ABC. Corporation is a U.S based Company that prepares its consolidated statements in accordance with U.S GAAP. The Company reported in Year 1: net income of $1,000,000 and total equity $8,000,000. The Company wishes to determine the impact that a switch to IFRS would have on its financial statements and has engaged you to prepare a reconciliation of income and equity from US GAAP to IFRS. You have identified the following area in which ABC. Co. accounting principles based on U.S. GAAP differ from IFRS. Research and Development: The Company disbursement $200,000 in Year 1. Of this amount, 40% related to development activities after the point at which criteria had been met indicating that an intangible asset existed. You must show the computations to receive the score.

Required: Answer the following.

1. Does the transaction impact Net Income and Total Assets on both accounting rules? (IFRS and US GAAP)

Yes: _____ No _____

2. If No, explain in which year they differ and mention the amount.

Year 1: ______

Year 2: ______

Year 3: ______

Year 4: ______

Year 5: ______