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MEDLink System Inc. $($MEDLink$)$ is a privately held company specializing in

customized medical software to manage patient records for the medical

offices, medical laboratories and hospitals across Canada. MEDLink users are

healthcare administrators and professionals $($lab technicians, nurses and

doctors$)$ across Canada.

The company has been operating from its headquarters in the Lower Mainland of BC since Jan $1,2018.$ The company$$s fiscal year end is December $31.$ For the first time since its inception, an external auditor had been appointed to conduct an audit prior to issuing the financial statements planned for April $15,2022.$

Building

On Jan $1,2020,$ MEDLink built two similar buildings in Surrey. Building

$$North$$ is the main administration office and Building $$South$$ is the data

centre facility.

Each building took a year to build and required $$1,200,000$ in construction costs. Given that interest rate was cheap, the company funded $$North$$

building internally while financed $$South$$ building by borrowing $$1,200,000$

evenly over the year $($i$.$e$.$ zero at the beginning of the year and increasing to

$$1,200,000$ by the end of the year in $2020.)$ The interest rate on the loan is

$6\%.$

Both buildings were completed by December $31,2020,$ and were ready for

occupancy immediately. However, due to personal reasons from the senior

management, the staff did not move to the two buildings until March $31,$

$2021.$ The Controller $($Meg Nutt$)$ capitalized the construction costs including

borrowing costs for the $15-$month period from Jan $1,2020$ to March $31,$

$2021.$ The buildings are estimated to have a useful life of $20$ years with no

residual value. The company uses the straight$-$line method for depreciation.

The two buildings sit on a vacant farmland which belongs to the City of

Surrey. The company signed a lease with the Surrey Municipality at an

affordable monthly lease rate of $$10,000$ for $30$ years. As part of the lease

agreement, the municipality requires MEDLink to restore the site to

conditions similar to the state prior to the construction $($i$.$e$.$ farmland$).$ The

company estimates that it will need to incur $$120,000$ to dismantle, remove

and restore the site at the end of the $30-$year lease. No provision was made

for this item.

Both buildings have been recorded at historical cost.

Required:

Regarding building, provide correct calculations and journal entries for each transaction in compliance with IFRS. Include your assumptions in the calculations$/$journal entries.

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