Part A

Flower Corp.s controller was preparing the adjusting entries for the companys year ended December 31, 2020, when the V.P. Finance called him into her office. Jean-Pierre, she said, Ive been considering a couple of matters that may require different treatment this year. First, the equipment we acquired in early January 2018 for $591,000 will now likely be used until the end of 2022 with a salvage value of $179,000. We previously thought that wed use it for 10 years in total with a salvage value of $142,000. Weve been using straight-line amortization on the equipment." Second, I just discovered that the property we bought on July 2, 2017, for $266,600 was charged entirely to the Land account instead of being allocated between Land ($62,600) and Building ($204,000). The building should be of use to us for a total of 20 years. At that point, itll be sold and we should be able to sell the building for at least $49,800. Please let me know how these changes should be accounted for and what effect they will have on the financial statements. Flower Corp. follows IFRS. Answer the following, ignoring income tax considerations and assuming that the company has not previously reported quarterly results.

Assuming that no amortization has been recorded as yet for the equipment for 2020,

prepare the entries required in 2020 to correct the books. Ignore income taxes. Show any calculations.

Part 2

PlayLand Ltd.

Comparative Balance Sheet

December 31,2021

	2021	2020
Cash	78,000	85,000
Trading Securities (money market fund with a 30-day maturity)	10,000	5,000
Accounts Receivable	220,000	148,000
Allowance for Doubtful Accounts	(10,000)	(8,000)
Inventories	260,000	220,000
Land	325,000	200,000
Building & Equipment	580,000	633,000
Accumulated Amortization: Building & Equipment	(90,000)	(100,000)
Patents	30,000	33,000
	1,403,000	1,216,000
Accounts Payable	260,000	200,000
Accrued Salaries and Wages	200,000	210,000
Income Taxes Payable	140,000	100,000
Long-Term Bonds Payable	130,000	180,000
Common Shares	483,000	380,000
Retained Earnings	190,000	146,000
	1,403,000	1,216,000

Playland Ltd.

Income Statement

Year ended December 31, 2021

Sales		1,000,000
Less: Cost of Goods Sold		560,000
Gross Profit		440,000
Less: Operating Expenses
Salaries and Wages Expense	190,000
Amortization Expense: Building & Equipment	20,000
Amortization Expense: Patent	3,000
Bad Debt Expense	5,000
Other Expenses	3,000
Interest Expense	16,000
Loss on sale of equipment	4,000	241,000
Income before income taxes		199,000
Income tax expense		90,000
Net Income		109,000

Required:

Prepare the operating section of the Cash Flow Statement for PlayLand Ltd. for the year ended December 31, 2021 using either the indirect OR the direct method.