Question $1(10$ marks$)$

Heavy Metals Inc. developed a new iron mine on January $5,2022.$ They are required by provincial law to restore the site to its previous condition once mining operations are completed. The company estimates that the mine will close in $30$ years and that the land restoration will cost $$15,000,000.$ They use a $6\mathrm{.}5\%$ discount rate, and they use IFRS.

Required

Complete the following with the details provided above. All questions requiring time value of money calculations should be done using a financial calculator.

Provide the January $5,2022$ journal entry to record the asset retirement obligation. $(4$ marks$)$

Record the December $31,2022$ year$-$end adjusting entries. $(6$ marks$)$

Question $2(20$ marks$)$

Gong Corporation issued a $$600,000,3-$year, non$-$interest$-$bearing note payable to Billings Corp. for April $30,$ Year $5$ to purchase equipment. Gong Corporation would normally pay interest at $7\%,$ they have a December $31$ year end, and they will repay the note with three equal yearly payments. Gong Corporation follows IFRS.

Required

Provide the journal entries for Gong Corporation, the debtor. Remember to use a Word table and correct journal entry format for all your journal entries. Round journal entry amounts to the nearest dollar. Round interest to the nearest full month. This question is easier to do if you make an amortization table in Excel. You do not need to provide an amortization table.

Complete the following journal entries with the details provided above.

Record the note

December $31,$ Year $5$ interest accrual

April $30,$ Year $6$ payment

December $31,$ Year $6$ interest accrual

April $30,$ Year $7$ payment

Question $3(20$ marks$)$

South Ltd$.$ sells televisions for $$2,500$ each, which includes a $3-$year assurance$-$type warranty that requires the company to perform periodic services and to replace defective parts. During Year $6,$ South Ltd$.$ sold $900$ televisions for cash. Based on experience, the company has estimated the total $3-$year warranty costs to be $$80$ per television. Assume sales all occur on December $31,$ Year $6.$ During Year $7,$ South Ltd$.$ incurred assurance warranty costs relative to Year $6$ television sales of $$24,000.$

South Ltd$.$ also sells a $6-$year extended warranty for $$420.$ Warranty expenditures are assumed to be zero in the first $3$ years since the assurance$-$type warranty covers these repairs. Then, warranty expenditures are spread evenly over the final $3$ years.

Of the $900$ televisions sold in Year $6,$ half the customers purchased the extended warranty. South Ltd$.$ recognizes extended warranty revenue each year. During Year $10,$ South Ltd$.$ incurred $$35,000$ in warranty costs related to the Year $6$ television sales and the extended warranty. South Ltd$.$ follows IFRS.

Required

Complete the following with the details provided above.

Prepare the entries for the sale of the televisions, including both warranties.

Prepare the entry for Year $7$ warranty costs. Use a date of May $30.$

Prepare the Year $10$ entry for the warranty costs using a date of May $30,$ and prepare the Year $10$ adjusting entry for the extended warranty December $31.$

Question $4(30$ marks$)$

On June $30,2022,$ Andalusian Inc. issued $$1,000,000$ in bonds. The bonds pay interest twice a year on December $31$ and June $30,$ mature in $10$ years, and have a coupon rate of $5\%.$ They were sold to yield $4\mathrm{.}8\%.$ Andalusian Inc. follows IFRS. On September $30,2023,$ Andalusian Inc. repurchased $40\%$ of the bonds. At that time, the bonds were selling at $101.$

Required

Prepare all journal entries related to the bonds up to and including the retirement of $40\%$ of the bonds on September $30,2023.$ Show calculations for possible partial marks. Round all values to the nearest dollar.

Question $5(20$ marks$)$

Respond to the accounting situations below. Prepare the journal entries as required.

For each situation, fully discuss the correct accounting treatment, including any required disclosures. Provide an explanation for your answers. A reasonably thorough answer would be $50$ to $70$ words in length.

Required

Consolation Corporation follows IFRS. Complete the following with the details provided.

Consolation Corporation has been in contract negotiations with its union for over a year. On February $10,$ Year $9,$ the union is asking for a $7\%$ increase retroactive to Year $8,$ and $3\%$ per year for Year $9$ and the next two years. Consolation Corporation is offering a $3\%$ increase retroactive to Year $8$ and $2\%$ thereafter. The negotiating team believes that the eventual settlement will be for a $5\%$ retroactive increase for Year $8$ and then $2\%$ thereafter.

During Year $8,$ Consolation Corporation was sued for $$2,500,000.$ The plaintiff is alleging breach of contract, and defense counsel believes an unfavourable outcome is more likely than not. A reliable measurement of the award to the plaintiff is between $$600,000$ and $$1,800,000.$

During Year $8,$ Consolation Corporation sued another company. The corporation$$s legal counsel believes it is likely that Consolation Corporation will be awarded damages