In its 10-K amended filing on April 30, 2010, Bronco Drilling reported the financial statements of Challenger Limited (an unconsolidated subsidiary) for its year ending

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In its 10-K amended filing on April 30, 2010, Bronco Drilling reported the financial statements of Challenger Limited (an unconsolidated subsidiary) for its year ending December 31, 2009. The balance sheet and the income statement are reported as follows:

Footnote 2 from the amended 10-K includes the following:
Basis of Preparation The financial statements have been prepared in accordance with International Financial Re porting Standards (IFRS). The financial statements have been prepared under the historical cost convention as modified by the revaluation of the rigs. Rigs include drilling equipment, well control equipment, electrical equipment, power plant, and so on.

Required:
A. Since the financial statements are prepared in U.S. dollars, does this imply that the financial statements are prepared in accordance with U.S. GAAP? Why or why not?
B. List three major differences between this balance sheet in comparison to bal ance sheets prepared under U.S. GAAP.
C. Evaluate the performance of the company using the income statement. What appears to be the cause of the major change inperformance?

CHALLENGER LIMITED Balance Sheets at 31 December all amounts in U.S. Dollars) 2008 2007 Assets Non-current Assets Property, plant and equipment 152,425,129 152.425,129 49,410,844 49,410,844 Total Non-current Assets Current Assets Spare parts inventory Receivables and prepayments Due from related parties Cash and cash equivalents 6,956.849 40,518,272 519,044 842.879 50,837,044 203,262,173 12,874,676 18,887,780 140,136 2,753,00:3 34,655,595 84,066,439 Total Current Assets Total Assets Equity and Liabilities Equity apital Additional paid-in capital Revaluation reserve Other Retained earnings 64,957,265 70,795,653 16,782,544 (1,368,122) 50,000,000 15,000,000 1,403,983 2,814,787 68,721,770 9,240,432 160,407.7 Total Equity Liabilities Non-current Liabilities Borrowings 4.545,190 4.545.190 738,499 738,499 Total Non-current Liabilities Current Liabilities Borrowings Trade and other payables Current tax liabilities Provisions Dividends and redemption payable Due to related parties 13,554,645 14,060,820 4,062,411 491,280 3,078,302 3.061.753 38,309,211 42.854,401 203.262.173 2,676,000 7,016,164 2,869,64S 2,044,363 Total Current Liabilities Total Liabilities Total Equity and Liabilities 14,606,170 15,344,669 84,066,439 CHALLENGER LIMITED (unconsolidated subsidary of Bronco Drilling) Statements of Income for the year ended 31 December (all amounts in U.S. Dollars) 2008 2007 Drill Drilling costs Gross profit General and administrative expenses Other income Other expense Operating (loss)/profit from operations 73,071,917 52,933,369) 20,138,548 (9,775,827) 2,446,43S 1,870,000) 10,939,154 46,043,831 (34,809,267) 11,734,564 (8,021,383) 19,005 ng revenue 3,732,186 46,015 (678,397 10,311,772 (8,389,127) 6,922,645 751,224 559,662) 3,923,748 2,307,594) 1,616,154 Finance income Finance cost (Loss)/profit before income tax Income tax (Loss) /profit for the year