The controller of a company has come to you for advice on several transactions that she is having difficulty deciding how to record or even if they should be recorded. She has asked for your assistance as follows. The company follows IFRS and has a December 31 year end. a. The company issued a purchase order for manufacturing equipment with an invoice price of $850,000 to be installed next year. When are we required to be recorded or disclosed? b. The company uses a micro chip manufactured in Germany in its computer manufacturing plant. There has been concern about the failure of this chip in computers manufactured in Germany. No failures have occurred to date in Canada. The company decided to do a voluntary recall of all computers manufactured with this part. The recall is 40% complete and has had a cost of $800,000 to date. Do we have to record anything? c. The company has guaranteed the $10 million loan of another company. This amount is material. The other company has a poor credit rating and there is a 45% chance of having to make a $10 million payment under the guarantee. Do we have to record anything? If so how much? d. The company's weekly payroll of $23,000 included employee income taxes withheld of $3,426, Canada Pension Plan (CPP) withheld of $990 and Employment Insurance (EI) withheld of $420. How do we record this (assume it is paid on the date you make the entry)? Ignore employer contributions for CPP and El. e. On December 30, 2021, the company has received $420,000 for work that is to be performed in 2022. She is wondering how this should be shown on the 2021 financial statements or if it should e shown in 2022 when the work is completed. The controller of a company has come to you for advice on several transactions that she is having difficulty deciding how to record or even if they should be recorded. She has asked for your assistance as follows. The company follows IFRS and has a December 31 year end. a. The company issued a purchase order for manufacturing equipment with an invoice price of $850,000 to be installed next year. When are we required to be recorded or disclosed? b. The company uses a micro chip manufactured in Germany in its computer manufacturing plant. There has been concern about the failure of this chip in computers manufactured in Germany. No failures have occurred to date in Canada. The company decided to do a voluntary recall of all computers manufactured with this part. The recall is 40% complete and has had a cost of $800,000 to date. Do we have to record anything? c. The company has guaranteed the $10 million loan of another company. This amount is material. The other company has a poor credit rating and there is a 45% chance of having to make a $10 million payment under the guarantee. Do we have to record anything? If so how much? d. The company's weekly payroll of $23,000 included employee income taxes withheld of $3,426, Canada Pension Plan (CPP) withheld of $990 and Employment Insurance (EI) withheld of $420. How do we record this (assume it is paid on the date you make the entry)? Ignore employer contributions for CPP and El. e. On December 30, 2021, the company has received $420,000 for work that is to be performed in 2022. She is wondering how this should be shown on the 2021 financial statements or if it should e shown in 2022 when the work is completed
