Marston Dairy Limited Marston Dairy Limited (Marston) is a dairy company operating in the Kawartha Region. The companys founder, Karen Marston, owns 70 percent of the shares. Three other private individuals, who have very little involvement in operating decisions, each own 10 percent. Marston produces milk, yogurt, ice cream, etc. that it sells through grocery stores and chains throughout Ontario. Over the years, labour and management have had a taxing relationship. Over the past ten years, the union representing Marstons employees have made significant wage concessions to avoid job losses. In the last contract negotiations, Marston and the union agreed that the union would have access to the companys financial statements. The upcoming negotiation will be the first time the union will receive the financial statements. You have been hired by the union representing Marstons employees to prepare a report on how to account for a number of controversial issues that arose on the unions review of Marstons December 31, 2021 financial statements and its preliminary discussions with Marstons management. The union will use your report in its assessment of Marstons financial position and performance, and its ability to pay higher wages and benefits to employees. Up until now, the company has followed ASPE, however, the union leader has asked whether IFRS would be more beneficial for the employees. The union leader has asked for your report to fully explain your recommendations, discuss arguments that Marstons management might use to counter your recommendations, and identify and discuss alternative treatments that Marston might present for the outstanding issues: 1. In September 2021, Marston signed an agreement with a health organization that provided its seal of approval on certain products. The seal of approval provides assurance to consumers that the products meet the health standards of the organization and allows Marston to use the health organizations logo on the products. As part of the agreement, Marston donated $350,000 to the health organization. The amount was paid in October 2021. Marston is allowed to use the seal of approval for four years. Marston expensed the amount when it paid the health organization. 2. In November 2021, the company stopped using one of its manufacturing facilities. Marston plans to put the facility up for sale in early 2022 in order to capture the spring market. Marston has hired an agent to list the facility and has tentatively set a price of $4,100,000 less a 5% commission. Since the facility is no longer in use, the property has been classified as a current asset that is held for sale using the carrying value of $3,900,000 (Cost: $5,000,000, less accumulated depreciation $1,100,000).

3. On December 31, 2021, Marston shipped a large order of $100,000 to a customer. Normally, Marston recognizes revenue on delivery (FOB Destination point) to the customer. The goods shipped werent included in the year-end inventory count. Marston uses a periodic inventory control system. The goods were delivered on January 2, 2022. 4. Early in 2021, some significant repairs were completed on the processing equipment. As a result of the changes, the equipment is now likely going to be able to produce double the amount of ice cream and other products. Marston expensed the $150,000 in repairs. 5. In early January 2022, one of Marstons largest customers went out of business. Marston doesnt expect to collect any of the $55,000 its owed.

Required: Provide the report to the head of the union.

Analysis: For each issue, you should attempt to apply the CPA Way, including: - Assess the Situation - Analyze Major Issues - Conclude & Advise In coming up with a solution you should recognize that not every problem has a definite solution. Accounting decisions often require judgement and interpretation of facts. Before coming up with THE correct answer, consider the context (and discuss this in your response) - Who are the key users in the situation? What are their objectives? - Who are you and what are you trying to do? - What is the GAAP? - Are there any limitations on what you can do based on your role? If there are, what are they?