Nolan Simulation - Simulation (20 minutes) Popular Props Ltd. (PPL) is a privately owned business that provides costume pieces, set design, and other props to the film industry in Vancouver. Given significant growth over the past three years, the company identified a need for additional space to store its props between filming contracts. As a result, PPL entered into an agreement with Storage-4-U Inc. for additional warehouse space starting on January 1, 2021. PPL follows ASPE for reporting purposes. VE The following documents are attached: DO Appendix I: Email from the PPL chief financial officer beste Appendix II: Excerpts from agreement with Storage-4-U Complete the tasks in the Excel Task file. o no es Page 1/3 Intermediate Financial Reporting 2-Unit 1-Task-Based Simulation #1 Simulation Appendix I: Email from the PPL chief financial officer Subject: Storage-4-U Agreement TO: FROM: , , I have provided excerpts from the new agreement with Storage-4-U for the analysis of the appropriate accounting treatment (Appendix II). I also reached out to a building appraiser regarding the warehouse space to obtain additional information. They informed me that the fair value of the warehouse is currently estimated at $1,575,000 and that the expected value of the warehouse on December 31, 2030, is $130,000. They also noted that a warehouse of this style and age is expected to have 15 years of operation before significant repairs and maintenance would be required. I also spoke with our bank and confirmed that our borrowing rate remains at 6%. Regards, Chief Financial Officer, PPL Page 2/3 Simulation Intermediate Financial Reporting 2 -- Unit 1 - Task-Based Simulation #1 Appendix #: Excerpts from agreement with Storage-4-0 AGREEMENT WITH STORAGE-4-U THIS LEASE AGREEMENT is made effective as of the 1" day of January 2021 between: Storage-4-U Inc. (the "lessor") and Popular Props Ltd. (the "lessee") LEASE TERM The term of the lease will be 10 years from the effective date of this agreement. LEASE PAYMENTS Monthly lease payments will be made in the amount of $16,000, with payments due on the 1 day of each calendar month. The first payment is due on January 1, 2021, at the commencement of the lease. PURCHASE OPTION If, at the termination date of this lease agreement, the lessee wishes to purchase the leased warehouse, the lessee may do so at a price of $135,000. Page 3/3