Quantacc Ltd. began operations on January 1, 2011 and uses IFRS to prepare its consoliated financial statements. Although not required to do so, to facilitate comparisons with companies in the US, Quantacc reconciles its net income and stockholder's equity to US 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 1, 2013, by $35000. At that time, fixed assets had a remaining useful life od 10 years.
2. On January 1, 2012, 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 2012 in the amount of $80,000. Quantacc began selling the new product on January 1, 2013, and expects the product to be marketable for a total of 5 years.Net income under IFRS in 2013 is $100,000 and stockholders' equity under IFRS at December 31, 2013 is $1,000,000.
Required:
a) Prepare a schedule to reconcile Quantacc's 2013 net income and December 31, 2013 stockholders' equity under IFRS to US GAAP.
b) Provide a brief title/description for each reconciling adjustment made, indicate the dollar amount of the adjustment, and calculate total amounts for the net income and stockholders' equity under US GAAP.