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intermediate accounting volume 2
Intermediate Accounting Volume 2 13th Canadian Edition Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy - Solutions
Presented below are four independent situations. All the companies involved use ASPE, unless otherwise noted.1. On December 31, 2023, Zarle Inc. sold equipment to Orfanakos Corp. and immediately leased it back for 10 years. The equipment’s selling price was $520,000, its carrying amount was
Golden Properties Corporation purchased a parcel of land in March 2022 for $1 million with the intent to construct a building on the property in the near future. At the time of purchase, Golden applied the cost model and measured and reported the land at its acquisition cost as allowed in IAS 16.
Indicate the effect—understated (U), overstated (O), or no effect (NE)—that each of the following errors has on 2022 net income and 2023 net income: Wages payable were not recorded at Dec. 31, 2022. Equipment purchased in 2021 was expensed. Equipment purchased in 2022 was expensed. Ending
Melanie Corporation reported net income of $550,000 in 2023 and had 900,000 common shares outstanding throughout the year. On May 1, 2023, Melanie issued 5% convertible bonds. Each $1,000 bond is convertible into 120 common shares. Total proceeds at par amounted to $1 million and were allocated to
Bryce Corporation is preparing the comparative financial statements for the annual report to its shareholders for the fiscal years ended May 31, 2023, and May 31, 2024. The income from operations was $1.8 million and $2.5 million, respectively, for each year. In both years, the company incurred a
On January 2, 2023, Yellowknife Corp. issues a $10-million, five-year note at LIBOR, with interest paid annually. To protect against the cash flow uncertainty related to interest payments that are based on LIBOR, Yellowknife entered into an interest rate swap to pay 6% fixed and receive LIBOR based
Anchovy Corp. issued a $1-million, four-year, 7.5% fixed-rate interest only, non-prepayable bond on December 31, 2022. Anchovy later decided to hedge the interest rate and change from a fixed rate to variable rate, so it entered into a swap agreement with M&S Corp. The swap agreement specified
On January 1, 2023, Trigson Ltd. had 580,000 common shares outstanding. During 2023, it had the following transactions that affected the common share account:Feb. 1 Issued 180,000 sharesMar. 1 Issued a 10% stock dividendMay 1 Acquired 200,000 common shares and retired themJune 1 Issued a 3-for-1
On June 1, 2021, Gustav Corp. and Gabby Limited merged to form Fallon Inc. A total of 800,000 shares were issued to complete the merger. The new corporation uses the calendar year as its fiscal year.On April 1, 2023, the company issued an additional 400,000 shares for cash. All 1.2 million shares
In 2022, Capstone Ltd. issued $50,000 of 8% bonds at par, with each $1,000 bond being convertible into 100 common shares. The company had revenues of $75,000 and expenses of $40,000 for 2023, not including interest and tax. (Assume a tax rate of 25%.) Throughout 2023, 1,000 common shares were
Spencer Ltd. established a SARs program on January 1, 2023, that entitles executives to receive cash at the date of exercise (any time in the next three years) for the difference between the shares’ fair value and the pre-established price of $20 on 10,000 SARs. As at December 31, 2023, the
On January 1, 2023, Blaine Corporation granted 6,000 options to executives. Each option entitles the holder to purchase one share of Blaine’s common shares at $35 per share at any time after January 1, 2025. The shares’ market price is $50 per share on the date of grant, and the required
Sayaka Tar and Gravel Ltd. operates a road construction business. In its first year of operations, the company won a contract to build a road for the municipality of Cochrane West. It is estimated that the project will be completed over a three-year period starting in June 2023. Sayaka uses the
Allen Corporation reports the following amounts in its first three years of operations.The difference between taxable income and accounting income is due to one reversing difference. The tax rate is 30% for all years and the company expects to continue with profitable operations in the
Zak Corp. purchased depreciable assets costing $600,000 on January 2, 2023. For tax purposes, the company uses CCA in a class that has a 40% rate. Assume these assets are considered “eligible equipment” for purposes of the Accelerated Investment Incentive (under the AII, instead of using the
At January 1, 2023, Ming Limited’s outstanding shares included the following:280,000 $50 par value, 7%, cumulative preferred shares 900,000 common sharesNet income for 2023 was $2,130,000. No cash dividends were declared or paid during 2023. On February 15, 2024, however, all preferred dividends
On January 1, 2023, Draper Inc. issued $4 million of face value, five-year, 6% bonds at par. Each $1,000 bond is convertible into 20 common shares. Draper’s net income in 2023 was $200,000, and its tax rate was 25%. The company had 100,000 common shares outstanding throughout 2023. None of the
Christina Inc. follows IFRS. Christina holds a variety of investments, some of which are accounted for at fair value through net income and some of which are accounted for at fair value through other comprehensive income. On January 1, 2023, the beginning of the fiscal year, Christina’s accounts
Applegate Inc. established a SARs program on January 1, 2023, that entitles executives to receive cash at the date of exercise for the difference between the shares’ fair value and the pre-established price of $16 on 3,700 SARs. The required service period is two years. The shares’ fair value
Dencil Corporation had 600,000 common shares outstanding on January 1, 2023. On March 1, 2023, Dencil issued 150,000 shares. On September 1, 2023, Dencil repurchased and cancelled 50,000 shares. Calculate Dencil’s weighted average number of shares outstanding for the year ended December 31, 2023.
