Alongos holdings Co (AHC) is owned by Edward and Mary Alongo. The company holds a variety of investments and currently follows ASPE for reporting purposes. Edward Alongo is Considering changing to IFRS but he would like to understand the implications of adopting IFRS. He is particularly concerned about the impact these changes will have on some key ratios: in particular, return on assets after tax, return on equity after tax, and total debt to equity. The bank requires that the long-term debt to equity not be higher than 0.7. Edward has come to you to request your assistance. He has asked that you calculate the ratios for the most recent ASPE statements (provided in Exhibit 1). He has also asked that you restate the 20X4 financial statements on the basis that IFRS is adopted and recalculate the ratios based on these restated amounts. The et earning for 20X4 was $520,000 after tax. The company has an income tax rate of 30%. Although the company follows the future income tax method, there were no future income taxes at the end of 20X4. Recently you met with Edward and took notes on accounts that would be impacted with the changeover to IFRS. A summary of your notes is in Exhibit 2. Prepare the memo for Edward showing the revised statements under IFRS and the revised ratios. Provide reconciliations of revised retained earnings. AOCI, and deferred income taxes. 1. The bonds receivable has a face value of $2 million. The bonds mature in 10 years, and bear interest at 8%, payable quarterly. Current market yield on similar risk bonds is 10%. The bonds are currently recorded at amortized cost and will be classified as FVTPL on adoption of IFRS. At the end of 20X3, the bonds had a market yield of 9%. Balance Sheet Alongos Holding Company All amounts in thousands of Canadian dollars 20X4 Current assets Cash and cash equivalents $175 Marketable securities 720 895 Bonds receivable 2,000 Investments in preferred shares 3,800 Investment in SODA 1,200 Vacant land 1,950 Total assets 9,845 Current liabilities Accounts payable and accrued expenses $320 Long term bank loans 3500 Total liabilities 3,820 Shareholders equity Preferred shares 2,800 Common Shares 1,500 Retained earnings 1,725 Total liabilities and shareholders equity $9,845