Beta LLC is part of an international holding and prepares its financial statements in accordance with IFRS
Question:
Beta LLC is part of an international holding and prepares its financial statements in accordance with IFRS in accordance with the accounting policies adopted by the foreign parent company for all the companies within the Group.
On December 1, 20X3, Alpha acquired 10 machines for USD 300,000,000. The company has established a useful life period for these items of property, plant, and equipment equal to three years for IFRS purposes in accordance with the accounting policy of the foreign parent company.
For the purposes of depreciation in national accounting, the company uses data on the useful life period of fixed assets established in the Tax Code. For the purposes of depreciation in national financial reporting standards, machine tools were assigned to the fourth depreciation group with a useful life of 6 2/3 years.
Required:
You need to prepare a summary along with journal entries for transformational adjustment for the year-end December 31, 20X3:
- Describe the main differences in the treatment of depreciation expenses in national reporting standards and IFRS
- Calculate the amount of the adjustment needed to the depreciation expenses
- Provide journal entries for the adjustment
Intermediate Accounting Volume 2
ISBN: 9781119497042
12th Canadian Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy