QualCore Company began operations on January 1, Year 1, and uses IFRS to prepare its financial statements. QualCore reported net income of $1 million in Year 5 and had stockholders' equity of $5 million at December 31, Year 5. The company wishes to determine what its Year 5 income and December 31, Year 5, stockholders' equity would be if it had used U.S. GAAP. Relevant information follows: o QualCore carries property that it uses for its own operations at revalued amounts. This property was last revalued upward by $350,000 on January 1, Year 3. At that time, it had a remaining useful life of 10 years. QualCore held no investment properties at the start of Year 5. However, on January 1, it purchased an office facility for $1.2 million and immediately began leasing it to tenants. QualCore accounts for this investment property using the fair value method. An appraiser reported that the facility's fair value was $1.4 million on December 31, Year 5. If QualCore had used the cost method for the facility, it would have computed depreciation using a 20-year useful life with no residual value. o QualCore capitalized development costs related to a new product in Year 4 in the amount of $800,000. QualCore began selling the new product in January, Year 5, and expects the product to be marketable for a total of five years. Required: 1. Determine net income for Year 5 if QualCore had used U.S. GAAP. 2. Determine stockholders' equity at December 31, Year 5, if QualCore had used U.S. GAAP.
QualCore Company began operations on January 1, Year 1, and uses IFRS to prepare its financial statements. QualCore reported net income of $1 million in Year 5 and had stockholders' equity of $5 million at December 31, Year 5. The company wishes to determine what its Year 5 income and December 31, Year 5, stockholders' equity would be if it had used U.S. GAAP. Relevant information follows: o QualCore carries property that it uses for its own operations at revalued amounts. This property was last revalued upward by $350,000 on January 1, Year 3. At that time, it had a remaining useful life of 10 years. QualCore held no investment properties at the start of Year 5. However, on January 1, it purchased an office facility for $1.2 million and immediately began leasing it to tenants. QualCore accounts for this investment property using the fair value method. An appraiser reported that the facility's fair value was $1.4 million on December 31, Year 5. If QualCore had used the cost method for the facility, it would have computed depreciation using a 20-year useful life with no residual value. o QualCore capitalized development costs related to a new product in Year 4 in the amount of $800,000. QualCore began selling the new product in January, Year 5, and expects the product to be marketable for a total of five years. Required: 1. Determine net income for Year 5 if QualCore had used U.S. GAAP. 2. Determine stockholders' equity at December 31, Year 5, if QualCore had used U.S. GAAP.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A1
Transcribed Image Text:QualCore Company began operations on January 1, Year 1, and uses IFRS to
prepare its financial statements. QualCore reported net income of $1 million in Year
5 and had stockholders' equity of $5 million at December 31, Year 5. The company
wishes to determine what its Year 5 income and December 31, Year 5, stockholders'
equity would be if it had used U.S. GAAP. Relevant information follows:
o QualCore carries property that it uses for its own operations at revalued
amounts. This property was last revalued upward by $350,000 on January 1,
Year 3. At that time, it had a remaining useful life of 10 years.
o QualCore held no investment properties at the start of Year 5. However, on
January 1, it purchased an office facility for $1.2 million and immediately
began leasing it to tenants. QualCore accounts for this investment property
using the fair value method. An appraiser reported that the facility's fair
value was $1.4 million on December 31, Year 5. If QualCore had used the
cost method for the facility, it would have computed depreciation using a
20-year useful life with no residual value.
o QualCore capitalized development costs related to a new product in Year 4
in the amount of $800,000. QualCore began selling the new product in
January, Year 5, and expects the product to be marketable for a total of five
years.
Required:
1. Determine net income for Year 5 if QualCore had used U.S. GAAP.
2. Determine stockholders' equity at December 31, Year 5, if QualCore had used
U.S. GAAP.
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