This is a Candian accounting course so pls answer accordingly as per INTERNATIONAL FINANCIAL REPORTING STANDARDS AND ACCOUNTING STANDARDS FOR PRIVATE ENTERPRISES

Richardson Lumber Inc. is southwestern Ontario's largest sawmill and kiln drying operation. After more than 65 years in the industry, Richardson Lumber has built a reputation for being a business with integrity among landowners, contractors, and consumers alike. Their customers range from DIY-ers (Do It Yourself) to wholesalers, with a specific focus on those that support Canadian jobs. Providing FSC21 Certified wood and wood by-products. They are well known for their quality hardwood and softwood locally and globally. The company's shares are traded on the local public stock exchange. As the economic environment around COVID-19 evolved, Richardson Lumber continued to stay committed to doing their part to help flatten the curve while staying focused on providing essential products, protecting their employees, customers, and the continuation of business operations. Net income for the past few years has been positive and increasing and has averaged approximately $1 million over the past few years. This past year, however, due to various factors including following all of the Government of Ontario's public health measures, weakness with the just-intime inventory model, the company is expecting to just break even at best. During the year, Richardson Lumber announced an exclusive licensing agreement with Simpson Strong-Tie (an unrelated company). Under the terms of the agreement, Richardson Lumber will have exclusive sales and distribution rights for Simpson Strong-Ties technology and products. In return, it will pay Simpson Strong-Tie royalties. The technology and products target the growing DIY market. During the first five years of the agreement, royalty payments that Richardson Lumber must pay to Simpson Strong-Tie are 3\% of sales in the first year, 2\% in the second, and 1% thereafter. A minimum royalty of $50,000 must be paid regardless of the level of sales. Simpson Strong-Tie has been in business many years and the products are proven and in great demand. It is therefore very likely that Richardson Lumber will have to pay. The Canada-U.S. softwood dispute 2 has become one of the most enduring trade disputes between both nations. Over the past 25 years, the United States lumber industry has frequently sought U.S. government restrictions on Canadian softwood lumber imports through the application of U.S. countervailing duty and antidumping laws - laws that allow the imposition of import duties when a U.S. industry is allegedly harmed by subsidies in the exporting country (countervailing duties), or by dumping, which is when a U.S. industry is allegedly harmed by imported products sold at prices that are lower than the cost of production or lower than prices in the domestic market (antidumping duties). The U.S. government has levied anti-dumping fees of 8% on all softwood lumber shipped to the United States. The U.S. government has also imposed countervailing duties of 20\% on Canadian lumber. The amounts must be paid by the company to the U.S. government in order to continue to sell in the United States. The Canadian government has challenged the right of the U.S. government to charge these duties and has appealed to the World Trade Organization (WTO). Canada feels that, under both WTO rules and the United States-Mexico-Canada Agreement (USMCA) - which entered into force on July 1, 2020 - such charges cannot be legally levied. In the meantime, Richardson Lumber has been accruing and setting the amounts aside in cash 1 The Forest Stewardship Council (FSC) Certification is an internationally recognized symbol of responsible deposits with the bank just in case the appeal is unsuccessful. The amounts accrued and set aside to date are approximately $300,000. The U.S. government is allowing the company to ship lumber as long as the cash is set aside. To date, the appeal process is going well, and the Canadian government feels that the duties will at least be reduced significantly, if not completely eliminated. There are rumours that the duties may be cancelled next year. In May 2021 Richardson Lumber became involved in litigation. As a result, it is likely that Richardson Lumber will have to pay $1.5 million. In an unrelated matter in July 2021 a competitor commenced a suit against Richardson Lumber alleging violation of antitrust laws and seeking damages of $2.2 million. Richardson Lumber denies the allegations, and the likelihood that Richardson Lumber will have to pay any damages is remote. Although Richardson Lumber has responsibly forested thousands of woodlots in southwestern Ontario. In September 2021 Simcoe County brought action against Richardson Lumber for $3.8 million for polluting Bass Lake. It is possible that the county's suit will be successful, but the amount of damages Richardson Lumber will have to pay is not reasonably determinable. Richardson's controller, believes that the yearly charge for expected credit losses (i.e., bad debt expense) for Richardson should be 2% of net credit sales. The president, nervous that the board of directors might expect the company to achieve its 10% growth rate in earnings, suggests that the controller increase the charge for expected credit losses to 3% yearly. The president thinks that the lower net income, reflecting a 6% earnings growth rate, will be more sustainable for Richardson. Richardson Lumber's controller, Laura Cherry, has asked you for advice on how to book all of the above in the financial statements (or if she even should). She has a meeting with the bank next week to discuss increasing the company's line of credit. She is hopeful that once the ruling comes down from the World Trade Organization, the increased line of credit will not be needed. In the meantime, the bank has signalled that it will be looking at the company's liquidity very closely. Richardson Lumber's controller would also like to know if she should be concerned with the company's growth rate in estimating the allowance. Additionally, does the president's request pose an ethical dilemma for the controller? The auditors will also be coming in to review the statements at the end of next month. Requlred: Discuss the financial reporting issues (recognize or do not recognize) and recommendation(s) on how to handle each situation. As you write, keep your audience : Your