Alfres Company has prepared its financial statements for 2020, the first operation year, in accordance with US GAAP. Its income statement and balance sheet are as follow:

Income statement for the year ended 31st Dec 2020
	$	$
Sales revenue Less: COGS Gross profit Less: Operating expense R&D cost (1) Depreciation expense (2) Other expenses Net income	20,000 25,000 57,000	412,000 280,000 132,000 102,000 30,000

	Balance sheet As at 31st Dec 2020
	$		$
I. Current asset Cash and cash equivalents Account receivables Inventory	150,000 25,000 50,000 75,000	Current liabilities Bank overdraft (3) Account payables Non-current liabilities Bank loan payable due on 1st March 2021 (4)	105,000 15,000 90,000 120,000 120,000
II. Non-current asset Machinery Accumulated Depreciation Machinery (2)	475,000 500,000 (25,000)	V. Equities Common stock Retained earnings:	400,000 370,000 30,000
Total assets	625,000	Total liabilities and equities	625,000

Additional informations:

1. the above R&D costs included $10,000 development-phase costs that have been met all the criteria for recognition as an intangible asset in accordance with IFRSs.
2. the above depreciation is calculated based on the PPE average estimated useful life of 20 years. However, the PPE can be decomposed into different components with different useful lives as follow:

Components	Cost ($)	Useful life (years)
Engines	200,000	10
Inspection	50,000	5
Other components	250,000	25

3. Overdrafts form an integral part of cash management of Alfres Company
4. At 31^st Dec 2020, Alfres company has reached an agreement with the bank to refinance the note for 2 years but the refinancing has not yet been completed. The new negotiation completed on 15^th January 2021 before the financial reporting issuance date.

Required:

1.1 Explain how should the above 4 items be reported in financial statements in accordance with IFRSs? (1.5 marks)

2. Prepare the income statement of Alfres Company for the year 2020 in accordance with IFRSs? (Explain your calculation, if any) (0.75 marks)
3. Prepare the balance sheet of Alfres Company as at 31^st Dec 2020 in accordance with IFRSs? (Explain your calculation, if any) (0.75 marks)