Advanced Accounting 12th Edition by Joe Ben Hoyle,Thomas Schaefer , Timothy Doupnik

Exercise 9

Ramshare Company acquired equipment at the beginning of 2015 at a cost of $135,000. The equipment has a 5-year life with no expected salvage value and is depreciated on a straight-line basis. At December 31, 2015, Ramshare compiled the following information related to this equipment:

a. Determine the amount at which Ramshare should carry this equipment on its December 31, 2015, balance sheet and the amount, if any, that it should report in net income related to this inventory using (1) U.S. GAAP and (2) IFRS.
b. Determine the adjustments that Ramshare would make in 2015 and 2016 to reconcile net income and stockholders' equity under U.S. GAAP to IFRS. Ignore the possibility of any additional impairment at the end of 2014.