written report should be at a minimum of two pages and a maximum of five pages. Richardson Lumber Inc. is southwestern Ontario's largest sawmill and kiln drying operation. After more than 65 years in the industry, Richardson Lumber has built a reputation for being a business with integrity among landowners, contractors, and consumers alike. Their customers range from DIY-ers (Do It Yourself) to wholesalers, with a specific focus on those that support Canadian jobs. Providing FSC21 Certified wood and wood by-products. They are well known for their quality hardwood and softwood locally and globally. The company's shares are traded on the local public stock exchange. As the economic environment around COVID-19 evolved, Richardson Lumber continued to stay committed to doing their part to help flatten the curve while staying focused on providing essential products, protecting their employees, customers, and the continuation of business operations. Net income for the past few years has been positive and increasing and has averaged approximately $1 million over the past few years. This past year, however, due to various factors including following all of the Government of Ontario's public health measures, weakness with the just-intime inventory model, the company is expecting to just break even at best. During the year, Richardson Lumber announced an exclusive licensing agreement with Simpson Strong-Tie (an unrelated company). Under the terms of the agreement, Richardson Lumber will have exclusive sales and distribution rights for Simpson Strong-Ties technology and products. In return, it will pay Simpson Strong-Tie royalties. The technology and products target the growing DIY market. During the first five years of the agreement, royalty payments that Richardson Lumber must pay to Simpson Strong-Tie are 3\% of sales in the first year, 2\% in the second, and 1% thereafter. A minimum royalty of $50,000 must be paid regardless of the level of sales. Simpson Strong-Tie has been in business many years and the products are proven and in great demand. It is therefore very likely that Richardson Lumber will have to pay. The Canada-U.S. softwood dispute 2 has become one of the most enduring trade disputes between both nations. Over the past 25 years, the United States lumber industry has frequently sought U.S. government restrictions on Canadian softwood lumber imports through the application of U.S. countervailing duty and antidumping laws - laws that allow the imposition of import duties when a U.S. industry is allegedly harmed by subsidies in the exporting country (countervailing duties), or by dumping, which is when a U.S. industry is allegedly harmed by imported products sold at prices that are lower than the cost of production or lower than prices in the domestic market (antidumping duties). The U.S. government has levied anti-dumping fees of 8% on all softwood lumber shipped to the United States. The U.S. government has also imposed countervailing duties of 20\% on Canadian lumber. The amounts must be paid by the company to the U.S. government in order to continue to sell in the United States. The Canadian government has challenged the right of the U.S. government to charge these duties and has appealed to the World Trade Organization (WTO). Canada feels that, under both WTO rules and the United States-Mexico-Canada Agreement (USMCA) - which entered into force on July 1, 2020 - such charges cannot be legally levied. In the meantime, Richardson Lumber has been accruing and setting the amounts aside in cash 1 The Forest Stewardship Council (FSC) Certification is an internationally recognized symbol of responsible deposits with the bank just in case the appeal is unsuccessful. The amounts accrued and set aside to date are approximately $300,000. The U.S. government is allowing the company to ship lumber as long as the cash is set aside. To date, the appeal process is going well, and the Canadian government feels that the duties will at least be reduced significantly, if not completely eliminated. There are rumours that the duties may be cancelled next year. In May 2021 Richardson Lumber became involved in litigation. As a result, it is likely that Richardson Lumber will have to pay $1.5 million. In an unrelated matter in July 2021 a competitor commenced a suit against Richardson Lumber alleging violation of antitrust laws and seeking damages of $2.2 million. Richardson Lumber denies the allegations, and the likelihood that Richardson Lumber will have to pay any damages is remote. Although Richardson Lumber has responsibly forested thousands of woodlots in southwestern Ontario. In September 2021 Simcoe County brought action against Richardson Lumber for $3.8 million for polluting Bass Lake. It is possible that the county's suit will be successful, but the amount of damages Richardson Lumber will have to pay is not reasonably determinable. Richardson's controller, believes that the yearly charge for expected credit losses (i.e., bad debt expense) for Richardson should be 2% of net credit sales. The president, nervous that the board of directors might expect the company to achieve its 10% growth rate in earnings, suggests that the controller increase the charge for expected credit losses to 3% yearly. The president thinks that the lower net income, reflecting a 6% earnings growth rate, will be more sustainable for Richardson. Richardson Lumber's controller, Laura Cherry, has asked you for advice on how to book all of the above in the financial statements (or if she even should). She has a meeting with the bank next week to discuss increasing the company's line of credit. She is hopeful that once the ruling comes down from the World Trade Organization, the increased line of credit will not be needed. In the meantime, the bank has signalled that it will be looking at the company's liquidity very closely. Richardson Lumber's controller would also like to know if she should be concerned with the company's growth rate in estimating the allowance. Additionally, does the president's request pose an ethical dilemma for the controller? The auditors will also be coming in to review the statements at the end of next month. Requlred: Discuss the financial reporting issues (recognize or do not recognize) and recommendation(s) on how to handle each situation. As you write, keep your audience : Your written report should be at a minimum of two pages and a maximum of five pages