Alamco is a Canadian public company with its head office located in Saskatoon, Saskatchewan. Its common shares are listed on both the Toronto and Shanghai stock exchanges. Alamco has a wholly owned subsidiary in China.
The subsidiary uses accounting principles consistent with Canadian GAAP except for one item. It expenses all research and development costs whereas IFRS would allow certain development costs to be capitalized and amortized over the period when the development costs provide benefit. The controller would like to understand the currency of financial reporting that would be required for presentation to the users of Alamco’s financial statements. In addition, she is unsure of the accounting effect of the difference in the treatment of the research and development costs.
Required
Respond to the controller’s questions.