Question

Tamarisk’s Steelers Inc. (MSI) is a steel manufacturing company located in Ontario. On November 1, 2018, MSI acquired land on which it constructed a facility for steel manufacturing purposes. Since its manufacturing process produces excessive waste, the government of Ontario has imposed a requirement for MSI to clean up property. As part of its agreement with the province of Ontario, MSI is allowed to operate on this site for only 15 years after which time MSI estimates it will need to incur $2,200,000 to clean up the site.

The company’s discount rate is 6% and MSI reports under IFRS with a December 31 year-end.

What adjusting journal entry should MSI make to initially recognize the ARO under IFRS? (Round answer to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
November 1, 2018

List of Accounts

Accounts Payable

• Accounts Receivable
• Accretion Expense
• Accumulated Depletion - Mineral Resources
• Accumulated Depreciation - Drilling Platform
• Accumulated Depreciation - Oil Tanker Depot
• Accumulated Depreciation - Buildings
• Accumulated Depreciation - Equipment
• Asset Retirement Obligation
• Bonus Expense
• Bonus Payable
• Buildings
• Cash
• Container Sales Revenue
• Cost of Goods Sold
• CPP Contributions Payable
• Current Tax Expense
• Depreciation Expense
• Dividends Payable
• Drilling Platform
• EI Premiums Payable
• Employee Benefit Expense
• Employee Income Tax Deductions Payable
• Estimated Inventory Returns
• Estimated Inventory Returns
• Estimated Liability for Premiums
• Equipment
• Freight-in
• Furniture and Fixtures
• Gain on Settlement of ARO
• GST Payable
• GST Receivable
• HST Payable
• HST Receivable
• Income Tax Expense
• Income Tax Payable
• Income Tax Receivable
• Interest Expense
• Interest Payable
• Inventory
• Inventory of Premiums
• Land Improvements
• Liability for Guarantee
• Litigation Expense
• Litigation Liability
• Loss Due to Environmental Clean-up
• Loss on Expropriation
• Loss on Guarantee
• Loss on Settlement of ARO
• Materials, Cash, Payables
• Mineral Resources
• No Entry
• Notes Payable
• Notes Receivable
• Oil Tanker Depot
• Parental Leave Benefits Payable
• Payroll Tax Expense
• Premium Expense
• Premium Liability
• Property Tax Expense
• Property Tax Payable
• Prepaid Expenses
• Property Tax Expense
• Property Tax Payable
• PST Payable
• Purchase Discounts
• Purchase Discounts Lost
• Purchase Returns and Allowances
• Purchases
• Refund Liability
• Rent Expense
• Rent Payable
• Rent Revenue
• Retained Earnings
• Salaries and Wages Expense
• Salaries and Wages Payable
• Sales Returns and Allowances
• Sales Revenue
• Sales Tax Payable
• Service Revenue
• Sick Pay Wages Payable
• Subscriptions Revenue
• Trucks
• Unearned Revenue
• Union Dues Payable
• Vacation Wages Payable
• Warranty Expense
• Warranty Liability
• Warranty Revenue

  What are the journal entries to record at year-end? (Round answer to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
December 31, 2018
December 31, 2018

Please provide correct answer and please use the accounts from the list given. thanks.

Answer 1

Date	Account Titles and Explanation	Debit	Credit
November 1, 2018	Buildings	917,983
	Asset Retirement Obligations		917,983
	[2,200,000/(1.06)^15]
Date	Account Titles and Explanation	Debit	Credit
December 31, 2018	Accretion Expense	9,180
	Asset Retirement Obligations		9,180
	(917,983 x 6% x 2/12)
December 31, 2018	Asset Retirement Obligations	9,180
	Loss on Settlement of ARO		9,180