InterRent Real Estate Investment Trust is a publicly traded company, headquartered in Ontario, generating revenue from rental operations and the sale of revenue-producing properties. The following are excerpts from its 2010 and 2009 financial statements, during which time it used Canadian GAAP prior to adopting IFRS on January 1, 2011.

In 2010, InterRent disposed of four properties (35 suites) (2009-one property, 22 suites) and classified seventeen income producing properties (482 suites) as discontinued operations as a result of InterRent initiating an active program to dispose of these properties.
The following table sets forth the results of operations associated with the properties reported as discontinued operations:

Instructions
Assume you are a financial analyst and have been asked to perform a comprehensive analysis of InterRent's performance. This requires you do the following: evaluate InterRent's accounting policies, perform a vertical and horizontal analysis, and calculate key ratios for InterRent.
(a) In its 2010 and 2009 financial statements, InterRent classified its discontinued operations according to Canadian GAAP prior to the transition to IFRS. Do you think InterRent's properties would meet the definition of discontinued operations under IFRS in 2011? Why or why not?
(b) When performing vertical and horizontal analyses, if companies follow different accounting policies, it may be necessary to make adjustments to the financial statements so that they are comparable with other companies. Based upon your answer in part (a), what adjustments (if any) would you have to make to InterRent's 2010 and 2009 income statements in order to make InterRent comparable with other companies in the real estate industry that follow IFRS? Will these adjustments result in a change in the overall 2010 and 2009 loss?
(c) One of the key ratios for real-estate companies such as Inter Rent is the net rental ratio (which is the same as the gross profit margin). Calculate the net rental ratio, using profit before the under-noted as a proxy for gross profit, for each of the unadjusted 2010 and 2009 figures and the adjusted 2010 and 2009 figures. What is the impact of your adjustments on the net rental ratio?

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INTERRENT REAL ESTATE INVESTMENT TRUST Income Statement Year Ended December 31 (in thousands) 2010 $31,922 16,945 14,977 11,381 3,508 7,113 22,002 (7,025) 29 (6,996 2009 Rental revenue Rental expenses Profit before the under-noted Financing costs Administrative costs Depreciation expense 31,773 16,599 15,174 11,325 6,957 697 24,979 (9,805) 272 $(10,077 Loss from continuing operations Profit (loss) from discontinued operations (Note 10) Loss (in thousands) Rental revenue Rental expenses Loss Gain (loss) on disposal Loss on write-down of properties held for sale(526) Discontinued operations 2009 2010 $3,431 3,472 (41) 596 $3,646 3,871 (225) (47) S 29 S (272)