Canadian Express provides overnight delivery of small parcels to locations throughout Canada. As a small public company,

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Canadian Express provides overnight delivery of small parcels to locations throughout Canada. As a small public company, Canadian Express follows IFRS.
Required:
Record the journal entries necessary to reflect the following transactions. Briefly justify your chosen treatment if you feel it is necessary.
a. The company has the engines in its delivery trucks tuned up once every' two years. The cost of the servicing in 2012 was $1 million. In addition, the tires are replaced three times per year, costing $3 million in 2012.
b. In 2012 the company paid $3.5 million to have the trucks in the fleet rust-proofed. As a result, management expects the trucks to last three extra years. Because each truck was out of service for about a week for rust-proofing, the company estimates that it lost $12.0 million of revenue in 2012.
c. The company spent $5 million during 2012 to develop a new parcel-tracking system to improve its efficiency and customer service quality. The new system was operational by September 2012.
d. The company built a new transfer and sorting depot in Winnipeg in 2012 to increase efficiency by reducing the number of flight routes necessary. The facilities became operational on December 1, just in time for the peak in parcel traffic during the holiday season. The company spent $5 million to purchase the land, and incurred the following costs related to construction: materials, $15 million; labour, $20 million; managerial project supervision, $1.2 million; construction insurance, $400,000; interest incurred on construction loan from May 1 to December 31, $1.6 million.
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Intermediate Accounting

ISBN: 978-0132612111

Volume 1, 1st Edition

Authors: Kin Lo, George Fisher

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