Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Fast Ltd . is a public company that prepares its consolidated financial statements in accordance with IFRS. Its net income in Year 2 was $
Fast Ltd is a public company that prepares its consolidated financial statements in accordance with IFRS. Its net income in Year was $ and shareholders equity at December Year was $
Mr Lombardi, the major shareholder, has made an offer to buy out the other shareholders, delist the company, and take it private. Thereafter, the company will report under ASPE. You have identified the following two areas in which Fasts accounting principles differ between IFRS and ASPE.
Fast incurred research and development costs of $ in Year Thirty percent of these costs were related to development activities that met the criteria for capitalization as an intangible asset. The newly developed product was brought to market in January, Year and is expected to generate sales revenue for years.
Fast acquired equipment at the beginning of Year at a cost of $ The equipment has a fiveyear life with no expected residual value and is depreciated on a straightline basis. At December Year Fast compiled the following information related to this equipment:
Expected future cash flows from use of the equipment $
Present value of expected future cash flows from use of the equipment
Net realizable value
Required:
a Determine the amount at which Fast should report each of the following on its balance sheet at December Year using IFRS and ASPE. Ignore the possibility of any additional impairment or reversal of impairment loss at the end of Year Assume that Fast wants to minimize net income. Leave no cells blank be certain to enter wherever required. Omit $ sign in your response.
i Research and development
IFRS ASPE
R&D @ Dec Yr $
$
ii Equipment
IFRS ASPE
Equipment @ Dec Yr $
$
b Prepare a reconciliation of net income for Year and shareholders equity at December Year under IFRS to an ASPE basis. Omit $ sign in your response.
Net Income Year under ASPE $
SE @ Dec Year under ASPE $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started