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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: 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.

Quickbooks Online Accounting
Quickbooks Online Accounting
3rd Edition
ISBN:9780357391693
Author:Owen
Publisher:Owen
Chapter3: Setting Up A New Company
Section: Chapter Questions
Problem 1.8C
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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:

  1. 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.


  2. 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.
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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 Record the development costs as per IFRS. Date 12/31/2020 3 Note: Enter debits before credits. Record entry General Journal Clear entry Debit Credit View general journal >
Transcribed Image Text: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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 Record the development costs as per IFRS. Date 12/31/2020 3 Note: Enter debits before credits. Record entry General Journal Clear entry Debit Credit View general journal >
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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet < 1 2 Record the conversion entry needed for 12/31/20. Note: Enter debits before credits. Date 12/31/2020 Record entry General Journal Clear entry Debit Credit View general journal
Transcribed Image Text: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. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet < 1 2 Record the conversion entry needed for 12/31/20. Note: Enter debits before credits. Date 12/31/2020 Record entry General Journal Clear entry Debit Credit View general journal
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