In its 10-K amended filing on April 30, 2010, Bronco Drilling reported the financial statements of Challenger Limited (an unconsolidated subsidiary) for its year ending December 31, 2009. The balance sheet and the income statement are reported as follows:

Footnote 2 from the amended 10-K includes the following:

Basis of Preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements have been prepared under the historical cost convention as modified by the revaluation of the rigs. Rigs include drilling equipment, well control equipment, electrical equipment, power plant, and so on.

Required:

A. Since the financial statements are prepared in U.S. dollars, does this imply that the financial statements are prepared in accordance with U.S. GAAP? Why or why not?

B. List three major differences between this balance sheet in comparison to balance sheets prepared under U.S. GAAP.

C. Evaluate the performance of the company using the income statement. What appears to be the cause of the major change in performance?

CHALLENGER LIMITED all amounts in U.S. Dollars) Property, plant and equipmen 152,425,129 1524251129 18,887,780 Retained earnings 4,545,190 515.190 Total Non-current Liabilities Trade and other payables Dividends and redemption payable