Income statements of Cat Co. and Dog Co. for the year ended December 31, Year 9, are presented below: Cat Co. Sales $ 605,000 Rent revenue $0 Interest revenue 6,700 Income from subsidiary 30,320 Gain on land sale $0 Cost of goods sold 334,000 Distribution expense 80,000 Administrative expense 147,000 Interest expense 1,700 Income tax expense 20,700 Profit $ 58,620

Dog Co. Sales $ 355,000 Rent revenue 50,000 Gain on land sale 8,000 Cost of goods sold 225,000 Distribution expense 70,000 Administrative expense 74,000 Interest expense 6,000 Income tax expense 7,500 Profit $ 30,500 Additional Information: - Cat Co. uses the equity method to account for its investment in Dog Co. - Cat Co. acquired its 80% interest in Dog Co. on January 1, Year 4. On that date, the acquisition differential of $25,000 was allocated entirely to buildings, it is being amortized over a 20 year period. - Amortization expense is grouped with distribution expenses, and impairment losses, if any, are grouped with other expenses. - Cat Co. made an advance of $100,000 to Dog Co. on July 1, Year 9. This loan is due on demand and requires the payment of interest at 12% per year. - Cat Co. rents marine equipment from Dog Co. During Year 9, $50,000 rent was paid and was charged to administrative expense. - In Year 7, Cat Co. sold land to Dog Co. and recorded a profit of $10,000 on the sale. Dog Co. held the land until October, Year 9, when it was sold to an unrelated company. - During Year 9, Dog Co. made sales to Cat Co. totalling $90,000. The December 31, Year 9, inventories of Cat Co. contain an unrealized profit of $5,000. The January 1, Year 9, inventories of Cat Co. contained an unrealized profit of $12,000. - On January 1, Year 7, Cat Co. sold machinery to Dog Co. and recorded a profit of $13,000. The remaining useful life on that date was five years. Assume straight line depreciation. - Dog Co. paid dividends of $20,000 during Year 9. - Both companies have a tax rate of 40%. Required: 1.) Prepare the consolidated income statement for Year 9 following IFRS. 2.) Prepare the consolidated income statement for Year 9 if Cat Co. was a private company following ASPE, and uses the cost method to report its investment in Dog Co. 3.) Assuming Cat Co. is a private company and has the accounting policy choice between adopting IFRS or following ASPE, which would you recommend? Why? (Maximum: 200 words)