Question: Lombardo Group is preparing to adopt IFRS It is preparing

Lombardo Group is preparing to adopt IFRS. It is preparing its opening statement of financial position on January 1, 2012. Lombardo identified the following accounting policy differences between IFRS and its previous GAAP.
1. Lombardo had not made a provision for a warranty of €75,000 under previous GAAP because the concept of a “constructive obligation” was not recognized.
2. Under previous GAAP, €60,000 paid for certain architect fees was not capitalized into the cost of a building that was put into service at the beginning of 2011, even though those costs were necessary to bring the asset to its working condition. The building has a 40-year life, no residual value, and Lombardo uses straight-line depreciation.

(a) Prepare the journal entries (if any) needed before preparation of Lombardo’s opening statement of financial position.
(b) Determine the net change in equity from these adjustments.
(c) Brief describe the disclosures that Lombardo will make related to the adjustments in it first IFRS financial statements.

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  • CreatedJune 17, 2013
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