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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 milli
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: 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. 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.