Laurin Limited had 42,000 common shares outstanding on January 1, 2023. On March 1, 2023, Laurin issued 20,000 shares in exchange for equipment. On July 1, Laurin repurchased and cancelled 10,000 shares. On October 1, 2023, Laurin declared and issued a 10% stock dividend. Calculate the weighted
The airline industry actively hedges risks related to fuel prices. Air Canada may expect fuel to increase in price, whereas West Jet may expect fuel to decrease in price. They may enter a forward contract to mitigate that market risk. Explain how both companies are using big data to help decide
Ethan Corporation had 100,000 common shares outstanding on December 31, 2022. During 2023, the company issued 12,000 shares on March 1, retired 5,000 shares on July 1, issued a 20% stock dividend on October 1, and issued 18,000 shares on December 1. For 2023, the company reported net income of
Ottey Corporation issued $4 million of 10-year, 7% callable convertible subordinated debentures on January 2, 2023. The debentures have a face value of $1,000, with interest payable annually. The current conversion ratio is 14:1, and in two years it will increase to 18:1. At the date of issue, the
Use the same information as in BE17.7, but assume that on October 1, 2023, Laurin declared a 1-for-2 reverse stock split instead of a 10% stock dividend. Calculate the weighted average number of shares outstanding for Laurin for the year ended December 31, 2023. Round to the nearest
Standard Corp’s net income for 2023 is $150,000. The only potentially dilutive securities outstanding were 1,000 call options issued during 2022, with each option being exercisable for one share at $20. None have been exercised, and 30,000 common shares were outstanding during 2023. The average
Milliken Corporation reported net income of $700,000 in 2023 and had 115,000 common shares outstanding throughout the year. Also outstanding all year were 9,500 cumulative preferred shares, with each being convertible into two common shares. The preferred shares pay an annual dividend of $5 per
Francine Limited was incorporated with share capital consisting of 100,000 common shares. In January 2023, it issued 20,000 mandatorily convertible preferred shares. The terms of the prospectus for the issuance of the preferred shares require the convertible preferred shares to be converted into
Thiessen Corporation earned net income of $300,000 in 2023 and had 100,000 common shares outstanding throughout the year. Also outstanding all year was $800,000 of 10% bonds that are convertible into 26,000 common shares. Thiessen’s tax rate is 25%. Calculate Thiessen’s 2023 diluted earnings
Henry Limited had investments in securities on its SFP for the first time at the end of its fiscal year ended December 31, 2023. Henry reports under IFRS and its investments in securities are to be accounted for at fair value through net income. During 2023, realized losses and gains on the trading
Bantec Corporation had 500,000 common shares outstanding on January 1, 2023. On May 1, Bantec issued 50,000 shares.(a) Calculate the weighted average number of shares outstanding for the year ended December 31, 2023, if the 50,000 shares were issued for cash. Round to the nearest share.(b)
Hang Technologies Inc. held a portfolio of shares and bonds that it accounted for using the fair value through other comprehensive income model at December 31, 2023. This was the first year that Hang had purchased investments. In part due to Hang’s inexperience, by December 31, 2023, the market
Bedard Corporation reported net income of $300,000 in 2023 and had 200,000 common shares outstanding throughout the year. Also outstanding all year were 45,000 (written) options to purchase common shares at $10 per share. The average market price for the common shares during the year was $15 per
Zdon Inc. reports accounting income of $105,000 for 2023, its first year of operations. The following items cause taxable income to be different than income reported on the financial statements.1. Capital cost allowance (on the tax return) is greater than depreciation on the income statement by
The following information is available for Roginski Corporation for 2023.1. CCA that was reported on the 2023 tax return exceeded depreciation reported on the income statement by $160,000. This difference is expected to reverse in equal amounts of $40,000 per year over the period 2024 to 2027.2.
