Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
Mikkeli Oy acquired a brand name with an indefinite life in 2015 for 42,700 markkas
Mikkeli Oy acquired a brand name with an indefinite life in 2015 for 42,700 markkas. At December 31, 2017, the brand name could be sold for 35,800 markkas, with zero costs to sell. Expected cash flows from the continued use of the brand are 44,770 markkas, and the present value of this amount is 34,800 markkas. Assume that a foreign company using IFRS 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: a. Prepare journal entries for this brand name for the year ending December 31, 2017, 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 worksheet to convert IFRS balances to U.S. GAAP. Complete this question by entering your answers in the tabs below. Required A Required B Prepare journal entries for this brand name for the year ending December 31, 2017, 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 entry for the loss on impairment of brand as per IFRS.
ck my work Mikkeli Oy acquired a brand name with an indefinite life in 2015 for 42,700 markkas. At December 31, 2017, the brand name could be sold for 35,800 markkas, with zero costs to sell. Expected cash flows from the continued use of the brand are 44,770 markkas, and the present value of this amount is 34,800 markkas. Assume that a foreign company using IFRS 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: a. Prepare journal entries for this brand name for the year ending December 31, 2017, 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 worksheet to convert IFRS balances to U.S. GAAP. Complete this question by entering your answers in the tabs below. Required A Required B Prepare journal entries for this brand name for the year ending December 31, 2017, 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 entry for the loss on impairment of brand as per U.S. GAAP.
ces entening your answers in the tabs below. Required A Required B Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017 and December 31, 2018 conversion worksheet 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 12/31/17 Note: Enter debits before credits Date General Journal 12/31/2017 Debit Credit
Complete this question by entering your answers in the tabs below. Required A Required B Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017 and December 31, 2018 convers convert IFRS balances to U.S. GAAP. (If no entry is required for a transaction/event, select "No journal entry requires account field.) View transaction list Journal entry worksheet
Expert Solution
Under IFRS, an asset is impaired when its carrying amount exceeds its recoverable amount, which is the larger of net selling price and value in use. Mikkeli correctly determines an impairment loss on the brand as follows:
Carrying amount 42700
Recoverable amount
(1) Net selling price (Selling price less costs to sell) 35800
(2) Value in use (PV of future cash flows) 34800
Recoverable amount (larger of (1) and (2)) 35800
Impairment loss 6900
The following journal entry is made.
IFRS
12/31/17
Impairment Loss 6900
Brand 6900
Under U.S. GAAP, the carrying amount of an asset is first compared with the future cash flows (undiscounted) to be generated from the asset to determine if an impairment exists.
Carrying amount 42700
Future cash flows (undiscounted) 44770
Because future cash flows exceed carrying amount, the brand is not impaired under U.S. GAAP.
U.S. GAAP
12/31/17
No entries are needed.
The entry to convert from IFRS to U.S. GAAP simply reverses the impairment loss entry made under IFRS.
Conversion Entry
12/31/17
Brand 6900
Impairment Loss 6900
22. (continued)
The 12/31/17partial conversion worksheet below summarizes the above entries, and shows that the conversion entry results in the correct amounts being reported in the U.S. GAAP column.
|
Partial Conversion Worksheet, 12/31/17 |
||||
|
(amounts in markkas) |
Conversion Entries |
|||
|
Account |
IFRS |
Debit |
Credit |
U.S. GAAP |
|
Impairment loss |
6900 |
|
6900 |
-0- |
|
Net income |
6900 |
|
|
-0- |
|
Retained earnings, 1/1/17 |
-0- |
|
|
-0- |
|
Retained earnings, 12/31/17 |
6900 |
|
|
-0- |
|
Cash |
(42700) |
|
|
(42700) |
|
Brand (net) |
35800 |
6900 |
|
42700 |
|
Total assets |
(6900) |
|
|
-0- |
|
Total liabilities |
-0- |
|
|
-0- |
|
Retained earnings, 12/31/17 (above) |
6900 |
|
|
-0- |
|
Total liabilities and equity |
6900 |
|
|
-0- |
|
|
6900 |
6900 |
|
Parentheses reflect credit balances.
Assuming that the Brand has suffered no further impairment in 2018, the following conversion entry would be made on 12/31/18.
Conversion Entry
12/31/18
Brand 6900
Retained Earnings, 1/1/18 6900
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
