request to put answers in in excel format

Question: Sapporo K.K. was sued by a competitor in late 2017, and company management concluded that there w...

Sapporo K.K. was sued by a competitor in late 2017, and company management concluded that there was a 55 percent probability that the company would lose the lawsuit. The best estimate of the loss on December 31, 2017, was 4,000,000 yen. In 2018, the lawsuit is concluded with Sapporo paying its competitor 5,000,000 yen on May 15, 2018.

a. Determine the appropriate accounting for this lawsuit for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP.

b. Prepare the entry(ies) 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.

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Solution: The above situation is related to the accounting treatment of Provisions, Contingent Liabilities, and Contingent Assets. ASC 450 of US GAAP deals with the above accounting treatment and IAS 37 deals with the above accounting treatment. Some of the key points of the case are given below:-

IAS 37 of IFRS and ASC 450 of US GAAP, both agrees on the same treatment when it comes to the recognition of contingent liability i.e. Both state that if the contingent liability or loss is reasonable probable and can be reasonably estimated then in such a case the accounting entry will be treated earlier then the payment is made for the same. The accounting entry will be:-

December 31, 2017, Loss on lawsuit A/c (Debited) 4000000 Yen

To Competitor Party A/c ( Credited) 4000000 Yen (Liability)

When actual loss happened on 15^th may, 2018

15^th My, 2018 Competitor Party A/c ( Debited ) 4000000 Yen

Additional loss on lawsuit ( Debited) 1000000 Yen

To cash A/c (Credited) 5000000 Yen

Note: There is a little difference between US GAAP and IFRS between the accounting treatment in the respective case. According to US GAAP, the accounting treatment is eligible in case of the probable event and probable estimates can be made. In the case of IFRS, the Accounting treatment is eligible if the best-estimated amount of the transaction can be made.