Use the same information as in BE17.15, but assume that the 10% bonds are convertible into 10,000 common shares. Calculate Thiessen’s 2023 diluted earnings per share. Round to the nearest cent.BE17.15Thiessen Corporation earned net income of $300,000 in 2023 and had 100,000 common shares
Riley Inc. reports the following pre-tax incomes (losses) for both financial reporting purposes and tax purposes:The tax rates listed were all enacted by the beginning of 2021. Riley reports under the ASPE future income taxes method.Instructionsa. Prepare the journal entries for each of the years
Sorpon Corporation purchased equipment very late in 2023. Based on generous capital cost allowance rates provided in the Income Tax Act, Sorpon claimed CCA on its 2023 tax return but did not record any depreciation because the equipment was being tested. This temporary difference will reverse and
The following are independent items.1. The excess amount of a charge to the accounting records (allowance method) over a charge to the tax return for the writedown of inventory due to obsolescence2. The excess amount of accrued pension expense over the amount paid3. The receipt of dividends from a
In 2023, Noshy Corporation had accounting income of $234,000 and taxable income of $184,000. The difference is due to the use of different depreciation methods for tax and accounting purposes. The tax rate is 25%. Calculate the amount to be reported as income tax payable at December 31, 2023.
Brush Inc. recently purchased Paint Pro, a home-painting corporation. One of the terms of the merger was that, if Paint Pro’s net income for 2024 was $110,000 or more, 10,000 additional shares would be issued to Paint Pro’s shareholders in 2025. Paint Pro’s net income for 2023 was
Nilson Inc. had accounting income of $156,000 in 2023. Included in the calculation of that amount is the CEO’s life insurance expense of $5,000, which is not deductible for tax purposes. In addition, the UCC for tax purposes is $14,000 lower than the net carrying amount of the property, plant,
Myers Corp. purchased depreciable assets costing $30,000 on January 2, 2023. For tax purposes, the company uses CCA in a class that has a 30% rate. For financial reporting purposes, the company uses straight-line depreciation over five years. The enacted tax rate is 25% for all years. This
Complete the following statements by filling in the blanks or choosing the correct answer in parentheses.a. In a period in which a taxable temporary difference reverses, the reversal will cause taxable income to be (less than/greater than) accounting income.b. In a period in which a deductible
The following are independent situations for Bramwell Corp.1. Estimated warranty costs (covering a three-year warranty) are expensed for financial reporting purposes at the time of sale but deducted for income tax purposes when they are paid.2. FV-NI equity investments have a quoted market value
Jenny Corporation recorded warranty accruals as at December 31, 2023, in the amount of $150,000. This reversing difference will cause deductible amounts of $50,000 in 2024, $35,000 in 2025, and $65,000 in 2026. Jenny’s accounting income for 2023 is $135,000 and the tax rate is 25% for all years.
