Question

CAN SOMEONE HELP ME PLS!!

Wildhorse’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 $2,300,000 to clean up the site.

The company’s discount rate is 7% and MSI reports under IFRS with a December 31 year-end.

1) What adjusting journal entry should MSI make to initially recognize the ARO under IFRS?

Nov. 1, 2018

2) What are the journal entries to record at year-end?

Dec. 31, 2018

Dec. 31, 2018

Wildhorse'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 $2,300,000 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 correct. What adjusting journal entry should MSI make to initially recognize the ARO under IFRS? (Round answer to O decimal places, es 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 for the amounts.) Date Account Titles and Explanation Debit Credit November Buildings 833.626 1. 2018 Asset Retirement Obligation 833.62 List of Accounts Assistance Used Question Part Score 3/3 Your answer is partially correct. What are the journal entries to record at year-end? (Round answer to decimal places, eg. 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 for the amounts.) Date Account Titles and Explanation Debit Credit ecember Interest Expense 31, 2018 Asset Retirement Obligation 9,726 ecember Depreciation Expense 31, 2018 Accumulated Depreciation. Buildings 9.726 9.263 9.726

HERE ARE ALSO SOME LIST OF ACCOUNTS THAT ARE ALLOWED TO USE FOR THE JOURNAL ENTRY

Answer 1

Dear student, All of your answers are corerct.

Date	Accounts titles and explanation		Debit	Credit
Nov. 1, 2018	Buildings		833,626
	Asset retirement obligation			833,626
	To record asset retirement obligation.) (2300000*0.36244602)
Dec 31, 2018	Depreciation Expense		9,263
	Accumulated Depreciation - Buildings			9,263
	(To record depreciation Expense.) ((833626/15)*2/12)
Dec 31, 2018	Interest Expense		9,726
	Asset retirement obligation			9,726
	(To record Interest Expense.) (Nov & Dec = 2 months) ((833626*7%)*2/12)

Year	PV factor @ 7%	Remarks
1	0.93457944	= 1 / 1.07
2	0.87343873	= 0.93458 / 1.07
3	0.81629788	= 0.87344 / 1.07
4	0.76289521	= 0.8163 / 1.07
5	0.71298618	= 0.7629 / 1.07
6	0.66634222	= 0.71299 / 1.07
7	0.62274974	= 0.66634 / 1.07
8	0.58200910	= 0.62275 / 1.07
9	0.54393374	= 0.58201 / 1.07
10	0.50834929	= 0.54393 / 1.07
11	0.47509280	= 0.50835 / 1.07
12	0.44401196	= 0.47509 / 1.07
13	0.41496445	= 0.44401 / 1.07
14	0.38781724	= 0.41496 / 1.07
15	0.36244602	= 0.38782 / 1.07