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Novak?s Steelers Inc. (MSI) is a steel manufacturing company located in Ontario. On November 1, 2018, MSI acquired land on which it constructed a facility

Novak?s Steelers Inc. (MSI) is a steel manufacturing company located in Ontario. On November 1, 2018, MSI acquired land on which it constructed a facility for steel manufacturing purposes. Since its manufacturing process produces excessive waste, the government of Ontario has imposed a requirement for MSI to clean up the property. As part of its agreement with the province of Ontario, MSI is allowed to operate on this site for only 15 years after which time MSI estimates it will need to incur $2,000,000 to clean up the site. The company?s discount rate is 5% and MSI reports under IFRS with a December 31 year-end.

1. What adjusting journal entry should MSI make to initially recognize the ARO under IFRS?

Date Account Titles and Explanation Debit Credit
November 1, 2018 Entry field with incorrect answer now contains modified data Entry field with correct answer Entry field with correct answer
Entry field with correct answer Entry field with correct answer Entry field with correct answer

2. What are the journal entries to record at year-end?

Date Account Titles and Explanation Debit Credit
December 31, 2018 Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer
Entry field with incorrect answer now contains modified data Entry field with correct answer Entry field with incorrect answer
December 31, 2018 Entry field with incorrect answer now contains modified data Entry field with incorrect answer Entry field with correct answer
Entry field with incorrect answer now contains modified data Entry field with correct answer Entry field with incorrect answer

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