Question

Trecek Corporation incurs research and development costs of $682,000 in 2017, 30 percent of which relate...

Trecek Corporation incurs research and development costs of $682,000 in 2017, 30 percent of which relate to development activities subsequent to IAS 38 criteria having been met that indicate an intangible asset has been created. The newly developed product is brought to market in January 2018 and is expected to generate sales revenue for 10 years.

Assume that a U.S.–based company is issuing securities to foreign investors who require financial statements prepared in accordance with IFRS. Thus, adjustments to convert from U.S. GAAP to IFRS must be made. Ignore income taxes.

Required:

1. Prepare journal entries for research and development costs for the years ending December 31, 2017, and December 31, 2018, under (1) U.S. GAAP and (2) IFRS.

- Record the research and development costs as per U.S. GAAP.

- Record the research and development costs as per IRFS.

- Record the amortization expense as per U.S. GAAP.

- Record the amortization expense as per IFRS.

2. Prepare the entry(ies) that Trecek would make on the December 31, 2017, and December 31, 2018, conversion worksheets to convert U.S. GAAP balances to IFRS.

- Record the conversion entry needed for the research and development costs for 12/31/17.

- Record the conversion entry needed for the research and development costs for 12/31/18.

- Record the conversion entry needed for the amortization expense for 12/31/18.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Sorocaba Ltda. sold a building to Banco Janeiro on January 1, 2017, for 212,000 reais and...
Sorocaba Ltda. sold a building to Banco Janeiro on January 1, 2017, for 212,000 reais and then leased it back under a 10-year lease agreement, which is accounted for as an operating lease. The building had a carrying amount of 158,600 reais and a fair value of 212,000 reais on the date of sale. 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...
Surat Limited paid cash to acquire an aircraft on January 1, 2017, at a cost of...
Surat Limited paid cash to acquire an aircraft on January 1, 2017, at a cost of 31,630,000 rupees. The aircraft has an estimated useful life of 50 years and no salvage value. The company has determined that the aircraft is composed of three significant components with the following original costs (in rupees) and estimated useful lives: Component Cost Useful Life Fuselage 11,300,000 50 years Engines 15,200,000 40 years Interior 5,130,000 30 years 31,630,000 The U.S. parent of Surat does not...
Izmir A.S. issued convertible bonds at their face value of 114,000 lira on December 31, 2017....
Izmir A.S. issued convertible bonds at their face value of 114,000 lira on December 31, 2017. The bonds have a 12-year life with interest of 9 percent payable annually. At the date of issue, the prevailing interest rate for similar debt without a conversion option was 11 percent. 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....
Izmir A.S. issued convertible bonds at their face value of 100,000 lira on December 31, 2017....
Izmir A.S. issued convertible bonds at their face value of 100,000 lira on December 31, 2017. The bonds have a 10-year life with interest of 10 percent payable annually. At the date of issue, the prevailing interest rate for similar debt without a conversion option was 12 percent. Determine the appropriate accounting for this compound financial instrument for the year ending December 31, 2017, under (1) IFRS and (2) U.S. GAAP. Prepare the entry(ies) that the U.S. parent would make...
Companies engage in research and development (R&D) in order to develop new products, processes, and/or ideas...
Companies engage in research and development (R&D) in order to develop new products, processes, and/or ideas that may provide future value. Under U.S. GAAP, all R&D costs are expensed in the year incurred (no asset recorded). For example, if a company spent $1,000,000 cash on R&D in 2017, U.S. GAAP would require the following journal entry: R&D Expense 1,000,000 Cash 1,000,000 Thus, the $1,000,000 expenditure would result in a $1,000,000 (pre-tax) reduction in income for 2017. Under IFRS, research costs...
Q) On January 1, 2016, equipment was purchased for $100,000. The equipment's estimated residual value is...
Q) On January 1, 2016, equipment was purchased for $100,000. The equipment's estimated residual value is $20,000, and its estimated useful life is 8 years. On December 31, 2016, the book value using the straight-line method of depreciation is $90,000. True False Q) International Financial Reporting Standards (IFRS) require the recording of research and development costs as follows: A)Capitalize research and development costs. B)Expense research and development costs. C)Expense research costs and capitalize development costs. D)Expense development costs and capitalize...
During 2017, Metlock Corporation spent $550,000 in research and development costs. As a result, a new...
During 2017, Metlock Corporation spent $550,000 in research and development costs. As a result, a new product was patented. The patent was obtained on July 1, 2017 and had a legal life of 20 years and useful life of 10 years. Legal costs of $140,000 related to the patent were incurred as of July 1, 2017. (1.) Prepare journal entries (4) required for 2017 and 2018. On October 1, 2019, Metlock spent $120,000 to successfully defend a patent infringement case...
products, processes, and/or ideas that may provide future value. Under U.S. GAAP, all R&D costs are...
products, processes, and/or ideas that may provide future value. Under U.S. GAAP, all R&D costs are expensed in the year incurred (no asset recorded). For example, if a company spent $1,000,000 cash on R&D in 2017, U.S. GAAP would require the following journal entry: R&D Expense 1,000,000 Cash 1,000,000 Thus, the $1,000,000 expenditure would result in a $1,000,000 (pre-tax) reduction in income for 2017. Under IFRS, research costs are expensed (similar to U.S. GAAP). However, development costs are capitalized (recorded...
During 2013, Martinez Corporation spent $155,520 in research and development costs. As a result, a new...
During 2013, Martinez Corporation spent $155,520 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2013, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $28,080 related to the patent were incurred as of October 1, 2013. On June 1, 2015, Martinez spent $20,160 to successfully prosecute a patent infringement suit. As a result, the...
In early January 2016, Bramble Corporation applied for a trade name, incurring legal costs of $16,080....
In early January 2016, Bramble Corporation applied for a trade name, incurring legal costs of $16,080. In January 2017, Bramble incurred $7,880 of legal fees in a successful defense of its trade name.Compute 2016 amortization, 12/31/16 book value, 2017 amortization, and 12/31/17 book value if the company amortizes the trade name over 10 years 2016 amortization 12/31/16 book value 2017 amortization 12/31/17 book value Compute the 2017 amortization and the 12/31/17 book value, assuming that at the beginning of 2017,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT