Determine the appropriate accounting for the past service cost for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP.

Question

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Answer 1

Question

Chapter 11, Problem 21P

a.

To determine

Determine the appropriate accounting for the past service cost for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP.

a.

Expert Solution

Explanation of Solution

(1)

IFRS:

The entry to be recorded under IFRS:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
01/01/2017	Past Service Cost expense		60,000
	Defined Benefit obligation			60,000
	(being increase in pension obligation recorded)

Table: (1)

(2)

U.S. GAAP:

The entry to be recorded under U.S. GAAP:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
01/01/2017	Deferred Past service Costs		60,000
	Defined Benefit obligation			60,000
	(being increase in pension obligation recorded)

12/31/2017	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being amortized amount recorded)

Table: (2)

b.

To determine

Prepare the entry 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.

b.

Expert Solution

Explanation of Solution

The entry to be recorded on December 31, 2017:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
12/31/2017	Deferred Past service Costs		56000
	Past Service Cost expense			56000
	(being past service cost expense recorded)

Table: (3)

Partial Conversion worksheet, December 31, 2017 (Past Service Cost)
Particulars	IFRS	Debit	Credit	U.S. GAAP
Past service expense	60,000		56,000	4,000
Net income of 2017	60,000			4,000
Retained earnings on 01/01/2017	-			-
Retained earnings on 12/31/2017	60,000			4,000

Deferred Past Service Cost (AOCI)	-	56,000		56,000
AOCI on 01/01/2017	-			-
AOCI on 12/31/2017	-			56,000
Total assets	-			0

Deferred benefit Obligation	(60,000)			(60,000)
Total Liabilities	(60,000)			(60,000)
Retained earnings on 12/31/2017	60,000			4,000
AOCI, 31/12/2017	-			56,000
Total liabilities and Equity	-	56,000	56,000	-

Table: (4)

The entry to be recorded on December 31, 2018:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
12/31/2018	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being value of past service cost reduced to 52,000 Yuan)

1/1/2018	AOCI		56000
	Retained Earnings			56000
	(being AOCI adjusted)

12/31/2018	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being balance carried forward)

Table: (5)

Partial Conversion worksheet, December 31, 2018 (Past Service Cost)
Particulars	IFRS	Debit	Credit	U.S. GAAP
Past service expense	-	4,000	-	4,000
Net income of 2017	-			4,000
Retained earnings on 01/01/2018	60,000		56,000	4,000
Retained earnings on 12/31/2018	60,000			8,000

Deferred Past Service Cost (AOCI)	-		4,000	(4,000)
AOCI on 01/01/2018	-	56,000		56,000
AOCI on 12/31/2018	-			52,000
Total assets	-			0

Deferred benefit Obligation	(60,000)			(60,000)
Total Liabilities	(60,000)			(60,000)
Retained earnings on 12/31/2018	60,000			8,000
AOCI, 31/12/2018	-			52,000
Total liabilities and Equity	-	60,000	60,000	-

Table: (6)

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On January 1, 2020, Xiamen Company made amendments to its defined benefit pension plan that resulted in 61,400 yuan of past service cost. The plan has 5,280 active employees with an average expected remaining working life of 10 years. There currently are no retirees under the plan. Assume that Xiamen Company 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. ints Skipped Required: a. Prepare journal entries for the past service cost 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. eBook Print References Complete this question by entering your answers in the tabs below. Required A Required B Prepare journal entries for the past service…

On January 1, 2020, Xiamen Company made amendments to its defined benefit pension plan that resulted in 62,500 yuan of past service cost. The plan has 5,190 active employees with an average expected remaining working life of 10 years. There currently are no retirees under the plan. Assume that Xiamen Company 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 the past service cost 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.

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Answer 2

Question

Chapter 11, Problem 21P

a.

To determine

Determine the appropriate accounting for the past service cost for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP.

a.

Expert Solution

Explanation of Solution

(1)

IFRS:

The entry to be recorded under IFRS:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
01/01/2017	Past Service Cost expense		60,000
	Defined Benefit obligation			60,000
	(being increase in pension obligation recorded)

Table: (1)

(2)

U.S. GAAP:

The entry to be recorded under U.S. GAAP:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
01/01/2017	Deferred Past service Costs		60,000
	Defined Benefit obligation			60,000
	(being increase in pension obligation recorded)

12/31/2017	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being amortized amount recorded)

Table: (2)

b.

