corresponding debit amount. Round all amounts 14 to the nearest dollar In Column C, enter the corresponding credit amount. Round all amounts 16 to the nearest dollar 18 . All rows in the table may not be needed to complete the journal entry. If no journal entry is needed, check the "No journal entry required' box at 20 the top of the table as your response. 21 To record year-end journal entries relating to the two investment 22 properties (land and manufacturing plant). 24 O No journal entry required 25 A B 26 1 Account name Debit amount Credit amount 27 2 283 29 4 30 5 31 6 32 7 33 8 34 Column A drop-down 35 options 36 Accumulated depreciation 37 Cash 38 Depreciation expense Gain in value of investment 39 property - Land Gal VOTUU UTTTVESTETIT 40 property - Manufacturing Gain on sale of investment 41 property - Land 42 Investment property-Land Investment property- 43 Manufacturing plant Loss in value of investment 44 property - Land LUSS T Varu UT TUTVUSTITTUTTI property - Manufacturing 45 Loss on sale of investment 46 property - Land 47 Revaluation gain/loss - OCI 48 49 Task 1 Task 2 o Ready