please double check the answers are correct i dont think they are, also fill in the explanation column for each row and show calculations for numbers $1-5.$In $2022,$ its first year of operations, Rieter A$.$G$.($Rieter$)$ prepared its financial statements in accordance with IFRS $($as audited by the company$$s auditors, KPMG Switzerland$).$ After$-$tax Operating Income amounted to $$1,250,000$ and Shareholders$$ Equity reported at $$10,300,000.$ Rieter A$.$G$.$s Swiss combined income tax rate $($central government statutory rate plus subcentral government rate$)$ is $19\mathrm{.}65\%.$

Rieter A$.$G$.$ is interested in attracting additional external investors to help finance a major expansion. Several of the targeted investors are based in the U$.$S$.$ and have asked the you to prepare a reconciliation to U$.$S$.$ GAAP for the Income statement and the Shareholders$$ Equity portion of the Balance Sheet. These investors have recommended to Rieter that they use FMV options where appropriate in IFRS.

You have identified the following items as having potentially material impact for the reconciliation process.

$1.$ The $2022$ IFRS balance sheet shows total inventory with a balance of $$1,600,000.$ Further investigation indicates that inventory with a historical cost of $$500,000$ was subjected to lower$-$of$-$cost or market analysis. That portion of the inventory has replacement cost of $$465,000,$ a current estimated selling price of $$490,000,$ and $$15,000$ estimated cost to sell. The normal profit margin is $15\%$ of selling price. Rieter A$.$G$.$ uses the retail inventory method.

$2.$ An analysis completed by a commercial property investment firm indicates the fair market value of Rieter$$s PP&E as of December $31$ is $$5,100,000.$ All PP&E was acquired in $2022$ at cost of $$5,000,000$ and has accumulated depreciation of $$250,000$ as of December $2022.$

$3.$ In $2022$ Rieter incurred research and development costs totaling $$260,000.$ Rieter can clearly distinguish the research phase from the development phase of the project. Research$-$phase costs amounted to $$132,000$ and development$-$phase costs are $$128,000.$ An additional $$150,000$ of development costs are expected in $2023.$ All the IAS $38$ criteria have been met for recognition of the development costs. The product is expected to be brought to market in $2023$ and is expected to be marketable for five years.

$4.$ Rieter owns a $5-$acre plot of land that is currently not in use and is being held as investment property. The historical cost of the land is $$1,350,000.$ A real estate broker conducted a comparative analysis in December and determined the fair market value of the tract is $$1,425,000.$

$5.$ In $2022$ Rieter began construction of a new plant that is recognized as a qualifying asset under IAS$23$: Borrowing Costs. Interest costs associated with construction loans amounted to $$108,000.$ Additionally, other borrowing costs associated with the loans $($bank fees, closing costs, etc.$)$ amounted to $$18,000.$ The interest rate on the construction loan is higher than the weighted$-$average interest rate that Rieter had at the time.

Requirements:

a$.$ Reconcile the IFRS$-$based financial statements to U$.$S$.$ GAAP using the templates on the following pages.

b$.$ Compare the return on equity on the IFRS$-$based financial statements to the U$.$S$.$ GAAP results.

Supporting calculations for items $1-5$:$$

a$.$ Use the following template to prepare the reconciliation of IFRS income to U$.$S$.$ GAAP income.

Item Adjustment Explanation

After$-$tax Operating Income $($IFRS$)$ $$1,250,000$

Inventory

PP&E

R&D

Invesment Property

Borrowing Costs

After$-$ tax Operating Income $($U$.$S$.$ GAAP$)$

$$

Use the following template to prepare the reconciliation of IFRS Shareholders$$ Equity to U$.$S$.$ GAAP Shareholders$$ Equity.

Item Adjustment Explanation

Shareholders$$ Equity

$($IFRS$)$ $$10,300,000$

Inventory

PP&E

R&D

Invesment Property

Borrowing Costs

Shareholders$$ Equity

$($U$.$S$.$ GAAP$)$

b$.$ ROE Impact Analysis $($Compare ROE under IFRS and U$.$S$.$ GAAP$)$