At the end of 2022, Valerie Corporation reported a deferred tax liability of $41,000. At the end of 2023, the company had $241,000 of temporary differences related to property, plant, and equipment. Depreciation expense on this property, plant, and equipment has been lower than the CCA claimed on
Mazur Corp. follows IFRS and began operations in 2023 and reported accounting income of $275,000 for the year. Mazur’s CCA exceeded its book depreciation by $40,000. Mazur’s tax rate for 2023 and years thereafter is 30%. In its December 31, 2023 SFP, what amount of deferred tax liability should
The accounting for the items in the numbered list that follows is commonly different for financial reporting purposes than it is for tax purposes.1. In the year of acquisition, for financial reporting purposes, the straight-line depreciation method is used for plant assets that have a useful life
Adelphi Corp. in its first year of operations has the following differences between its carrying amounts and the tax bases of its assets and liabilities at the end of 2023.It is estimated that the warranty liability will be settled in 2024. The difference in equipment (net) will result in future
At December 31, 2023, Watzman Inc. owned equipment that had a book value of $178,000 and a tax base of $136,000 due to the use of different depreciation methods for accounting and tax purposes. The enacted tax rate is 30%. Calculate the amount that Watzman should report as a deferred tax liability
At December 31, 2023, Camille Corporation had an estimated warranty liability of $256,000 for accounting purposes and $0 for tax purposes. (The warranty costs are not deductible until they are paid.) The tax rate is 25%. Calculate the amount that Camille should report as a deferred tax asset at
Sonia Corporation has historically followed ASPE, but is considering a change to IFRS. It has temporary differences at December 31, 2023, that result in the following SFP future tax accounts:Indicate how these balances will be presented in Sonia’s December 31, 2023 SFP, assuming(a) That Sonia
At December 31, 2022, Chai Inc. had a deferred tax asset of $40,000. At December 31, 2023, the deferred tax asset is $62,000. The corporation’s 2023 current tax expense is $70,000. What amount should Chai report as total 2023 income tax expense? Prepare the journal entries to record income taxes
At December 31, 2022, Ambuir Corporation had a deferred tax liability of $35,000. At December 31, 2023, the deferred tax liability is $52,000. The corporation’s 2023 current tax expense is $53,000. What amount should Ambuir report as total 2023 income tax expense?
At December 31, 2023, Tapper Corporation has a future tax asset of $420,000. After a careful review of all available evidence, it is determined that it is more likely than not that $85,000 of this future tax asset will not be realized. Prepare the necessary journal entry assuming(a) That Tapper
At December 31, 2022, Palden Corporation had a deferred tax asset of $800,000, resulting from future deductible amounts of $3.2 million and an enacted tax rate of 25%. In May 2023, new income tax legislation is signed into law that raises the tax rate to 30% for 2023 and future years. Prepare the
The accounting income (loss) figures for Farah Corporation are as follows:Accounting income (loss) and taxable income (loss) were the same for all years involved. Assume a 30% tax rate for 2018 and 2019, and a 25% tax rate for the remaining years.InstructionsPrepare the journal entries for each of
Kyle Inc. incurred a net operating loss of $580,000 in 2023. Combined income for 2020, 2021, and 2022 was $460,000. The tax rate for all years is 30%. Prepare the journal entries to record the benefits of the carryback and the carryforward, assuming it is more likely than not that the benefits of
Yen Inc.’s only temporary difference at the beginning and end of 2023 is caused by a $4.8-million deferred gain for tax purposes on an instalment sale of a plant asset. The related receivable (only one half of which is classified as a current asset) is due in equal instalments in 2024 and 2025.
In 2023, Borovya Limited purchased shares of Gurvir Corp. at a cost of $52,000. This was the first time the company had ever acquired an investment to be accounted for at fair value through other comprehensive income (FV-OCI). At December 31, 2023, the Gurvir shares had a fair value of $43,000.
