Case Study Is Marks Hessel Corporation is a US-based company that properes is stated financial statement in accordance with U.S. GAAP. The company reported income is 2020 of 1,000,000 and stockholders quity at Deer 1, 2020, 6.000.000 The CFO of Beaulo lamed that the US Securities and Exchange Commission is considering requiring U.S.companies to IFRS is preparing solidated financial statements The company wishes to determine the impact that a switch to IFRS would love on its facial tements and has mgaped you to prepare a reconciliation of income and stockholders equity from US GAAP IS You have identified the following five in which Brawl's accounting principles is is hased on US GAAP differ from IFRS. 1. Invey 2 Property, plant and equipment 3. Intangibles 4 Rescarch and development costs 5. Sale-and-leaseback transaction Bestat provides the following information with respect to cach of these accounting differences At year-end 2020, inventory had a historical cost of $250,000, a replacement cost of $180,000, Het reliable value of 5190,000, and a nemal profit margin of 20 percent Property. Plant Equipment The company acquired a building at the beginning of 2019 a cost of $2,750,000. The building has an estimated useful life of 25 years, an estimatedral value of $250.000, and is being depreciated on a straight-line hosis. At the beginning of 2020, the building was appraised and determined to have a fair value of $3,250,000. There is no change in estimated useful life or rodal value. In a switch to IFRS, the company would use the reevaluation model in IAS 16 determine the carrying value of property, plant, and equipment sequent to acquisition Intangible Act As part of a business combination in 2017, the company acquired a brand with a fair value of $40.000. The brand is classified as an intangible asset with an indefinite life. At year-end 2020 the brand in determined to have a selling price of $35.000 with no cost to sell. Expected future cash flow from continued of the brand are 543,000 and the present value of the expected future cash flows is $34.000 2 Research and Development Cost The company incurred research and development costs of $200,000 in 2030. of this amount 40 percent related to developenent activities subsequent to the point which criteria had been met indicating that an intangible asset exstod. As of the end of the 2020, development of the sea product had not been completed In January 2018, the company realised a pair of the sale and stack of an office building in the mount of $150,000. The lease is accounted for as in operating home, and the form of the Ice five you Required Prepare a reconciliation schedule to convert 2020 income, and December 31, 2020. stockholders quity from a US GAAP basis FRS. Ignore come tax Prepare a note to explain each djustment made in the reconciliation schedule Case Study Is Marks Hessel Corporation is a US-based company that properes is stated financial statement in accordance with U.S. GAAP. The company reported income is 2020 of 1,000,000 and stockholders quity at Deer 1, 2020, 6.000.000 The CFO of Beaulo lamed that the US Securities and Exchange Commission is considering requiring U.S.companies to IFRS is preparing solidated financial statements The company wishes to determine the impact that a switch to IFRS would love on its facial tements and has mgaped you to prepare a reconciliation of income and stockholders equity from US GAAP IS You have identified the following five in which Brawl's accounting principles is is hased on US GAAP differ from IFRS. 1. Invey 2 Property, plant and equipment 3. Intangibles 4 Rescarch and development costs 5. Sale-and-leaseback transaction Bestat provides the following information with respect to cach of these accounting differences At year-end 2020, inventory had a historical cost of $250,000, a replacement cost of $180,000, Het reliable value of 5190,000, and a nemal profit margin of 20 percent Property. Plant Equipment The company acquired a building at the beginning of 2019 a cost of $2,750,000. The building has an estimated useful life of 25 years, an estimatedral value of $250.000, and is being depreciated on a straight-line hosis. At the beginning of 2020, the building was appraised and determined to have a fair value of $3,250,000. There is no change in estimated useful life or rodal value. In a switch to IFRS, the company would use the reevaluation model in IAS 16 determine the carrying value of property, plant, and equipment sequent to acquisition Intangible Act As part of a business combination in 2017, the company acquired a brand with a fair value of $40.000. The brand is classified as an intangible asset with an indefinite life. At year-end 2020 the brand in determined to have a selling price of $35.000 with no cost to sell. Expected future cash flow from continued of the brand are 543,000 and the present value of the expected future cash flows is $34.000 2 Research and Development Cost The company incurred research and development costs of $200,000 in 2030. of this amount 40 percent related to developenent activities subsequent to the point which criteria had been met indicating that an intangible asset exstod. As of the end of the 2020, development of the sea product had not been completed In January 2018, the company realised a pair of the sale and stack of an office building in the mount of $150,000. The lease is accounted for as in operating home, and the form of the Ice five you Required Prepare a reconciliation schedule to convert 2020 income, and December 31, 2020. stockholders quity from a US GAAP basis FRS. Ignore come tax Prepare a note to explain each djustment made in the reconciliation schedule