Quantacc Ltd. began operations on January I, 2015, and uses IFRS to prepare its consolidated financial statements. Although not required to do so, to facilitate comparisons with companies in the United States, Quantacc reconciles its net income and stockholders' equity to U.S. GAAP. Information relevant for preparing this reconciliation is as follows: 1. Quantacc carries fixed assets at revalued amounts. Fixed assets were revalued upward on January I, 2017, by $35,000. At that time, fixed assets had a remaining useful life of 10 years 2. On January I, 2016, Quantacc realized a gain on the sale and leaseback of an office building in the amount of $200,000. The lease is classified as an operating lease and has a term of 20 years. 3. Quantacc capitalized development costs related to a new pharmaceutical product in 2016 in the amount of $80,000. Quantacc began selling the new product on January 1, 2017, and expects the product to be marketable for a total of Five years. Net income under IFRS in 2017 is $100,000 and stockholders' equity under IFRS at December 31, 2017, is $1,000,000. Ignore income taxes. Required a. Prepare a schedule to reconcile Quantacc's 2017 net income and December 31, 2017, stockholders' equity under IFRS to U.S. GAAP. b. Provide a brief title/description for each reconciling adjustment made, indicate the dollar amount of the adjustment, and calculate total amounts for net income and stockholders' equity under U.S. GAAP.
Quantacc Ltd. began operations on January I, 2015, and uses IFRS to prepare its consolidated financial statements. Although not required to do so, to facilitate comparisons with companies in the United States, Quantacc reconciles its net income and
1. Quantacc carries fixed assets at revalued amounts. Fixed assets were revalued upward on January I, 2017, by $35,000. At that time, fixed assets had a remaining useful life of 10 years
2. On January I, 2016, Quantacc realized a gain on the sale and leaseback of an office building in the amount of $200,000. The lease is classified as an operating lease and has a term of 20 years.
3. Quantacc capitalized development costs related to a new pharmaceutical product in 2016 in the amount of $80,000. Quantacc began selling the new product on January 1, 2017, and expects the product to be marketable for a total of Five years.
Net income under IFRS in 2017 is $100,000 and stockholders' equity under IFRS at December 31, 2017, is $1,000,000. Ignore income taxes.
Required
a. Prepare a schedule to reconcile Quantacc's 2017 net income and December 31, 2017, stockholders' equity under IFRS to U.S. GAAP.
b. Provide a brief title/description for each reconciling adjustment made, indicate the dollar amount of the adjustment, and calculate total amounts for net income and stockholders' equity under U.S. GAAP.
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