H Page view A Read aloud Draw Big Bath Emporium (BBE), a private company based in Toronto, is the city's largest manufacturer and vendor of bathtubs, showers, and sinks. The company sells products direct to consumers, and also sells wholesale to other retailers. BBE is owned by Bob Bresher, who runs the operations side of the business. His brother, Thomas Bresher, manages all of the accounting functions. Bob performed market research and determined that the next step for BBE is to expand sales to Quebec. BBE has slowly reduced its debt load over the years, but still relies on creditors and bankers to finance its operations. BBE went to the bank to obtain additional financing to expand to Quebec. The bank agreed to provide $1.5 million in financing at face value, at a rate of 9%, interest payable annually. The bank indicated that audited financial statements would be required this year, and BBE would need to maintain a debt to equity ratio of 1:1, where debt is defined as all liabilities in accordance with their accounting framework. Brayden LLP is a local audit firm engaged to perform the December 31, 2020 year-end audit to satisfy the bank requirements. You are the senior accountant assigned to this audit engagement. It is January 2021, and Thomas Bresher has asked that the work be performed as soon as possible. You meet with Bob and Thomas and note the following transactions that occurred during the year. 1. BBE has an intangible asset on its balance sheet (a website) with a remaining useful life of 6 years. Its book value is currently $150,000. As customers have started to use the mobile application instead, fewer and fewer sales are occurring through the website. Management is considering a change to the website's use and believes an impairment test should be performed. The website's estimated future net cash inflows for the next 6 years are $30,000 annually. The fair value is currently $125,000 (there would be no selling costs). BBE's balance sheet shows that the company has $1.3 million in debt and $2.4 million in equity. Because the equity is so much higher than the debt and the debt to equity ratio is easily met, Bob indicated that a dividend will be declared this year for $800,000. Assume that BBE applies ASPE, but is potentially interested in going public in the future, and therefore would like to know where there are differences for those issues under IFRS. You may calculate certain figures under IFRS rules in order to provide more useful analysis, but do not prepare journal entries or analyze the debt-equity covenant under IFRS.