ABC Corporation began operations on January 1, 2001 and uses IFRS to prepare its Financial Statements....

 

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ABC Corporation began operations on January 1, 2001 and uses IFRS to prepare its Financial Statements. ABC reported Net Income of $350,000 and stockholders' equity of $650,000 on December 31, 2005. Relevant information follows. *ABC paid $80,000 for development stage related to a new product in 2004 in the amount of $80,000. *ABC began selling the new product on January 1, 2005 and expects the product to be marketable for a total five years. 1. ABC's Net Income and Stockholder's Equity in 2005 will: Decrease It remains the same Increase (select only one) 2. "Ceteris paribus" = Other things being equal. Assume Research and Development is the only difference between USGAAP and IFRS accounting system. For 2005 will there be any difference in Net Income reported by USGAAP and IFRS? ( Amount (if any) S Explanation and *calculations. ABC Corporation began operations on January 1, 2001 and uses IFRS to prepare its Financial Statements. ABC reported Net Income of $350,000 and stockholders' equity of $650,000 on December 31, 2005. Relevant information follows. *ABC paid $80,000 for development stage related to a new product in 2004 in the amount of $80,000. *ABC began selling the new product on January 1, 2005 and expects the product to be marketable for a total five years. 1. ABC's Net Income and Stockholder's Equity in 2005 will: Decrease It remains the same Increase (select only one) 2. "Ceteris paribus" = Other things being equal. Assume Research and Development is the only difference between USGAAP and IFRS accounting system. For 2005 will there be any difference in Net Income reported by USGAAP and IFRS? ( Amount (if any) S Explanation and *calculations.

Answer rating: 100% (QA)

SOLUTION Under IFRS the RD cost will be capitalized and amortized over the life of of product ... View the full answer