$203,000, and shareholders' equity at December 31 , Year 2 , was $1,830,000. Mr. Lombardi, the major shareholder, has made an offer to buy out the other shareholders, delist the company, and take it private. Thereafter, the company will report under ASPE. You have identified the following two areas in which Fast's accounting principles differ between IFRS and ASPE. 1. Fast incurred research and development costs of $503,000 in Year 1. Thirty percent of these costs were related to development activities that met the criteria for capitalization as an intangible asset. The newly developed product was brought to market in January, Year 2 and is expected to generate sales revenue for 10 years. 2. Fast acquired equipment at the beginning of Year 1 at a cost of $106,000. The equipment has a five-year life with no expected residual value and is depreciated on a straight-line basis. At December 31, Year 1, Fast compiled the following information related to this equipment: Required: (a) Determine the amount at which Fast should report each of the following on its balance sheet at December 31, Year 2, using (1) IFRS and (2) ASPE. Ignore the possibility of any additional impairment or reversal of impairment loss at the end of Year 2. Assume that Fast wants to minimize net income. (Leave no cells blank - be certain to enter "0" wherever required. Omit \$ sign in your response.) (i) Research and development (ii) Equipment (b) Prepare a reconciliation of net income for Year 2 and shareholders' equity at December 31, Year 2, under IFRS to an ASPE basis. (Omit \$ sign in your response.) $203,000, and shareholders' equity at December 31 , Year 2 , was $1,830,000. Mr. Lombardi, the major shareholder, has made an offer to buy out the other shareholders, delist the company, and take it private. Thereafter, the company will report under ASPE. You have identified the following two areas in which Fast's accounting principles differ between IFRS and ASPE. 1. Fast incurred research and development costs of $503,000 in Year 1. Thirty percent of these costs were related to development activities that met the criteria for capitalization as an intangible asset. The newly developed product was brought to market in January, Year 2 and is expected to generate sales revenue for 10 years. 2. Fast acquired equipment at the beginning of Year 1 at a cost of $106,000. The equipment has a five-year life with no expected residual value and is depreciated on a straight-line basis. At December 31, Year 1, Fast compiled the following information related to this equipment: Required: (a) Determine the amount at which Fast should report each of the following on its balance sheet at December 31, Year 2, using (1) IFRS and (2) ASPE. Ignore the possibility of any additional impairment or reversal of impairment loss at the end of Year 2. Assume that Fast wants to minimize net income. (Leave no cells blank - be certain to enter "0" wherever required. Omit \$ sign in your response.) (i) Research and development (ii) Equipment (b) Prepare a reconciliation of net income for Year 2 and shareholders' equity at December 31, Year 2, under IFRS to an ASPE basis. (Omit \$ sign in your response.)
