Non-toxic-toys currently has $400,000 of equity and is planning a $160,000 expansion to meet increasing demand for its product. the company currently earns $100,000 in net income and the expansion will yield $50,000 in additional income before any interest expense. the company has 3 options; do not expand, expand and issue $160,000 in debt that requires 8% annual interest, or expand and raise $160,000 from equity financing. for each of the 3 options compute a) net income b) return on equity.

Trecek corporation incurs research and development costs of $625,000 in 2017, 30 percent of which relate to development activities subsequent to ias 38 criteria having been met that indicate an intangible asset has been created. the newly developed product is brought to market in january 2018 and is expected to generate sales revenue for 10 years. assume that a u.s.–based company is issuing securities to foreign investors who require financial statements prepared in accordance with ifrs. thus, adjustments to convert from u.s. gaap to ifrs must be made. ignore income taxes. required: (a) prepare journal entries for research and development costs for the years ending december 31, 2017, and december 31, 2018, under (1) u.s. gaap and (2) ifrs. (c) prepare the entry(ies) that trecek would make on the december 31, 2017, and december 31, 2018, conversion worksheets to convert u.s. gaap balances to ifrs.