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Principal Company is a US based company that prepares its consolidated financial staterments in accordance with US. GAAP Principat reported net income of $ 2.600O.000 in 2018 and stockhoiders equity of $12.000.000 at December 31, 2018. Principal wants to determine the reporting impact of switching to FRS. The following three items would create differences in financial reporting: At December 31 2018, management had detormined that a contingent iabitity was reasonably possible with regard to a defective product and Principal disciosed an amount of Se0.000 for this possibility. However, under IFRS, the likeihood of occurrence of an outtiow of resounces to settle the Sabitity was considered probable. ignore income tax) ZEPrincipal acquired a buildng at the beginning of 2016 at a cost of $5.000.000. The building has an estimated useful afe of 20 years, an estimated residual value of St000.000, and is being depreciated on a straight-ane basis. On January1, 2018. the building as a fair value of $5.500.000 Tere is no change in the estimated useful tife or residual value. In a switch to FRS, Principal would use the revaluation moodet in AS 16 to determine the carrying value of propertyr. plant, and equipment subsequent to acquistion 3 In 2018, Principal ncurred $O0,.000 of sesearch and development for a new product, of which 35% relates to development activities suibseguent to the point at which criteria indicating the creation of an intangibie asset had been met. As of the end of 2018. development of the new product had not been completed. Required: Prepareaschedule reconciting net income under US. GAAP to net income under IFRS for the year ended December 31 201s 2 Prepare aschedute reconcing stockholders equity under uS GAAP to stockholdes equity under IFRS at December 3n 20se Principal Company is a US based company that prepares its consolidated financial staterments in accordance with US. GAAP Principat reported net income of $ 2.600O.000 in 2018 and stockhoiders equity of $12.000.000 at December 31, 2018. Principal wants to determine the reporting impact of switching to FRS. The following three items would create differences in financial reporting: At December 31 2018, management had detormined that a contingent iabitity was reasonably possible with regard to a defective product and Principal disciosed an amount of Se0.000 for this possibility. However, under IFRS, the likeihood of occurrence of an outtiow of resounces to settle the Sabitity was considered probable. ignore income tax) ZEPrincipal acquired a buildng at the beginning of 2016 at a cost of $5.000.000. The building has an estimated useful afe of 20 years, an estimated residual value of St000.000, and is being depreciated on a straight-ane basis. On January1, 2018. the building as a fair value of $5.500.000 Tere is no change in the estimated useful tife or residual value. In a switch to FRS, Principal would use the revaluation moodet in AS 16 to determine the carrying value of propertyr. plant, and equipment subsequent to acquistion 3 In 2018, Principal ncurred $O0,.000 of sesearch and development for a new product, of which 35% relates to development activities suibseguent to the point at which criteria indicating the creation of an intangibie asset had been met. As of the end of 2018. development of the new product had not been completed. Required: Prepareaschedule reconciting net income under US. GAAP to net income under IFRS for the year ended December 31 201s 2 Prepare aschedute reconcing stockholders equity under uS GAAP to stockholdes equity under IFRS at December 3n 20se
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Answer rating: 100% (QA)
Part 1 The schedule of reconciliation is as follows Net Income US GAAP 2600000 Inventory WriteDown 8... View the full answer
Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
Posted Date:
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