Sandeep Corporation had income before income tax of $230,000 in 2023. Sandeep’s current tax expense is $43,000 and deferred tax expense is $27,000.(a) Prepare Sandeep’s 2023 income statement, beginning with income before income tax.(b) Calculate Sandeep’s effective tax rate. Round to one
Weiss Inc. reported income from continuing operations of $87,000 and a loss from discontinued operations of $16,000 in 2023, all before income taxes. All items are fully taxable and deductible for tax purposes. Prepare the bottom of the income statement for Weiss, beginning with income from
Baker Company Limited (BCL) was founded in 2023. Its first year of operations turned out to be a good one, as far as start-up years go. The company not only broke even but actually showed a very small profit. However, just as the company was establishing itself in the market, a recession hit in
Josit Ltd. initiated a one-person pension plan in January 2015 that promises the employee a pension on retirement according to the following formula: pension benefit = 2.5% of final salary per year of service after the plan initiation. The employee began employment with Josit early in 2015 at age
The following facts apply to the pension plan of Yorke Inc. for the year 2023. Yorke applies ASPE.Instructionsa. Using a work sheet, calculate defined benefit expense for the year 2023, and provide the entries to recognize the expense and contributions for the year assuming that Yorke has chosen
The following defined benefit pension data of Dahl Corp. apply to the year 2023:The company applies ASPE and has made an accounting policy choice to base its actuarial valuation of the DBO on the funding basis.Instructionsa. Prepare a continuity schedule for the DBO for 2023.b. Prepare a continuity
The following is partial information related to Siri Ltd.’s non-pension, post-retirement health-care benefit plan at December 31, 2023:Instructions a. Prepare a schedule reconciling, to the extent possible, the plan surplus or deficit with the asset/ liability reported on the SFP at December 31,
The following information is available for Antoine Corporation’s pension plan for the 2023 fiscal year:Defined benefit obligation, 1/1/23, accounting basis, beforeOn January 1, 2023, Antoine amended its pension plan, resulting in past service costs with a present value of $140,400. Antoine
Berstler Limited follows ASPE, and the company sponsors a defined benefit pension plan. Berstler’s actuary provides the following information about the plan (in thousands of dollars):Instructionsa. Calculate the actual return on the plan assets in 2023.b. Calculate the amount of the net defined
Rosek Inc. provides the following information related to its post-retirement health-care benefits for the year 2023:Rosek follows IFRS.Instructionsa. Calculate the post-retirement benefit expense for 2023.b. Calculate the post-retirement benefit remeasurement gain or loss—other comprehensive
Rebek Corporation provides the following information about its defined benefit pension plan for the year 2023:Rebek follows IFRS.Instructionsa. Prepare a continuity schedule for 2023 for the defined benefit obligation.b. Prepare a continuity schedule for 2023 for the plan assets.c. Calculate
Opsco Corp. provides the following information about its post-retirement health-care benefit plan for the year 2023:Instructionsa. Assuming Opsco follows IFRS, calculate the post-retirement benefit expense for 2023, and prepare all required journal entries related to the post-retirement benefit
Griseta Limited sponsors a defined benefit pension plan for its employees, which it accounts for under ASPE. The following data relate to the operation of the plan for the year 2023:1. The actuarial present value of future benefits earned by employees for services rendered in 2023 amounted to
Legacy Corporation has the following information available concerning its post- retirement benefit plan for 2023:Assuming Legacy follows IFRS,(a) Calculate Legacy’s 2023 post-retirement benefit expense that will be included in net income.(b) Calculate the post-retirement benefit expense included
The following information concerns Saverio Corp.’s defined benefit pension plan. On January 1, 2023, the company amended its pension plan, which resulted in a reduction in prior service benefits for current employees. The present value of the reduced benefits is $34,000.Instructionsa. Calculate
The following information is available for Huntley Corporation’s pension plan for the year 2023:Instructionsa. Calculate defined benefit expense (also known as pension expense) for the year 2023, and provide the entries to recognize the defined benefit expense and funding for the year, assuming
Duster Corporation is a private company with a defined benefit pension plan. The following information is available for Duster for 2023:Assuming that Duster follows IFRS, determine the 2023 effect of the pension plan on defined benefit expense and the company’s shareholders’ equity. Opening
Ditek Corp. provides a defined contribution pension plan for its employees. The plan requires Ditek to contribute 5% of employees’ gross pay to a fund trustee each year. Ditek’s total payroll for 2023 was $2,735,864. At the start of 2023, Ditek revised the terms of the plan, which resulted in
Saver Corporation ended its previous fiscal year with a defined benefit obligation of $137,888 and plan assets of $140,000. On January 1, 2023, the company amended its one-person defined benefit pension plan, resulting in a revised defined benefit obligation at that date of $156,239. As a result of
Qui Importers provides the following pension plan information:InstructionsCalculate the actual return on the plan assets for 2023. Fair value of pension plan assets, January 1, 2023 Fair value of pension plan assets, December 31, 2023 Contributions to the plan in 2023 Benefits paid to retirees in
