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Kirkland Farms Inc. (KFI) is a private company that prepares its financial statements in accordance with ASPE. KFI is a family owned farm, located in southern Ontario. The controller has recently left for a competitor. KFI has a December 31, 2020 year-end, and its bookkeeper has prepared draft financial statements for 2020 that include the following items: 1. In January 2019, KFI entered into a five-year fixed-price contract for hay to protect against market fluctuations. As at December 31, 2020, the market price of hay declined significantly. The expectation in the industry is that the price will remain at this reduced level into the foreseeable future. On December 7, 2020, KFI triggered the cancellation clause that allows them to get out of the contract for $50,000. The payment was made and expensed on January 15, 2021. 2. KFI has determined that they need to generate more recognition within the industry. To generate this brand awareness KFI launched an advertising campaign which ran throughout the summer of 2020. The total costs of the advertising campaign were $150,000. The bookkeeper capitalized the costs and will not amortize them on the basis the benefit of the advertising will be realized indefinitely 3. KFI hosts weddings at the farm. During the year, KFI began to collect deposits which are required six months prior to customers' wedding dates. The deposits are to hold the date and are applied against the rental fee and other costs when the wedding occurs. The weddings are non-cancellable. The deposits have been recorded in revenue. As at year-end, there was $75,000 in deposits relating to weddings which will take place in 2021. Instructions: You have just been hired to take over from the former controller. For each of the situations above: (a) (i) State whether you AGREE or DISAGREE with the accounting treatment proposed by the bookkeeper (ii) explain why based on your understanding of the definition of an element (such as asset or liability) under the Conceptual Framework (CF) and (iii) discuss each issue based on one other aspect of the CF (that is, a qualitative characteristic or Foundational Principle of the CF). (You are encouraged to use point form for your answer) (3 marks per issue x 3 = 9 marks) (b) Provide the correcting journal entry required to be made to RPFL's 2019 financial statements (if any). (2 marks per issue x 3 = 6 marks) Kirkland Farms Inc. (KFI) is a private company that prepares its financial statements in accordance with ASPE. KFI is a family owned farm, located in southern Ontario. The controller has recently left for a competitor. KFI has a December 31, 2020 year-end, and its bookkeeper has prepared draft financial statements for 2020 that include the following items: 1. In January 2019, KFI entered into a five-year fixed-price contract for hay to protect against market fluctuations. As at December 31, 2020, the market price of hay declined significantly. The expectation in the industry is that the price will remain at this reduced level into the foreseeable future. On December 7, 2020, KFI triggered the cancellation clause that allows them to get out of the contract for $50,000. The payment was made and expensed on January 15, 2021. 2. KFI has determined that they need to generate more recognition within the industry. To generate this brand awareness KFI launched an advertising campaign which ran throughout the summer of 2020. The total costs of the advertising campaign were $150,000. The bookkeeper capitalized the costs and will not amortize them on the basis the benefit of the advertising will be realized indefinitely 3. KFI hosts weddings at the farm. During the year, KFI began to collect deposits which are required six months prior to customers' wedding dates. The deposits are to hold the date and are applied against the rental fee and other costs when the wedding occurs. The weddings are non-cancellable. The deposits have been recorded in revenue. As at year-end, there was $75,000 in deposits relating to weddings which will take place in 2021. Instructions: You have just been hired to take over from the former controller. For each of the situations above: (a) (i) State whether you AGREE or DISAGREE with the accounting treatment proposed by the bookkeeper (ii) explain why based on your understanding of the definition of an element (such as asset or liability) under the Conceptual Framework (CF) and (iii) discuss each issue based on one other aspect of the CF (that is, a qualitative characteristic or Foundational Principle of the CF). (You are encouraged to use point form for your answer) (3 marks per issue x 3 = 9 marks) (b) Provide the correcting journal entry required to be made to RPFL's 2019 financial statements (if any). (2 marks per issue x 3 = 6 marks)