Reference no: EM133138078

Question - During the year, the company began building a new theatre in Toronto. There is a bank loan based on net assets. Interest of $20,000 was paid on the loan. Salvage proceeds of $15,000 was recorded as other income while the following costs associated with the construction were capitalized to the trial balance:

Payments were made for materials of $950,000 and labour of $450,000.

Approximately 80% of the building will last 50 years and the remainder will last 10 years with regular maintenance.

Cost of delays due to strikes by construction staff was $100,000.

The owner spent $75,000 on a lavish party to celebrate the opening of the theatre.

General Manager supervised the construction for 6months so $50,000 - 50% of his salary - was capitalized

Required -

Assume the company follows IFRS. Provide an analysis using the CPA Way as illustrated in class: Provide issue, a GAAP supported/ case specific analysis, recommendation, and correcting JE, if any, that is needed. Show all calculations in proper format.

Explain one difference under ASPE for this issue.