To determine

Prepare the entry 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.

b.

Expert Solution

Explanation of Solution

The entry to be recorded on December 31, 2017:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
12/31/2017	Deferred Past service Costs		56000
	Past Service Cost expense			56000
	(being past service cost expense recorded)

Table: (3)

Partial Conversion worksheet, December 31, 2017 (Past Service Cost)
Particulars	IFRS	Debit	Credit	U.S. GAAP
Past service expense	60,000		56,000	4,000
Net income of 2017	60,000			4,000
Retained earnings on 01/01/2017	-			-
Retained earnings on 12/31/2017	60,000			4,000

Deferred Past Service Cost (AOCI)	-	56,000		56,000
AOCI on 01/01/2017	-			-
AOCI on 12/31/2017	-			56,000
Total assets	-			0

Deferred benefit Obligation	(60,000)			(60,000)
Total Liabilities	(60,000)			(60,000)
Retained earnings on 12/31/2017	60,000			4,000
AOCI, 31/12/2017	-			56,000
Total liabilities and Equity	-	56,000	56,000	-

Table: (4)

The entry to be recorded on December 31, 2018:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
12/31/2018	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being value of past service cost reduced to 52,000 Yuan)

1/1/2018	AOCI		56000
	Retained Earnings			56000
	(being AOCI adjusted)

12/31/2018	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being balance carried forward)

Table: (5)

Partial Conversion worksheet, December 31, 2018 (Past Service Cost)
Particulars	IFRS	Debit	Credit	U.S. GAAP
Past service expense	-	4,000	-	4,000
Net income of 2017	-			4,000
Retained earnings on 01/01/2018	60,000		56,000	4,000
Retained earnings on 12/31/2018	60,000			8,000

Deferred Past Service Cost (AOCI)	-		4,000	(4,000)
AOCI on 01/01/2018	-	56,000		56,000
AOCI on 12/31/2018	-			52,000
Total assets	-			0

Deferred benefit Obligation	(60,000)			(60,000)
Total Liabilities	(60,000)			(60,000)
Retained earnings on 12/31/2018	60,000			8,000
AOCI, 31/12/2018	-			52,000
Total liabilities and Equity	-	60,000	60,000	-

Table: (6)

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Answer 3

Question

Chapter 11, Problem 21P

a.

To determine

Determine the appropriate accounting for the past service cost for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP.

a.

Expert Solution

Explanation of Solution

(1)

IFRS:

The entry to be recorded under IFRS:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
01/01/2017	Past Service Cost expense		60,000
	Defined Benefit obligation			60,000
	(being increase in pension obligation recorded)

Table: (1)

(2)

U.S. GAAP:

The entry to be recorded under U.S. GAAP:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
01/01/2017	Deferred Past service Costs		60,000
	Defined Benefit obligation			60,000
	(being increase in pension obligation recorded)

12/31/2017	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being amortized amount recorded)

Table: (2)

b.

To determine

Prepare the entry 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.

b.

Expert Solution

Explanation of Solution

The entry to be recorded on December 31, 2017:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
12/31/2017	Deferred Past service Costs		56000
	Past Service Cost expense			56000
	(being past service cost expense recorded)

Table: (3)

Partial Conversion worksheet, December 31, 2017 (Past Service Cost)
Particulars	IFRS	Debit	Credit	U.S. GAAP
Past service expense	60,000		56,000	4,000
Net income of 2017	60,000			4,000
Retained earnings on 01/01/2017	-			-
Retained earnings on 12/31/2017	60,000			4,000

Deferred Past Service Cost (AOCI)	-	56,000		56,000
AOCI on 01/01/2017	-			-
AOCI on 12/31/2017	-			56,000
Total assets	-			0

Deferred benefit Obligation	(60,000)			(60,000)
Total Liabilities	(60,000)			(60,000)
Retained earnings on 12/31/2017	60,000			4,000
AOCI, 31/12/2017	-			56,000
Total liabilities and Equity	-	56,000	56,000	-

Table: (4)

The entry to be recorded on December 31, 2018:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
12/31/2018	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being value of past service cost reduced to 52,000 Yuan)

1/1/2018	AOCI		56000
	Retained Earnings			56000
	(being AOCI adjusted)

12/31/2018	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being balance carried forward)

Table: (5)

