I need help in balancing my financial statements. Any advice on why they might be off would be appreciated. So this is for an international accounting class project. So it's asking for the highest IFRS and lowest IFRS income statement and balance sheet as well as one from GAAP. I guided myself as much as I could from class materials and stuff, but I still need to make sure these financial statements balance. I already completed them! But they don't balance. Again any insights on why they aren't balancing could help me resolve the issue. Thanks.

Ill leave an snapshots for the class project; my workings on excel and my finished income statements and balance sheets.

The assignment

The company has not yet determined appropriate accounting policies for inventory, non-current assets and research and development. The following information is made available:

1.Marv uses the periodic inventory measurement approach. The ending inventory of finished goods at December 31 2020 was valued on a first in, first out basis at $400,000, on a weighted average cost basis at $700,000 and a LIFO basis at $1,200,000.Assume that the company does not keep inventories of raw materials and unfinished work in process.

2.The manufacturing plant and equipment has an estimated useful economic life of four years and a residual value at the end of that period of $500,000. The accountant believes it appropriate to use either the straight-line, double declining balance, or the diminishing balance (applying a depreciation rate of 44% per year to the current net book value) methods for calculating annual depreciation.

3.Research ($500,000) and development expenditure ($1,400,000) were incurred researching, developing and completing a new manufacturing process. The process is expected to be operational on March 1 2021 and is estimated to have a useful economic life of ten years and have no residual value. When development commenced, the company's engineers were sure of the technical and commercial feasibility of the project as it was expected to result in significant reductions to production costs.

4.At 31 December 2020, the company's freehold land was valued at $1,900,000. Land is not depreciated.

5.As a result of a meteor hitting Mars on 12/31/2020, the company's manufacturing plant and equipment must be tested for impairment. The following data is made available:

Net book value of plant and equipment (i.e. carrying value) at 12/31/2020

Use your own calculations, after accounting for annual depreciation

Fair value (i.e. selling price)

$3,300,000

Cost of asset disposal

$600,000

Expected future cash flows from use

$3,600,000

Present value of expected future cash flows from use

$2,900,000

Note: the impairment has not been accounted for in the trial balance at 12/31/2020. Account for this, after depreciating the plant. Any impairment loss must be expensed and added to the accumulated depreciation in the balance sheet.

6.On 12/1/2020, the company incurred $200,000 of legal fees to register a 10 year patent for the new manufacturing process. On 12/14/2020, the company incurred $500,000 of legal fees to successfully defend its patent in a New York court. The court's verdict did not increase the future value of the patent. If you choose to capitalize the intangible patent cost(s), assume that there is no amortization during 2020.

7.On January 1 2020, the company signed a contract for the construction of a new factory. To finance this expansion, the company obtained a specific $3,200,000 construction loan at an annual interest rate of 20% per year. The factory was completed on December 31 2020. The total construction cost (excluding borrowing and interest costs) was $3,200,000.

The loan financed the construction costs of the factory. Construction fees of $2,000,000 were paid to the construction on January 1 2020, with a further $1,200,000 paid to the contractor on October 1st 2020. The unused portion of this loan was invested on the money markets at a rate of return equal to 10% per year. The interest income and loan interest are already included in the ending trial balance above.

Using Excel and appropriate journal entries, answers to the following:

a)Using accounting practices allowed under U.S. GAAP, do an income statement for Marvin Ltd for the year ending December 31 2020 and a statement of financial position at that date that achieve the company's aim of impressing potential investors and lenders. Briefly explain all of the accounting policies that you used to produce this answer. (30 points)

b)Using accounting practices allowed under IFRS, do an income statement for Marvin Ltd for the year ending December 31 2020 and a statement of financial position at that date that achieve the company's aim of impressing potential investors and lenders. Briefly explain all of the accounting policies that you used to produce this answer. (30 points)

