Problem 1 Extraction Friendly Ltd. [EFL] specializes in extracb'ng ore. It prides itself for following high environmental standards in the extraction process. On January 1. 2010. EFL purchased the rights to use a parcel of land from the provinoe of New Brunswick. The rights cost $15.000.000 and allowed the company to extract ore for five years. i.e.. until Dec 31. 2014. EFL expects to extract the ore evenly over the contract period. At the end of the contract. EFL has one year to clean up and restore the land. EFL estimates this will cost $2,000,000. EFL uses a discounted cash ow method to calculate the fair value of this obligation and believes that 0% is the appropriate discount rate. EFL uses straightline depreciation method. EFL uses the calendar year as its fiscal year and follows IFRS. As a helpful suggestion, students may want to draw a meline of events before solving the questions given below. Instructions {Round all values to the nearest dollar.) a. Prepare the joumal entries to be recorded on January 1. 2010. b. Prepare the joumal entries to be recorded on December 31. 2010. Show the amounts and accounts to be reported on the classied statement of financial position at December 31. 201i]. Prepare the joumal entries to be recorded on December 31. 2014. Show the amounts and accounts reported on the classied statement of financial position at December 31. 2014. After 2014. EFLwas supposed to clean up and restore the land. Even though the company spent a considerable amount of money on restoration. it was sued bythe province of New Brunswick for not following the contract's requirements. On February 3. 2016. judgment was rendered against EFL for $3.000.000. The company claims that because the language in the contract was misleading regarding the restoration costs. it plans to appeal the judgment and expects the ruling to be reduced to anywhere between $1,000,000 and $2,000.000. with $1.500.000 being the probable amount. EFL has not yet released its 2015 financial statements. Discuss how EFL should report this matter on its nancial statements for the year ended December 31. 2015