How much PPE should be recognized under ASPE

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Reference no: EM133112958

Question - Lavoie Corporation acquired new equipment at a cost of $100,000 plus 7% provincial sales tax and 5% GST. (GST is a recoverable tax.) The company paid $1,700 to transport the equipment to its plant. The site where the equipment was to be placed was not yet ready and Lavoie Corporation spent another $500 for one month's storage costs. When installed, $300 in labour and $200 in materials were used to adjust and calibrate the machine to the company's exact specifications. The units produced in the trial runs were subsequently sold to employees for $400. During the first two months of production, the equipment was used at only 50% of its capacity. Labour costs of $3,000 and material costs of $2,000 were incurred in this production, while the units sold generated $5,500 of sales. Lavoie paid an engineering consulting firm $11,000 for its services in recommending the specific equipment to purchase and for help during the calibration phase. Borrowing costs of $800 were incurred because of the one-month delay in installation.

Required -

1. Provide a GAAP supported/ case-specific analysis under ASPE.

2. What is your recommendation for how much PPE should be recognized under ASPE.

3. Provide the correcting JE, if any, that is needed. Show all calculations in a proper format.

4. Explain any GAAP criteria that differ under IFRS from ASPE for this issue.

Reference no: EM133112958

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