Novak?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 the 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 $2,000,000 to clean up the site. The company?s discount rate is 5% 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?

Date	Account Titles and Explanation	Debit	Credit
November 1, 2018

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

Date	Account Titles and Explanation	Debit	Credit
December 31, 2018
December 31, 2018

Answer rating: 100% (QA)

Solution 1 The adjusting journal entry MSI s... View the full answer