GOOD$-$FEELING PRODUCTS INC.Andy Good$-$Feeling looked out of the window at the drizzling rain. Although it was greyand misty outside Andy was certainly feeling great. The health food business that he hadestablished was starting to take off, riding on the wave of interest in well being and healthconsciousness that had caught on with young, and not$-$so$-$young, professionals. Every daytheir website blogs and X accounts were filled with feel good stories contributed by theirmany grateful clients and fans. Life should have been one long sweet song for Andy...butsomething seemed to be bothering him. He frowned as he turned away from the window."I sometimes wish I wasn't so successful" he muttered to himself.Good$-$Feeling Products Inc. $($GFP$)$ is a private company incorporated $3$ years agodedicated to the production and distribution of health products, cosmetics and gymequipment for the burgeoning health and well$-$being sector. All the shares are held byAndy and some close family and friends. Temporary cash shortfalls have always beenmet by the family or friends stepping in to bridge their needs, and Andy's own personalassets have often been sufficient to obtain modest bank loans. The office staff is quietlyefficient looking after the day$-$to day administration, and Andy uses the services of Budthe tax whiz to prepare the HST$,$ payroll and income tax returns. Bud is an expert on taxdeductions and credits, and helps minimize the tax bills for Andy to the extent possible $-"$we don't want the government to take away all our hard$-$earned money, do we$?$"Their three production lines $-$ health foods, cosmetics and gym equipment $-$ have alldone extremely well. Their spectacular growth has led to increased financing needs, andthey are considering going public in the near future. They have been generating modestprofits in the last three years, and estimate a profit after taxes of $$4,762,000$ in $2023,$based on a preliminary draft of their financial statements prepared by the administrativestaff. The firm has not paid dividends in the past, preferring to finance their growth withinternally generated funds as much as possible. To preserve cash, management receivespart of their compensation in the form of stock options, and several employee stockoption plans have been implemented in the past to tie in employee loyalty to the firm.Andy himself occasionally dons an apron and chef's hat for the annual employee picnicto barbecue hot dogs for the families of the employees.In the past the firm has followed ASPE using the taxes payable method. However as soonas they go public they know that they have to adopt IFRS rules.It is January $2024.$ GFP$\text{'}$s fiscal year$-$end is December $31,2023.$ Andy Good$-$Feeling,President of GFP$,$ has taken a decision. $"$We must move on to the next step, and gopublic", he says to himself as he picks up the phone. He has remembered an old schoolfriend $($you$)$ who went on to Seneca Polytechnic, an accounting degree, and a CPAdesignation, and who could help him out with his current problems. After the initialpleasantries Andy asks if you could come over to talk with him about some accountingissues related to his firm. You agree.

"Hey, as you know, I am just a guy who loves healthy wholesome food, fresh air and ahealthy lifestyle", he says, shaking you warmly by the hand, "but I am completely lost inthe new global business environment with all these new$-$fangled rules that they keepthrowing at us$.$ We will have to follow these international rules for our accounting, andhave our financial statements audited by a recognized and respected auditing firm.Barney, my head clerk, is very hard$-$working and intelligent, but he just cannot keep upwith all the changes that have taken place in the past few years. Aunt Agatha helps asmuch as she can. In fact she has given me an interest free loan of $$1,000,000$ to help usalong. Since she is family, and the loan is interest free I think of it as her investment inthe firm. I would have to pay the banks at least $4\%$ to borrow that money. But she isfacing a tightening of her financial position, and I may have to return her money in a yearor two. Why don't you hop on board, study the situation, and tell me what I should do$.$Summer is around the corner, and we could put in a few rounds of golf too. You knowwhat they say...all work and no play... ha ha$".$ He would like you to prepare a reportoutlining alternative accounting policies and your recommendations. "Let me take a raincheck", you say, continuing with the golf theme.After giving the proposal a lot of thought over the weekend, you accept the offer.Early Monday morning you arrive at GFP headquarters, and set to work.The following information is collected by you:

$13.$ Summarized statement of financial position for $2023-$ the company had total assets of $$12,000,000$ and liabilities of $$8,000,000.14.$ The income tax rate is $30\%.15.$ The firm has covenants with their creditors to maintain their debt$-$equity ratio at or below $2\mathrm{.}5$:$1$