Exuberance Corp. presented its financial statements under the national GAAP of “Strangeland” (country) until 2004. It adopted IFRS from 2005 and is required to prepare an opening IFRS balance sheet as at January 1, 2004. In preparing the IFRS opening balance sheet Exuberance Corp. noted
• Under its previous GAAP, Exuberance Corp. had deferred advertising costs of $1,000,000 and had classified proposed dividends of $500,000 as a current liability.
• It had not made a provision for warranty of $200,000 in the financial statements presented under previous GAAP since the concept of “constructive obligation” was not recognised under its previous GAAP.
• In arriving at the amount to be capitalized as part of costs necessary to bring an asset to its working condition, Exuberance Corp. had not included professional fees of $300,000 paid to architects at the time when the building it currently occupies as its head office was being constructed.
Advise Exuberance Corp. on the treatment of all the above items under IFRS 1