Brunswick Ltd is seeking your advice on how to account for the following transactions, in line with the Conceptual Framework and other relevant documents. Discuss and explain your recom¬mended treatment of each of the situations below.

1. Brunswick Ltd spends $10 000 per year to have its head office cleaned and its gardens main¬tained. In order to continue this maintenance, the company established a Provision for Main¬tenance account and classified this provision as a liability on the statement of financial position/ balance sheet.

2. Brunswick Ltd raised $1 000 000 by issuing 100 000 10-year redeemable preference shares. The company classified these shares as equity.

3. Brunswick Ltd is in the business of selling house and land packages to its customers. The current demand for these packages is extremely low and this is placing Brunswick Ltd in severe financial difficulties. The company has approached Hilands Finance Company Ltd (HFC), to provide special finance for the buyers of their house and land packages. HFC normally charges 13% interest but agrees to lower the interest rate by 3%. Customers of Brunswick Ltd will therefore pay only 10% interest and Brunswick Ltd will then pay HFC a sum equal to 3% interest as soon as each package is sold. Brunswick Ltd wants to know how to treat the 3% pay¬ment to HFC in its accounting records.