1. Areas of differences between IFRS and US GAAP, in respect of IFRS include: * Property, plant and equipment – Measurement subsequent to initial recognition. Cost less accumulated depreciation and any accumulated impairment losses. * Purchased intangibles - Measurement subsequent to initial recognition. Same as property, plant and equipment. However, fair value method is only applicable for intangibles with an active secondary market. * Borrowing costs - No borrowing costs are capitalized as part of the cost of a qualifying asset. * Types of differences include: definition, recognition, measurement, alternatives, lack of requirements, presentation, and disclosure.

4. Under IAS 36, an impairment loss arises when an asset’s recoverable amount is less than its carrying value, where recoverable amount is the greater of net selling price and value in use. Value in use is determined as the expected future cash flows from use of the asset discounted to present value. The amount of the loss is the difference between carrying value and recoverable amount. Under US GAAP, an impairment loss arises when the expected future cash flows (undiscounted) from the use of the asset are less than its carrying value. If impairment exists, the amount of the loss is equal to the difference between carrying value and fair value, which can be determined in different ways.

6. An increase in fair value of the asset is credited to “revaluation surplus” in equity, except to the extent it reverses previously recorded decrease reported directly in net income.

8. The fair value model for investment property differs from the revaluation method for property, plant, and equipment in that changes in fair value are recognized as gains or losses in current income and not as a revaluation surplus.

Exercise 1. B $205,000

Exercise 2. C $45,000

Exercise 4. D