Ramshare Company acquired equipment at the beginning of 2015 at a cost of $135,0

Question

Ramshare Company acquired equipment at the beginning of 2015 at a cost of $135,000. The equipment has a five-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:

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. (Input all values as positive numbers.)

Depreciation            (GAAP)                    (IFRS)

Impairment Loss       (GAAP)                   (IFRS)

Equipment, Dec.31, 2105           (GAAP)        (IFRS)

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. (If there is no reconciliation adjustment select "No adjustment is required to". Input all values as positive numbers.)

2015 Adjustments

____________ GAAP Net Income ________

____________GAAP Stockholders' Equity_______

2016 Adjustments

____________GAAP Net Income _______

__________GAAP Syockholderes' Equity__________

Ramshare Company acquired equipment at the beginning of 2015 at a cost of $135,000. The equipment has a five-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:

Explanation / Answer

Ramshare company Details Asset Cost               135,000 Salvage                             -   Depreciable value                 135,000 Useful life in years                            5 Annual depreciation by SL method                  27,000 Book Value on Dec 31.2015.               108,000 Impairment Test USGAAP IFRS Book Value/Carrying value               108,000               108,000 Undiscounted expected future cash flows               116,000               116,000 As per first step carrying value is less than undiscounted future cash flows So no impairmane as per USGAAP PV of expected future cash flows               100,000 Fair value less cost to sale                  96,600 Recoverable value =higher of FV less cost to sale and PV of net expected cash flows=               100,000 Carrying value > Recoverable amount. So Impairment exists as per IFRS Amount of impairnment =108000-100000=                    8,000 So reportings   Dec 31.2015. Value   USGAAP IFRS Gross Value                 135,000               135,000 Depreciation                    27,000                  27,000 Impairment                             -                      8,000 Net Carrying Value               108,000               100,000 Year 2016 Remaining life in years                            4                            4 SL depreciation per year                    27,000                  25,000 Year 2015. Net Income And stock holders equity USGAAP IFRS Net Income = More than IFRS by                    8,000 Stockholders Equity =More than IFRS by                    8,000 Year 2016. Net Income And stock holders equity Net Income = Less Than IFRS by                      2,000 Stockholders Equity =Less than IFRS                      2,000

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