Reference no: EM133183264

Question - Grizzlies Shoes Limited. Many of the stores were anchor tenants in medium to large-sized retail shopping malls. This space was primarily leased under non-cancellable real estate lease as disclosed in the Disclosure Note 16 to the consolidated financial statements. Aggregate commitments under both capital and operating leases amounted to over $1.3 million.

As part of Sun's restructuring and downsizing plans before its bankruptcy, the company announced at the beginning of the year that it planned to close 31 of its 85 stores by June 30. Subsequently, it announced that it might keep certain stores open until February of the following year, if the landlords were prepared to provide an appropriate level of financial support. Sun's also announced that landlords who allowed the stores to close June 30 (the earlier date) would be given a bonus of three months of rent.

Required - Assume the role of Sun's management and discuss the financial reporting of the real-estate leases that the company had to deal with before its bankruptcy. The company is interested in understanding the differences between IFRS and ASPE, if any. Present your discussion in the form of:

1. Overview

2. Analysis

3. Recommendation