Section 2 Answer four problems from the 5 marks) Section 2-Problem 1 (5 marks): Due to a recent boom in the demand for sheds, Mike's Sheds Inc. has decided to expand to Gander. He has narrowed down his search to three buildings in the area, and wants to select the one most financially advantageous. His alternatives are: Roe Avenue-purchase price of $600,000 cash, and a useful life of 25 years Magee Road-lease for 25 years for $59,000 per year, with payments due at the beginning of each year (i.e. the first payment is due upon signing) McCurdy Drive-purchase for $659,000 cash, and a useful life of 25 years. The building is larger than Mike needs, so he can sublet part of the building for $7,800 per year, payable at the end of each year. Mike doesn't anticipate any vacancies in the rent income. Assuming Mike's interest rate for funds is 10%, which building should he acquire? Be sure to show all your present value calculations to support your recommendation. Section 2-Problem 2 (5 marks): On November 1, 2021 Mike's Sheds Inc. - Aviation Division sold one of its planes, the Plywood Pelican, to Lucky Airlines for $1,200,000. The purchase includes a testing and commissioning contract valued at $250,000. The Plywood Pelican, without a testing and commissioning contract, normally sells for $1,100,000. Lucky agreed to pay $100,000 upfront (on Nov 1), and the remainder upon delivery of the plane on Dec 1. The testing and commissioning was completed on Dec 10. Prepare all the journal entries for Mike's Sheds Inc. for this transaction. Ignore the COGS. Section 2 - Problem 3 (5 marks): Expecting substantial growth in sales of the Plywood Pelican, Mike's Sheds Inc. - Aviation Division invested heavily in wooden propellers. Luckily for Mike, wooden propellers caught on in Belgium as a lawn ornament. To spur sales, Mike had to offer customers an unconditional right to return the propellers within 3 months of purchase if they are not fully satisfied. On September 1, 2021 Mike sold 50 propellers at $500 each, terms 1/15, n45. Each propeller cost Mike $300. Based on prior experience, Mike expects 20% to be returned. Prepare the journal entry to record the sale. Mike's Sheds Inc. follows IFRS.