Partial Conversion worksheet, December 31, 2018 (Past Service Cost)
Particulars	IFRS	Debit	Credit	U.S. GAAP
Past service expense	-	4,000	-	4,000
Net income of 2017	-			4,000
Retained earnings on 01/01/2018	60,000		56,000	4,000
Retained earnings on 12/31/2018	60,000			8,000

Deferred Past Service Cost (AOCI)	-		4,000	(4,000)
AOCI on 01/01/2018	-	56,000		56,000
AOCI on 12/31/2018	-			52,000
Total assets	-			0

Deferred benefit Obligation	(60,000)			(60,000)
Total Liabilities	(60,000)			(60,000)
Retained earnings on 12/31/2018	60,000			8,000
AOCI, 31/12/2018	-			52,000
Total liabilities and Equity	-	60,000	60,000	-

Table: (6)

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Answer 4

Question

Chapter 11, Problem 21P

a.

To determine

Determine the appropriate accounting for the past service cost for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP.

a.

Expert Solution

Explanation of Solution

(1)

IFRS:

The entry to be recorded under IFRS:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
01/01/2017	Past Service Cost expense		60,000
	Defined Benefit obligation			60,000
	(being increase in pension obligation recorded)

Table: (1)

(2)

U.S. GAAP:

The entry to be recorded under U.S. GAAP:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
01/01/2017	Deferred Past service Costs		60,000
	Defined Benefit obligation			60,000
	(being increase in pension obligation recorded)

12/31/2017	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being amortized amount recorded)

Table: (2)

b.

To determine

Prepare the entry 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.

b.

Expert Solution

Explanation of Solution

The entry to be recorded on December 31, 2017:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
12/31/2017	Deferred Past service Costs		56000
	Past Service Cost expense			56000
	(being past service cost expense recorded)

Table: (3)

Partial Conversion worksheet, December 31, 2017 (Past Service Cost)
Particulars	IFRS	Debit	Credit	U.S. GAAP
Past service expense	60,000		56,000	4,000
Net income of 2017	60,000			4,000
Retained earnings on 01/01/2017	-			-
Retained earnings on 12/31/2017	60,000			4,000

Deferred Past Service Cost (AOCI)	-	56,000		56,000
AOCI on 01/01/2017	-			-
AOCI on 12/31/2017	-			56,000
Total assets	-			0

Deferred benefit Obligation	(60,000)			(60,000)
Total Liabilities	(60,000)			(60,000)
Retained earnings on 12/31/2017	60,000			4,000
AOCI, 31/12/2017	-			56,000
Total liabilities and Equity	-	56,000	56,000	-

Table: (4)

The entry to be recorded on December 31, 2018:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
12/31/2018	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being value of past service cost reduced to 52,000 Yuan)

1/1/2018	AOCI		56000
	Retained Earnings			56000
	(being AOCI adjusted)

12/31/2018	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being balance carried forward)

Table: (5)

Partial Conversion worksheet, December 31, 2018 (Past Service Cost)
Particulars	IFRS	Debit	Credit	U.S. GAAP
Past service expense	-	4,000	-	4,000
Net income of 2017	-			4,000
Retained earnings on 01/01/2018	60,000		56,000	4,000
Retained earnings on 12/31/2018	60,000			8,000

Deferred Past Service Cost (AOCI)	-		4,000	(4,000)
AOCI on 01/01/2018	-	56,000		56,000
AOCI on 12/31/2018	-			52,000
Total assets	-			0

Deferred benefit Obligation	(60,000)			(60,000)
Total Liabilities	(60,000)			(60,000)
Retained earnings on 12/31/2018	60,000			8,000
AOCI, 31/12/2018	-			52,000
Total liabilities and Equity	-	60,000	60,000	-

Table: (6)

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Answer 5

Chapter 11, Problem 21P

a.

To determine

Determine the appropriate accounting for the past service cost for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP.

a.

Expert Solution

Explanation of Solution

(1)

IFRS:

The entry to be recorded under IFRS:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
01/01/2017	Past Service Cost expense		60,000
	Defined Benefit obligation			60,000
	(being increase in pension obligation recorded)

Table: (1)

(2)

U.S. GAAP:

The entry to be recorded under U.S. GAAP:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
01/01/2017	Deferred Past service Costs		60,000
	Defined Benefit obligation			60,000
	(being increase in pension obligation recorded)

12/31/2017	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being amortized amount recorded)

Table: (2)

b.

