You are a junior accountant, recently employed by RM Resources Ltd., a public company traded on the Toronto Stock Exchange. The company is based in Alberta and it operates two divisions: an oil and gas exploration division, and a heavy equipment manufacturing division. The company is aggressively pursuing overseas partners who could provide further financing to expand operations into Asia. You arrive at work on a Monday morning in early January, 2021 and receive the following email: To: Junior Accountant From: Controller Re: Preparation for annual audit I am preparing the working papers for the December 31, 2020 year-end audit to present to the company's auditors when they arrive late next week. In reviewing the draft financial statements and other information, I have identified a number of issues that need to be addressed: 2) On December 2, 2020, one of the oil and gas division's wells exploded. It leaked a significant amount of oil into a nearby stream until it could be repaired. The repair was completed on December 27, 2020, but remediation of the site has just begun. It cost $800,000 to repair the well, as a number of attempts initially failed, and new components had to be fabricated to replace the damaged parts. Our CEO issued a press release soon after the explosion, stating that the company will bear the full cost for cleaning up the damage and returning the site to its original condition. It is estimated that it will cost between $2 million to $4 million to fully remediate the site. The process of remediation will likely take several years, as the process of cleaning up the site and the nearby waterway is complicated. 3) During the exploration of a different well site, the oil and gas division discovered a significant amount of gold. The division is now mining and selling the gold. We are trying to decide how to account for the gold inventory. We are considering valuing the gold inventory at its market price once it has been refined, even though it has not yet been sold. Before I finalize the working papers for the auditor, the Chief Financial Officer has requested I summarize the key financial reporting issues. Where possible, he would also like to know the potential impact of the issue on the balance sheet and income statement, and he would like an explanation why an adjustment is required. If there are areas where judgment is involved, or the accounting treatment is not clear, he would like to know the alternatives that are available and factors that need to be considered in choosing an alternative. I am away on a conference this week. Please provide a memo to me by next Monday that addresses the issues identified above. I will then provide a report to the Chief Financial Officer. Required: Prepare the requested memo to the controller. (30 marks)