Quantacc Company began operations on January 1, Year 1, and uses IFRS to prepare its financial statements. Quantacc reported net income of $100,000 in Year 5 and had stockholders' equity of $500,000 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:
• Quantacc carries fixed assets at revalued amounts. Fixed assets were last revalued upward by $35,000 on January 1, Year 3. At that time, fixed assets had a remaining useful life of 10 years.
• Quantacc capitalized development costs related to a new product in Year 4 in the amount of $80,000. Quantacc began selling the new product in January, Year 5, and expects the product to be marketable for a total of five years.
• Early in January, Year 5, Quantacc realized a gain on the sale-and-leaseback of an office building in the amount of $150,000. The lease is accounted for as an operating lease, and the term of the lease is 20 years.
Required:
Calculate the following for Quantacc Company using U.S. GAAP (ignore income taxes):
a. Net income for Year 5.
b. Stockholders' equity at December 31, Year 5.