Today is Wednesday, September 28, 2022. You are part of the audit team conducting the year-end audit for The Banff Hotel and Resorts Corporation (BHR) for the year ended June 30, 2022. Throughout the audit, the following issues were identified. You can assume that all dollar amounts noted below are material to the outcome of the audit.
1. BHR's draft year-end financial statements show $182,750 in inventory for fresh fruit and vegetables as of June 30, 2022. On August 17, 2022, it was discovered that the company that provides BHR with their freh produce had a salmonela outbreak and was contaminated. Samples from the year-end inventory show that 30% of the produce was contaminated and is not suitable to serve at the resorts.
2. On July 23, 2022, one of the BHR's passenger vans was destroyed in an accident and was written off by their insurance provider. The van has a value of $65,000 on the books of BHR as of June 30, 2022.
3. In February 2022, BHR purchased 5,000 shares of Suncor Energy Inc. at $76.00 per share. These shares are widely traded on the Toronto Stock Exchange and share prices are available on a daily basis. The share price on June 30, 2022 was $65.00 and as of September 28, 2022, the share price has declined further to $52.00 per share.
4. You noted that the closing cash balance on the bank statement dated August 31, 2022 was $15,890, much lower than the $86,750 shown on the draft financial statements at June 30, 2022.
5. At June 30, 2022, BHR had a balance in their Accounts Receivable for $12,425 from Eco Bella Spa Inc., a corporate client that hosts frequent events at BHR's hotels. On September 1, 2022, BHR learns that Eco Bella has filed for bankruptcy and the balance is unlikely to be recovered.
6. In August 2022, a guest at one of BHR's resorts slips and falls, and threatens to sue the company.
Required:
Using the table below, identify the accounting treatment that would be most appropriate for each of the four issues described above, and explan why that is the appropriate treatment. (