Reference no: EM132679215

Carnival is a public entity which produces a very popular traveling carnival show. Carnival employs a number of circus performers and uses various aquatic acts in its shows. In 2020, one of Carnival's dolphins gave birth to a baby dolphin, which they named "Aqua."
Carnival incurred various costs at the time of Aqua's birth and throughout the first two years of her life before she began performing with the carnival.

Some of these costs included the following:

(1) veterinary bills associated with her birth, immunizations, etc.,
(2) costs to purchase and clear a tract of aquariums for Aqua and the other dolphins to spend their time
(3) training costs to get Aqua ready to perform in shows
(4) costs to feed, bathe, and maintain Aqua's health.

• Because it can be expensive to care for a dolphin, Carnival took out a loan to finance the costs associated with Aqua's upbringing until he could begin  performing and making Carnival money. Therefore, Carnival also incurred interest costs associated with the loan used to pay for Aqua's care and training during the first two years of her life.
• Finally, in 2022, Aqua debuted in her first performance. Although Aqua proved herself to be profitable, Carnival still incurred multiple costs including costs for food, veterinary bills, etc. Furthermore, Carnival had to pay trainers to teach Aqua new tricks, so she would continue to attract crowds.

Problem 1: How should Carnival account for the different costs incurred throughout Aqua's life after she has begun performing (food, vet bills, and training)?