To determine

Prepare the entry 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.

b.

Expert Solution

Explanation of Solution

The entry to be recorded on December 31, 2017:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
12/31/2017	Deferred Past service Costs		56000
	Past Service Cost expense			56000
	(being past service cost expense recorded)

Table: (3)

Partial Conversion worksheet, December 31, 2017 (Past Service Cost)
Particulars	IFRS	Debit	Credit	U.S. GAAP
Past service expense	60,000		56,000	4,000
Net income of 2017	60,000			4,000
Retained earnings on 01/01/2017	-			-
Retained earnings on 12/31/2017	60,000			4,000

Deferred Past Service Cost (AOCI)	-	56,000		56,000
AOCI on 01/01/2017	-			-
AOCI on 12/31/2017	-			56,000
Total assets	-			0

Deferred benefit Obligation	(60,000)			(60,000)
Total Liabilities	(60,000)			(60,000)
Retained earnings on 12/31/2017	60,000			4,000
AOCI, 31/12/2017	-			56,000
Total liabilities and Equity	-	56,000	56,000	-

Table: (4)

The entry to be recorded on December 31, 2018:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
12/31/2018	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being value of past service cost reduced to 52,000 Yuan)

1/1/2018	AOCI		56000
	Retained Earnings			56000
	(being AOCI adjusted)

12/31/2018	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being balance carried forward)

Table: (5)

Partial Conversion worksheet, December 31, 2018 (Past Service Cost)
Particulars	IFRS	Debit	Credit	U.S. GAAP
Past service expense	-	4,000	-	4,000
Net income of 2017	-			4,000
Retained earnings on 01/01/2018	60,000		56,000	4,000
Retained earnings on 12/31/2018	60,000			8,000

Deferred Past Service Cost (AOCI)	-		4,000	(4,000)
AOCI on 01/01/2018	-	56,000		56,000
AOCI on 12/31/2018	-			52,000
Total assets	-			0

Deferred benefit Obligation	(60,000)			(60,000)
Total Liabilities	(60,000)			(60,000)
Retained earnings on 12/31/2018	60,000			8,000
AOCI, 31/12/2018	-			52,000
Total liabilities and Equity	-	60,000	60,000	-

Table: (6)

Answer 6

Chapter 11, Problem 21P

a.

To determine

Determine the appropriate accounting for the past service cost for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP.

a.

Expert Solution

Explanation of Solution

(1)

IFRS:

The entry to be recorded under IFRS:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
01/01/2017	Past Service Cost expense		60,000
	Defined Benefit obligation			60,000
	(being increase in pension obligation recorded)

Table: (1)

(2)

U.S. GAAP:

The entry to be recorded under U.S. GAAP:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
01/01/2017	Deferred Past service Costs		60,000
	Defined Benefit obligation			60,000
	(being increase in pension obligation recorded)

12/31/2017	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being amortized amount recorded)

Table: (2)

Answer 7

Chapter 11, Problem 21P

a.

To determine

Determine the appropriate accounting for the past service cost for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP.

Answer 8

a.

Expert Solution

Explanation of Solution

(1)

IFRS:

The entry to be recorded under IFRS:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
01/01/2017	Past Service Cost expense		60,000
	Defined Benefit obligation			60,000
	(being increase in pension obligation recorded)

Table: (1)

(2)

U.S. GAAP:

The entry to be recorded under U.S. GAAP:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
01/01/2017	Deferred Past service Costs		60,000
	Defined Benefit obligation			60,000
	(being increase in pension obligation recorded)

12/31/2017	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being amortized amount recorded)

Table: (2)

Answer 9

a.

Expert Solution

Answer 10

a.

Expert Solution

Answer 11

Expert Solution

Answer 12

b.

To determine

Prepare the entry 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.

b.

