Question - Bracy Company acquired a new piece of construction equipment on January 1, 2011, at a cost of $100,000. The equipment was expected to have a useful life of 10 years and a residual value of $20,000 and is being depreciated on a straight-line basis. On January 1, 2012, the equipment was appraised and determined to have a fair value of $101,000, a salvage value of $20,000, and a remaining useful life of nine years.
(a) Determine the amount of depreciation expense that Bracy should recognize in determining net income in 2011, 2012, and 2013 and the amount at which equipment should be carried on the December 31, 2011, 2012, and 2013 balance sheets using (1) U.S. GAAP and (2) IFRS. In measuring property, plant, and equipment subsequent to acquisition, Bracy uses the revaluation model in IAS 16. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)
(b) Determine the adjustments that Bracy would make in 2011, 2012, and 2013 to reconcile net income and stockholders' equity under U.S. GAAP to IFRS. (Input all amounts as positive values. If there is no reconciliation adjustments select "none". Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)