Question

View Policies Show Attempt History Current Attempt in Progress Nash'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 7% and MSI reports under IFRS with a December 31 year-end. Your answer is partially correct. 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 o for the amounts.) Account Titles and Explanation Debit Credit Date November 1. 2018 Buildings 797381 Asset Retirement Obligation 797381 e Textbook and Media Assistance Used e Textbook Book Pro

Answer 1

Credit Preparation of Journal Entries: Date Account titles and explanation Nov-18 Land /Property, plant and equipment Provision for dicommission cost (2200000/(1.07)^15) Debit $ 7,97,381 $ 7,97,381 $ 9,303 Dec-18 Finance Cost A/c Dr.( 797381 * 7%)*2/12 Provision for dicommissioning cost $ 9,303 $ $ 9,303 Dec-18 Income statement A/c Dr. Finance cost $ 9,303 * Kindly Comment down for any clarifications/ queries and please upvote.