What I did

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Statement of Comprehensive Income for Marv Lid for year ended 12/31/2020 IFRS IFRS Lowest Highest U.S. GAAP EOOO EOOO EOOO Revenue 4300 4300 4,300 Cost of sales Raw materials used in production 400 400 400 Production staff wages 200 200 200 Rental of factory facility 100 100 100 Depn of plant & machinery 2188 1125 1125 Cost of goods manufactured 2888 1825 1825 Opening FGI inventory Closing FGI inventory -700 -400 -400 Cost of goods sold 2188 1425 1425 Gross profit 2112 2875 2,875 Expenses Administration expenses 200 200 200 Distribution expenses 0 Development expenses 1400 0 1400 Research expenses 500 500 500 Loan interest on construction* 640 -2740 -700 180 -2280 Profit for the year -628 2175 2,020 Other comprehensive income Interest revenue 90 90 90 Gain on revaluation of land 0 900 Total comprehensive income for year -538 3165 2,110 under IAS 23, borrowing costs should be capitalized if attributable to construction of a qualifying asset. Current practice suggests that this rule is typically being applied to assets that take a substancil time to complete (e.g. more than 12 months). Statement of Financial Position for Marv Ltd as of 31 Dec 2020 Lowest IFRS Highes IFRS U.S. GAAP Non-Current assets Cost Acc Depn NBV Cost/Value Acc Depn NVB Cost Acc Depn NBV Freehold Land 1000 1000 1900 1900 1000 1000 Plant & equipment 5000 2188 2812 5000 1125 3875 5000 1125 3875 Manufacturing facility 3200 975 2225 3840 975 2865 3660 975 2685 Intangible development asset 0 1400 0 400 0 9200 3163 6037 12140 2100 10040 9660 2100 7560 Current assets Inventory 700 400 400 Cash 250 250 250 950 650 650 Current iabilities Trade payables 900 900 900 Working capital 50 250 -250 Less non-current liabilities Construction loan 3200 3200 -3200 Net assets 2887 6590 4110 Equity Ordinary share capital 5100 5100 5100 Retained earnings .538 2175 2,020 Revaluation reserve 900 4562 8175 7120Trial balance for Marv Ltd as at 31 December 2020 2 SOOOS Common Stock ($1 shares) 5100 Trade and other accounts payable 900 Revenue 4300 6 Beginning Inventory at 1 January 2020 7 Raw materials used in production 400 8 Production and factory wages 200 9 Factory Rent for 2020 100 10 Plant and equipment at cost 5000 11 Administration expenditure 200 12 Distribution expenditure 13 Cash 250 14 Research and development expenditure 1900 5 Patent on legal costs 700 16 Loan interst paid on construction loan (before capitalization) 640 17 Interest received on unused portion of construction loan 18 Manufacturing facilty at construction cost (excluding borrowing costs) 3200 19 Construction loan 3200 20 Freehold land at cost 1000 21 13590 13590 22 Workings Question1 3 Inventories at 31 December 2020 First-in- first-out (FIFO 400 Avarage cost 700 LIFO 200 26 Research and development expenses Research 500 27 1400 Question 3 Development 28 USEFUL LIFE 10 29 Depreciation of plant & machinery COST 5000 30 Question 2 SCRAP 500 31 USEFUL LIFE 33 STRAIGHT LINE 34 YEAR END DEPN ACC DEPN BOOK VALUE 35 1125 1125 3875 1125 2250 2750 37 W N 1125 3,375 1,625 1125 4.500 500 DIMINISHING BALANCE 44% 1-((5/C)^(1/4)) YEAR END DEPN ACC DEPN BOOK VALUE 2188 2188 2812 1231 3419 1581 692 4111 889 389 4500 500 44 To test for impairment: compare carrying cost and fair value of the asset. If the fair value is lower then the asset is impair Question 45 Carrying cost = 5,000,000-1,125,000= 3,875,00 Whichever is higher in FV 2,900,00 46 Fair value less ocst of dispossal 3,300,000-600,000= 2,700,00 47 Value in use (discounted future cash flow)= 2,900,000 this case value in use CA(3,875,000 is higher 48 Impairment= 975,000 49 Patent cost= $700,000 (amount to be recognized for FS presentation) Question 6 50 To be amortized over 10 years 51 Amount incurred for defending patent is not recognized as cost but still added. 52 Accrued 3 Interest on construction loan 209 640 Question 7 54 55 Income on unused construction loan 56 From Until Months annual equivalent amount of loan used on project 58 1/1/2020 9/30/2020 Amount 57 1200 90 59 Construction cost of Factory facility Building cost 3200 60 61 Amount Months Annual equivalent amount of loan used on project 62 Payment 1/1/2020 2000 2000 63 10/1/2020 1200 12 300 64 2300 Capitalized loan interest 65 Invested 1/1/2020 1200 9/ 900 460 US GAAP 66 640 IFRS 67 Total cost of premises @ 12/31/2020 & Capitalization of borrowing costs 68 Specific loan U.S. GAAP IRS- if a specific loan all interst cap 69 Construction costs 3,200,000 ,200,000 70 Borrowing costs capitalized 460,000 640,000 71 Interest on temporary investment -90,000 72 Total cost of the asset 3,660,000 3,750,000 73 74 Valuation of freehold land Cost 1000 75 Market value 1900 76