Expert Solution

Explanation of Solution

The entry to be recorded on December 31, 2017:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
12/31/2017	Deferred Past service Costs		56000
	Past Service Cost expense			56000
	(being past service cost expense recorded)

Table: (3)

Partial Conversion worksheet, December 31, 2017 (Past Service Cost)
Particulars	IFRS	Debit	Credit	U.S. GAAP
Past service expense	60,000		56,000	4,000
Net income of 2017	60,000			4,000
Retained earnings on 01/01/2017	-			-
Retained earnings on 12/31/2017	60,000			4,000

Deferred Past Service Cost (AOCI)	-	56,000		56,000
AOCI on 01/01/2017	-			-
AOCI on 12/31/2017	-			56,000
Total assets	-			0

Deferred benefit Obligation	(60,000)			(60,000)
Total Liabilities	(60,000)			(60,000)
Retained earnings on 12/31/2017	60,000			4,000
AOCI, 31/12/2017	-			56,000
Total liabilities and Equity	-	56,000	56,000	-

Table: (4)

The entry to be recorded on December 31, 2018:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
12/31/2018	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being value of past service cost reduced to 52,000 Yuan)

1/1/2018	AOCI		56000
	Retained Earnings			56000
	(being AOCI adjusted)

12/31/2018	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being balance carried forward)

Table: (5)

Partial Conversion worksheet, December 31, 2018 (Past Service Cost)
Particulars	IFRS	Debit	Credit	U.S. GAAP
Past service expense	-	4,000	-	4,000
Net income of 2017	-			4,000
Retained earnings on 01/01/2018	60,000		56,000	4,000
Retained earnings on 12/31/2018	60,000			8,000

Deferred Past Service Cost (AOCI)	-		4,000	(4,000)
AOCI on 01/01/2018	-	56,000		56,000
AOCI on 12/31/2018	-			52,000
Total assets	-			0

Deferred benefit Obligation	(60,000)			(60,000)
Total Liabilities	(60,000)			(60,000)
Retained earnings on 12/31/2018	60,000			8,000
AOCI, 31/12/2018	-			52,000
Total liabilities and Equity	-	60,000	60,000	-

Table: (6)

Answer 13

b.

To determine

Prepare the entry 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.

Answer 14

b.

Expert Solution

Explanation of Solution

The entry to be recorded on December 31, 2017:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
12/31/2017	Deferred Past service Costs		56000
	Past Service Cost expense			56000
	(being past service cost expense recorded)

Table: (3)

Partial Conversion worksheet, December 31, 2017 (Past Service Cost)
Particulars	IFRS	Debit	Credit	U.S. GAAP
Past service expense	60,000		56,000	4,000
Net income of 2017	60,000			4,000
Retained earnings on 01/01/2017	-			-
Retained earnings on 12/31/2017	60,000			4,000

Deferred Past Service Cost (AOCI)	-	56,000		56,000
AOCI on 01/01/2017	-			-
AOCI on 12/31/2017	-			56,000
Total assets	-			0

Deferred benefit Obligation	(60,000)			(60,000)
Total Liabilities	(60,000)			(60,000)
Retained earnings on 12/31/2017	60,000			4,000
AOCI, 31/12/2017	-			56,000
Total liabilities and Equity	-	56,000	56,000	-

Table: (4)

The entry to be recorded on December 31, 2018:

Date	Account Title and Explanation	Post ref.	Debit (Yuan)	Credit (Yuan)
12/31/2018	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being value of past service cost reduced to 52,000 Yuan)

1/1/2018	AOCI		56000
	Retained Earnings			56000
	(being AOCI adjusted)

12/31/2018	Past Service Cost expense		4,000
	Deferred Past service Costs			4,000
	(being balance carried forward)

Table: (5)

Partial Conversion worksheet, December 31, 2018 (Past Service Cost)
Particulars	IFRS	Debit	Credit	U.S. GAAP
Past service expense	-	4,000	-	4,000
Net income of 2017	-			4,000
Retained earnings on 01/01/2018	60,000		56,000	4,000
Retained earnings on 12/31/2018	60,000			8,000

Deferred Past Service Cost (AOCI)	-		4,000	(4,000)
AOCI on 01/01/2018	-	56,000		56,000
AOCI on 12/31/2018	-			52,000
Total assets	-			0

Deferred benefit Obligation	(60,000)			(60,000)
Total Liabilities	(60,000)			(60,000)
Retained earnings on 12/31/2018	60,000			8,000
AOCI, 31/12/2018	-			52,000
Total liabilities and Equity	-	60,000	60,000	-

Table: (6)

Answer 15

b.

Expert Solution

Answer 16

b.

Expert Solution

Answer 17

Expert Solution

Answer 18

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Determine the appropriate accounting for the past service cost for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP.

Determine the appropriate accounting for the past service cost for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP.

Explanation of Solution

Prepare the entry 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.

Explanation of Solution

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