ARLR Inc. is a local company from United States and prepares its consolidated Financial Statements in accordance with US GAAP. The Company reported revenues for $3,000,000, expenses for $2,000,000 and total stockholders equity for $8,000,000 in 2017. The company wishes to determine the impact that a switch to IFRS would have on its financial satetements. You are the responsible to prepare the reconciliation from US GAAP to IFRS for 2017. You have identified the following areas in which ARLR accounting rules bases on US GAAP differ from IFRS: Property Plant and Equipment, Research and Development and Contingency Liabilities.

Depreciation: The Asset was acquired at the beginning of 2017 at a total cost of $15,000,000, useful life 10 years, no residual value.

Components:

#1 Cost: $3,000,000, 5years useful life, residual value $100,000.

#2 Cost: $10,000,000, total units 25,000,000, fisrts year units 1,000,000, no residual value.

#3 Cost: $2,000,000, total hours 50,000 fisrts year hours 5,000, no residual value.

There is no change in estimated useful life or residual value. Under IFRS the company would use components to depreciates.

Impairment: ARLR Inc. reported an impairment loss of $65,000 for the year ended December 31, 2016. At December 31, 2017, the assets recoverable amount increased by $90,000. The current book value is $100,000 less than it would have been if the asset had not been impaired. The recoverable amount doses not exceed the original book value as if the asset was not impaired.

There is no change in estimated useful life or residual value. The company wants to apply IAS 36 Impairment of assets.

Contingency Liabilities:

1. A new product liability lawsuit was files in 2017, related to the drug of the Pharmacy, the attorneys asses the likelihood and allows the company to record a loss under IFRS. If the range of estimates is between $30,000 and $50,000. How the company accounted this transaction under IFRS.
2. A new product liability lawsuit was files related to the drug of the Pharmacy, the attorneys asses the likelihood of losing of 10%. The attorney assessment is between $10,000 and $50,000.

Required: Prepare a reconciliation to convert 2017 net income and stockholders equity from US GAAP to IFRS. Ignore income taxes. Prepare 3 Notes (depreciation, impairment and contingency liabilities) to explain each adjustment made in the reconciliation.