Oil-Is-Us (OIS) uses IFRS. OIS chooses to use the Cost Model for its property, plant and...

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Oil-Is-Us ("OIS") uses IFRS. OIS chooses to use the Cost Model for its property, plant and equipment, and its intangibles. OIS paid cash to acquire an oil recycling facility on July 1, 2020 for a cost of $3,068,000. OIS has an asset retirement obligation associated with this oil recycling facility. The following additional information was obtained from OIS' management team: • The removal and clean-up is expected to cost $1.345,868 at the date of retirement. • The asset retirement obligation is expected to be settled in 15 years from today. • The risk-free rate of return, as reflected by government securities, is expected to be 6% over the next 15 years. • IS uses straight-line depreciation and calculates fractional depreciation based on the number of months. On September 15, 2020, there was a leak in the roof that needed to be repaired. OIS paid $6,000 for the repair work. OIS was entitled to a government grant of $40,000 when it purchased this facility on July 1. 2020. The grant was received on November 30, 2020. There are no repayment provisions on this government grant. OIS uses the net method to account for government assistance. OIS has a bank loan that specifies, among other things, a maximum debt-to-equity ratio of 2.0 and a minimum times-interest-earned ratio of 3.0. REQUIRED A. Prepare all of the relevant journal entries, including adjusting journal entries, for 2020. Date every journal entry. (14 Marks) B. There are two methods of accounting for government grants. In the above question, OIS used the net method. If OIS used the other method, how would your above journal entries have changed? (Show ONLY the journal entries that are different. Do not repeat any journal entries that remain the same for this part of the question). Date all journal entries. (6 Marks) C. What basis of measurement is used in the accounting for asset retirement obligations? (2 Marks) Clearly indicate below Parts "A", "B" or "C" & DATE all of your transactions Oil-Is-Us ("OIS") uses IFRS. OIS chooses to use the Cost Model for its property, plant and equipment, and its intangibles. OIS paid cash to acquire an oil recycling facility on July 1, 2020 for a cost of $3,068,000. OIS has an asset retirement obligation associated with this oil recycling facility. The following additional information was obtained from OIS' management team: • The removal and clean-up is expected to cost $1.345,868 at the date of retirement. • The asset retirement obligation is expected to be settled in 15 years from today. • The risk-free rate of return, as reflected by government securities, is expected to be 6% over the next 15 years. • IS uses straight-line depreciation and calculates fractional depreciation based on the number of months. On September 15, 2020, there was a leak in the roof that needed to be repaired. OIS paid $6,000 for the repair work. OIS was entitled to a government grant of $40,000 when it purchased this facility on July 1. 2020. The grant was received on November 30, 2020. There are no repayment provisions on this government grant. OIS uses the net method to account for government assistance. OIS has a bank loan that specifies, among other things, a maximum debt-to-equity ratio of 2.0 and a minimum times-interest-earned ratio of 3.0. REQUIRED A. Prepare all of the relevant journal entries, including adjusting journal entries, for 2020. Date every journal entry. (14 Marks) B. There are two methods of accounting for government grants. In the above question, OIS used the net method. If OIS used the other method, how would your above journal entries have changed? (Show ONLY the journal entries that are different. Do not repeat any journal entries that remain the same for this part of the question). Date all journal entries. (6 Marks) C. What basis of measurement is used in the accounting for asset retirement obligations? (2 Marks) Clearly indicate below Parts "A", "B" or "C" & DATE all of your transactions

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Answer A Journal entries for folloing are as follows Assumption i Accounting Year end is 31st December2020 Note Government Grant accounted using net basis Date Particualrs Debit Credit 01Jul20 PPE 306... View the full answer