Maurice Ltd. is a private Canadian company. It has been preparing its financial statements in accordance with IFRS but is now considering a change to ASPE. For its Year 6 financial statements, Maurice reported the following in accordance with IFRS: Net income $5,000 Total debt $27,200 Current assets 15,600 Total shareholders equity 23,500 Current liabilities 12,700 You have identified the following three areas in which Maurices accounting policies have differences between IFRS and ASPE: Impairment losses Convertible bonds Income taxes The controller at Maurice provides the following information with respect to each of these accounting differences and indicates that the Year 6 financial statements reflect the proper accounting for these items in accordance with IFRS: Impairment Losses Impairment tests were performed on the companys equipment for Years 5 and 6 with the following results: December 31, Year 5 December 31, Year 6 Cost of equipment $33,125 $33,125 Accumulated depreciation 6,625 7,950 Carrying amount before impairment 26,500 25,175 Undiscounted future cash flows 21,500 20,000 Value in use 20,900 20,100 Fair value 19,700 20,200 Depreciation expense for year 1,325 1,325 At the end of Year 5, the equipment had an estimated remaining useful life of 20 years. There were no impairment losses prior to Year 5. Convertible Bonds Maurice issued bonds for proceeds of $33,000 on January 1, Year 5. The bonds are convertible into common shares at any time within the next five years. The bonds would have been worth only $30,100 if they did not have the conversion feature. The amortization of the discount on bonds was $75 in Year 5 and $76 in Year 6. Income Taxes Maurices income tax rate has been and is expected to continue at 40%. The financial statements reflect the future taxes payable method of accounting for income taxes and contain the following amounts: December 31, Year 5 December 31, Year 6 Future income tax payable $6,500 $6,890 Future income tax expense 385 390 The CEO is concerned about the impact of converting Maurices financial statements from IFRS to ASPE on the following metrics: current ratio, debt-to-equity ratio, and return on total shareholders equity. Where ASPE provides an accounting policy choice, he wants to choose the method that is most simple and straightforward. Required: (a) Calculate the three ratios first using IFRS and then ASPE. Prepare a schedule showing any adjustments to the numerator and denominator for these ratios. Ignore income taxes on the impairment losses and convertible bonds. (Round the final answers for all the ratios to two decimal places. Omit $ and % sign in your response.) IFRS ASPE $ 15600 $ Current ratio = = $ 12700 $ $ 27200 $ Debt to equity = = $ 23500 $ $ $ Return on total equity = % = % $ $ (b) Determine whether Maurices liquidity, solvency, and profitability look better or worse under ASPE after considering the combined impact of the three areas of difference. Under ASPE Liquidity (Click to select) Solvency (Click to select) Profitability (Click to select)