Please help! Is international accounting and explain the treatment for USGAPP and IFRS with the new rules.
Case 4-1 Bessrawl Corporation Besarawl Corporation is a US-based company that prepares its consolidated nancial statements in accordance with US GAAP. The company reported income in 2014 of $1,000,000 and stockholders' equity at December 31, 2014, of $8.000.000 The CFO of Bestaw has learned that the US Securities and Exchange Com mission is considering requiring US companies to use IFRS in preparing con solidated financial statements. The company wishes to determine the impact that a switch to IFRS would have on its financial statements and has engaged you to prepare a reconciliation of income and stockholders' equity from US GAAP to IFRS. You have identified the following five areas in which Besrawl's accounting principles based on US GAAP differ from IFRS 1. Inventory 2. Property, plant, and equipment 3. Intangible assets 4. Research and development costs 5. Sale-and-leaseback transaction Bessrawl provides the following information with respect to each of these ac- counting differences Inventory At year-end 2016, inventory had a historical cost of $250.000, a replacement cont of $180,000, a ne realizable value of $190,000, and a normal profit margin of 20 percent Property, Plant and Equipment The company acquired a building at the beginning of 2013 at a cost of $2,750,000 The building has an estimated setul life of 25 years, an estimated residual value of $250,000, and is being depreciated on a straight-line basis. At the beginning of 2014, the building was appraised and determined to have a fair value of $3,250,000 ). There is no change in estimated seal life or residual value in a switch to IFRS, the company would use the revaluation model in IAS 16 to determine the carrying value of property, plant, and equipment subsequent to acquisition Intangible Assets As part of a business combination in 2011, the company acquired a brand with a fair value of $40,000. The brand is dessed as an intangible set with an in definite life. At year-end 2014, the brand is determined to have a selling price of $35,000 with zero cost to sell Expected future cash flows from continued use of the brand are 542,000, and the present value of the expected future cash flows is $34,000 Research and Development Costs The company incurred research and development costs of $200,000 in 2014. Or this amount. 40 percent related to development activities subsequent to the point at which criteria had been met indicating that an intangible asset eciated. As of the end of the 2014, development of the new product had not been completed. Sale-and-Leaseback In January 2012, the company realised again on the sale-and-leaseback of an of fice building in the amount $150,000. The lease is accounted for as an operating lease, and the term of the lease is five years Required Prepare a reconciliation schedule to convert 2024 income and December 31, 2014, stockholders' equity from a US GAAP basis to IFRS. Ignore income taxes. Prepare a note to explain each adjustment made in the reconciliation schedule
