| | Problem 13-4 Sheffield Corp., a leader in the commercial cleaning industry, acquired and installed, at a total cost of $109,700 plus 15% HST, three underground tanks to store hazardous liquid solutions needed in the cleaning process. The tanks were ready for use on February 28, 2020. The provincial ministry of the environment regulates the use of such tanks and requires them to be disposed of after 10 years of use. Sheffield estimates that the cost of digging up and removing the tanks in 2030 will be $29,510. An appropriate interest or discount rate is 5%. Sheffield also manufactures commercial cleaning machines that it sells to dry cleaning establishments throughout Nova Scotia. During 2020, Sheffield sold 20 machines at a price of $11,920 each plus 15% HST. The machines were sold with a two-year warranty for parts and labour. Similar warranty agreements are available separately and are estimated to have a stand-alone value of $969. Sales in 2020 occurred evenly throughout the year. Any revenue related to the warranty agreements is assumed to be earned evenly over the two-year contract term as follows: 2020, 25%, 2021, 50%, and 2022, 25%. Sheffield estimates the total cost of servicing the warranties will be $11,181 over the two-year contract term. Sheffield incurred actual warranty expenditures of $2,898 in 2020. Answer the following, assuming Sheffield follows IFRS and has a December 31 fiscal year end. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. | | | | | Assuming straight-line depreciation and no residual value for the tanks at the end of their 10-year useful life, what is the balance in the asset Storage Tanks account, net of accumulated depreciation, at December 31, 2020? (Round answer to 0 decimal places, e.g. 5,275. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) | Storage Tanks account, net of accumulated depreciation | | $ | | | | | | What is the balance of the asset retirement obligation liability at December 31, 2022, assuming there has been no change to the estimate of the final cost of disposal? (Round answer to 0 decimal places, e.g. 5,275.) | Asset Retirement Obligation | | $ | | | | | | | Determine the balance of the warranty-related liability that would be reported on the December 31, 2020 SFP. Ignore HST and assume that Sheffield uses the service-type approach to account for warranties. | | | | | | Determine the warranty expense that would be reported on Sheffields 2020 income statement. | | | | | Sheffield has been permitted to file its HST return on December 31 each year and either send a cheque or request a refund on this date. Assuming there are no other HST transactions during the year, will Sheffield be sending a cheque or requesting a refund on December 31, 2020? | Sheffield will request a refundsend a cheque . | What will be the amount of the cheque paid or refund claimed? | | | | | | Question Attempts: 0 of 5 used | | SAVE FOR LATER | SUBMIT ANSWER | | | | |
