Solarium Inc. (SI) is a public corporation incorporated in 2014. SI operates a professional soccer team and related activities. New bank financing was obtained in 2021 for the construction of a new stadium. The bank requires annual audited financial statements and SI has a covenant with a maximum debt-to-equity ratio.

SIs players have an agreement with SI that entitles them to a bonus if SI exceeds net income of $25 million in the year. They agreed to this new bonus arrangement in 2021 instead of a salary increase. Net income before any adjustments on December 31, 2021 was $24 million. The players are upset, since the games have been well attended and they anticipated a substantial bonus payment. Management has stated that they have invested in the future, which will provide healthy bonuses in later years. Exhibit 1 includes the income statement.

EXHIBIT 1-STATEMENT OF COMPREHENSIVE INCOME: Solarium Incorporated Statement of Comprehensive Income For the year ended December 31, 2021 (in millions) $ 50 (22) $ 28 (1) 3 $ 24 Revenues Operating expenses Operating Profit Finance costs Finance income Net income Other comprehensive income: Unrealized gain on investments recorded - FVOCI Fair value changes on cash flow hedge Foreign exchange gain subsidiary Actuarial gain pension plan Comprehensive Income 5 (1) 3 3 $ 33 You have been hired by the players to review the accounting policies for SIs 31 December year- end. Exhibit 2 provides the notes to the financial statements. You have been asked by the players to analyze the current accounting policies; discuss alternatives, where possible; and provide recommendations on the appropriate accounting policies for events that have occurred during 20X9. The incremental borrowing rate for SI is 10%. The tax rate for SI is 30%. EXHIBIT 2 - NOTES TO THE FINANCIAL STATEMENT 1. Tickets can be purchased on--line through Si's new website or at the box office at the stadium. Customers using a credit card can purchase online tickets up to a year in advance. Revenue for on line sales is recognized when the ticket is used. To increase sales of season tickets for the 2022 season, when tickets are purchased, customers received a $50 gift card for use in the souvenir shop. Many customers used the gift card for holiday shopping in December. Revenue for season tickets is recognized as games are played. 2. Si provided 100,000 coupons for $2 off the game food combination at local grocery stores and pharmacies. The $ 200,000 was expensed as an advertising cost 3. SI received a $100 million loan from the bank for the construction of the new stadium. Transaction costs of $2 million were expensed during the year as a finance cost. In 2021. SI invested cash from the bank loan until needed for construction in shares of Moffat Inc., a company in the high tech industry. SI purchased 2% of the company's shares and will sell them when cash is needed over the next year and a half. These shares were classified as FVTOCL 4. SI started construction of the new sports stadium in March 2021. The estimated completion date was December 2023. Costs capitalized in 2021 were $15 million and included materials, labour, and variable overhead. Costs expensed in 2021 were $2 million in interest. In July 2021, a strike occurred that shut down construction for two months and will delay the opening of the new stadium. 5. SI issued $1,000,000 of term preferred shares to two of the SI owners. These shares have a cumulative dividend of 10% and a mandatory repayment date in 10 years. Any unpaid dividends must be repaid at that date. These shares were recorded on the statement of financial position as debt, and dividends were recorded as a finance cost. 6. SI issued common shares during the year. Share issue costs of $1 million were expensed as a financing cost. 7. SI has $10 million of unused tax losses. It has decided that the future is too uncertain to recognize the benefit of these losses. This industry has a history of strikes. 8. Si uses the Black Scholes model to determine fair value for stock options granted to the executive team. Since SI's shares are not frequently traded, it does not measure stock price volatility. SI s stock option plan vests annually over a five. year period. The entire stock option expense recognized in period stock option is granted. Forfeitures are recognized when they occur