As of December 31, 2020, Gamma Corporation is currently evaluating three of its plant assets currently used in operations for possible impairments. Gamma is a U.S.- based company that complies with U.S. GAAP. Plant Asset # 201 hs Book Value $400,000 Undiscounted Future Cash Flows $450,000 Fair Value $390,000
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- es Rolfe Company (a US-based company) has a subsidiary in Nigeria where the local currency unit is the naira (NGN). On December 31, 2019, the subsidiary had the following balance sheet (amounts are in thousands [000s] Cash Inventory Land Building Accumulated depreciation NGN 16,820 12, 200 4,220 42,200 (21,100) NGN 54,340 2020 Feb. 1 Paid 8,220,000 NGN on the note payable. May 1 Sold entire inventory for 18,200,000 NGN on accou The subsidiary acquired the inventory on August 1, 2019, and the land and building in 2013. It issued the common stock in 2011. During 2020, the following transactions took place June 1 Sold land for 6,220,000 NGN cash. Aug. 1 Collected all accounts receivable. Sept. 1 Signed long-term note to receive 8,220,000 NGN cash. Oct. 1 Bought inventory for 20,220,000 NGN cash. 2011 2013 Nov. 1 Bought land for 3,220,008 NGN on account. Dec. 1 Declared and paid 3,220,000 NON cash dividend to parent. Dec.31 Recorded depreciation for the entire year of 2,110,000 NON. The US…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 for given problem. Trecek Corporation incurs research and development costs of $650,000 in 2017, 30 percent of which relate to development activities subsequent to IAS 36 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.a. Determine the appropriate accounting for research and development costs for the years ending December 31, 2017, and December 31, 2018, under (1) U.S. GAAP and (2) IFRS.b. 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.6. Consider the following excerpts from the balance sheet and income statement of Kane Plc. Kane Plc. reports under IFRS. Amounts in £ Capitalized development costs (net) Research expenses* 2,000 350 Amortisation of capitalised development costs 400 *Amounts spent in researching a new drug, whose technological and commercial feasibility has not yet been established. 2022 ANSWER: B 2,300 420 500 2021 If Kane Plc. had to report under U.S. GAAP instead, its income before taxes for fiscal year 2022 would be: a. Higher by £300 b. Lower by £300 c. Lower by £720 d. Lower by £500 e. None of the above
- Assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes for given problem. Tapatio S.A. de C.V. acquired a new piece of manufacturing equipment on January 1, 2016, for a cash price of 500,000 pesos. The equipment was expected to have a useful life of 10 years and no residual value, and is being depreciated on a straight-line basis. On January 1, 2017, the equipment was appraised and determined to have a fair value of 540,000 pesos, zero salvage value, and a remaining useful life of 9 years. Tapatio uses the revaluation model in IAS 16 to measure equipment subsequent to acquisition. Any revaluation surplus will be recycled to retained earnings when the equipment is disposed of.a. Determine the appropriate accounting for this equipment for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP. b. Prepare the…Assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes for given problem. Llungby AB spent 1,000,000 krone in 2017 on the development of a new product. The company determined that 25 percent of this amount was incurred after the criteria in IAS 36 for capitalization as an intangible asset had been met. The newly developed product is brought to market in January 2018 and is expected to generate sales revenue for five years.a. Determine the appropriate accounting for development costs for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017, and December 31, 2018, conversion worksheets to convert IFRS balances to U.S. GAAP.An analyst is studying the impairment of the manufacturing equipment of WLP Corp.,a U.K.-based corporation that follows IFRS. He gathers the following information aboutthe equipment:Fair value £16,800,000Costs to sell £800,000Value in use £14,500,000Net carrying amount £19,100,000Th e amount of the impairment loss on WLP Corp.’s income statement related to its manufacturing equipment is closest to:A. £2,300,000.B. £3,100,000.C. £4,600,000.
- Llungby AB spent 1,000,000 krone in 2020 on the development of a new product. The company determined that 25 percent of this amount was incurred after the criteria in IAS 36 for capitalization as an intangible asset had been met. The newly developed product is brought to market in January 2021 and is expected to generate sales revenue for five years. Assume that Llungby AB is a foreign company using IFRS and is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes. Required: Prepare journal entries for development costs for the years ending December 31, 2020, and December 31, 2021, under (1) IFRS and (2) U.S. GAAP. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020, and December 31, 2021, conversion worksheets to convert IFRS balances to U.S. GAAP.Llungby AB spent 1,000,000 krone in 2020 on the development of a new product. The company determined that 25 percent of this amount was incurred after the criteria in IAS 36 for capitalization as an intangible asset had been met. The newly developed product is brought to market in January 2021 and is expected to generate sales revenue for five years. Assume that Llungby AB is a foreign company using IFRS and is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes. Required: a. Prepare journal entries for development costs for the years ending December 31, 2020, and December 31, 2021, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020, and December 31, 2021, conversion worksheets to convert IFRS balances to U.S. GAAP. Required A Required B Prepare journal entries for development costs for the years ending December 31, 2020,…Llungby AB spent 1,000,000 krone in 2017 on the development of a new product. The company determined that 25 percent of this amount was incurred after the criteria in IAS 36 for capitalization as an intangible asset had been met. The newly developed product is brought to market in January 2018 and is expected to generate sales revenue for five years. Assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes. Required: Prepare journal entries for development costs for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017, and December 31, 2018, conversion worksheets to convert IFRS balances to U.S. GAAP.
- 1. Entity A, a government entity, acquires a machine for $10,000 on November 1, 20x1, on account, and settles the account on January 3, 20x2. The machine is estimated to have a useful life of 5 years and a residual value of 5% of cost. Entity A uses the straight line method of depreciation. The exchange rates are as follows. November 1, 20x1 $1 P50 December 31 20x1 $1 P40 January 3 20x2 $1P45 How much is the net foreign exchange gain (loss) recognized in surplus or deficit from the transaction?| a. P10.000 C. (P5 000) b. (P10,000) d. P5000A. XYZ Ltd has a system of depreciating its assets at a higher rate than required. The value of assets are much higher valued than its position as shown in the Balance sheet. What is the purpose achieved by XYZ Ltd in devaluing its Assets? State with reasons. B. As on 31st March, 2021 the company has receivables account of its exports in terms of US Dollars. The rate of US Dollar on 20th May, 2021 has reduced by 20%, causing a substantial loss to the company. What are the matters to be stated in this regard in the Annual Report for 2020-21 ?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 for given problem. Hirsch Company acquired equipment at the beginning of 2017 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, 2017, Hirsch compiled the following information related to this equipment: Expected future cash flows from use of the equipment . . . . . . . . $116,000Present value of expected future cash flows from use of the equipment . . . . . . . . . . . 100,000Fair value (selling price less costs to dispose) . . . . . . . . . . . . . . . . 96,600 a. Determine the appropriate accounting for this equipment for the years ending December 31, 2017, and December 31, 2018, under (1) U.S. GAAP and (2) IFRS.b. Prepare the entry(ies) that Hirsch would…