Company Background: Florida Chocolate Inc. was first opened as a sole proprietor in 20x2 under the name Alexandrias Chocolates. The company produced 4 specialty chocolate products using an old family recipe, which only the owner, Alexandria Vierra, knows. The company started as a small homebased business. In 20x4 Alexandria decided to expand the business, opened a factory in Ft. Lauderdale Florida and converted the business to a corporation named Florida Chocolate Inc. Due to the huge success of the business she decided to expand to Europe in 20x6, opening another factory in England. This factory is run by Alexandrias brother Nelson. The third factory was open in Brazil in 20x9 and is run by Alexandrias sister Laura. Project Information: *The recording currency and functional currency of Florida Chocolate Inc. is the U.S. Dollar. On January 1, 20x6 Florida Chocolate Inc acquired 100% of Brazil Cos outstanding stock to open a factory in Brazil. The following facts relate to the acquisition: Florida Chocolate Inc paid $1,000,000 cash for Brazil Co Industries. On January 1, 20x6, Brazil Co had the following assets and liabilities on its balance sheet: Cash - $375,000, Inventory - $1,000,000, Land - $100,000, Buildings & equipment - $625,000, Accounts Payable - $300,000, and Notes Payable - $1,500,000. Fair market values of all Brazil Co' assets and liabilities approximate their costs with the exception of: Inventory - $950,000 Land - $300,000 Buildings & Equipment - $975,000 For the year ended December 31, 20x6, Florida Chocolate Inc had the following other assets and liabilities on its balance sheet: Cash - $825,000, Inventory - $1,250,000, Land - $500,000, Buildings & equipment - $1,500,000, Accounts payable - $500,000, Notes payable - $2,000,000. Retained earnings before closing the income statement was $2,500,000. Florida Chocolate Inc. received income from Brazil Co of $125,000, and dividends from Brazil Co of $50,000. Florida Chocolate Inc 's sales for the year were $3,000,000. Cost of goods sold was $1,900,000, and its operating expenses were $875,000. Brazil Co' sales for the year were $1,000,000. Cost of goods sold was $650,000, and its operating expenses were $225,000. Assume that net income increased Brazil Co' cash balances. Dividends were paid out of Brazil Co' cash balances. Ignore amortization expense. There were no intercompany transactions between Florida Chocolate Inc. and Brazil Co during 20x6. Due to the huge success of the business she expanded to Europe in 20x7, opening another factory in England. The recording currency of the England factory is the Euro and the functional currency is the Pound sterling. In 20x9 Alexandria formed a partnership in Florida with her brother, Nelson. Alexandria and her brother both contributed the following assets: Alexandria Nelson Cash $61,100 $50,800 Inventories 80,900 0 Land 0 131,500 Equipment 101,400 0 The land was subject to a $51,600 mortgage, which the partnership assumed on January 1, 20x9. The equipment was subject to an installment note payable that had an unpaid principal amount of $21,200 on January 1, 20x9. The partnership also assumed this note payable. Alexandria and Nelson agreed to share partnership income and losses in the following manner: Alexandria Nelson Interest on beg. Capital balances 3% 3% Salaries $13,900 $13,900 Remainder 60% 40% During 20x9, the following events occurred: Inventory was acquired at a cost of $31,400. At December 31, 20x9, the partnership owed $6,300 to its suppliers. Principal of $5,700 was paid on the mortgage. Interest expense incurred on the mortgage was $2,000, all of which was paid by December 31, 20x9. Principal of $3,300 was paid on the installment note. Interest expense incurred on the installment note was $2,300, all of which was paid by December 31, 20x9. Sales on account amounted to $162,000. At December 31, 20x9, customers owed the partnership $21,900. Selling and general expenses, excluding depreciation, amounted to $34,400. At December 31, 20x9, the partnership owed $7,100 of accrued expenses. Depreciation expense was $6,700. Each partner withdrew $230 each week in anticipation of partnership profits. The partnerships inventory at December 31, 20x9, was $20,700. The partners allocated the net income for 20x9 and closed the accounts. Part 3: This week's assignment is to complete Part 3 of the portfolio project and to submit the final versions of Part 1 and Part 2 of the project for a completed Portfolio Project. Independent of your response to Parts 1 & 2, assume Florida Chocolate Inc, uses U.S. GAAP for financial reporting and that Brazil Co. or England also use IFRS. Based on your research, select three differences between accounting for a specific transaction under GAAP and IFRS and explain the impact that the difference could have on the consolidation financials if the transaction was part of the intercompany transactions between the two companies. Include a hypothetical example to show the impact. In addition, discuss any ethical concerns you find if a company decides to switch from GAAP to IFRS reporting. Be sure to identify standards and/or professional practice to back up your example. Please answer part 3