Geoff Corp.’s operations in 2023 had mixed results. One division, Vincenti Group, again failed to earn income at a rate that was high enough to justify its continued operation, and management therefore decided to close the division. Vincenti Group earned revenue of $118,000 during 2023 and
Jonquière Corporation provides the following information about its defined benefit pension plan (in hundreds of thousands of dollars) for 2023:At the end of the year, Jonquière revised the terms of its pension plan, which resulted in past service costs of $35. Assuming that Jonquière applies an
Maya Corp. reports the following information (in hundreds of thousands of dollars) to you about its defined benefit pension plan for 2023:Provide a continuity schedule for the DBO for the year. Maya follows IFRS. Actual return on plan assets Benefits paid to retirees Contributions from
At December 31, 2023, Glover Corporation provided you with the following information:Determine the account and its balance that should be reported on Glover’s December 31, 2023 balance sheet if it applies ASPE. How should the $990,000 be reported? Defined benefit obligation, December 31,
Monday Corporation sponsors a defined benefit pension plan and reports under IFRS. On January 1, 2023, the company reported plan assets of $1,000 and a defined benefit obligation of $1,100 (all amounts in thousands of dollars). During 2023, the current service cost was determined to be $90, the
At January 1, 2023, Rui Corporation had plan assets of $250,000 and a defined benefit obligation of the same amount based on projected costs. During 2023, the current service cost was $27,500, the discount rate on the DBO and plan assets was 10%, actual return on plan assets was $30,000,
Petra Ltd. is preparing its financial statements for its year ended December 31, 2023, and has just obtained an actuarial pension valuation as at its year-end date. Prior to the actuarial valuation, Petra determined, based on the individual components of its defined benefit expense, that its
Kea Limited provides a defined contribution pension plan for its employees. The plan requires the company to deduct 5% of each employee’s gross pay for each payroll period as the employee contribution. The company then contributes 7% of the gross pay for the employer contribution. Both amounts
As the new accountant for Carly’s Pet Express Inc., a line of pet boutiques, you are developing the financial statement disclosures for the 2023 financial statement note on income taxes. The company uses ASPE, and has selected the taxes payable method. The statutory tax rate is currently 30%.
Darrell Corporation reports under IFRS. At December 31, 2023, the company had a net deferred tax liability of $402,000. An explanation of the items that make up this balance follows:Instructionsa. Indicate how deferred tax should be presented on Darrell’s December 31, 2023 SFP.b. How would your
Tika Corp. has recently decided to implement a pension plan for its employees; however, it is unsure if it would like to structure the pension as a defined contribution plan or a defined benefit plan. As requested by management, prepare a short memo outlining the nature of both types of plans,
Scott Enterprises Inc. sponsors a defined benefit plan for its 500 employees. On December 31, 2023, the company’s actuary provided the following information related to the plan: defined benefit obligation $11.3 million and fair value of plan assets $9 million. Defined benefit expense was $3
Roux Corp. had a Deferred Tax Asset account with a balance of $81,000 at the end of 2022 due to a single temporary difference of $270,000 related to warranty liability accruals. At the end of 2023, this same temporary difference has increased to $300,000. Taxable income for 2023 is $912,000. The
Coa Corporation recently needed to find temporary inventory storage space when transitioning from an old factory to a newly built factory within the same city. Coa signed a 10-month lease on a warehouse requiring monthly payments in advance of $14,500.(a) What is the nature of the lease assuming
On September 1, 2023, Wong Corporation, which uses ASPE, signed a five-year, non-cancellable lease for a piece of equipment. The terms of the lease called for Wong to make annual payments of $13,668 at the beginning of each lease year, starting September 1, 2023. The equipment has an estimated
Yogendran Corp., which uses ASPE, leases a car to Jaimme DeLory on June 1, 2023. The term of the non-cancellable lease is 48 months. The following information is provided about the lease:1. The lessee is given an option to purchase the automobile at the end of the lease term for $5,000.2. The
Merrill Corporation, which uses ASPE, enters into a six-year lease of equipment on September 1, 2023, that requires six annual payments of $28,000 each, beginning September 1, 2023. In addition, Merrill guarantees the lessor a residual value of $17,000 at lease end. The equipment has a useful life
Lai Corporation, which uses ASPE, leased equipment it had specifically purchased at a cost of $175,000 for Swander, the lessee. The term of the lease is six years, beginning January 1, 2023, with equal rental payments of $33,574 at the beginning of each year. Swander pays all executory costs
Matta Leasing Limited, which has a fiscal year end of October 31 and follows IFRS, signs an agreement on January 1, 2023, to lease equipment to Irvine Limited. The following information relates to the agreement:1. The term of the non-cancellable lease is six years, with no renewal option. The
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