An employee sued Harrington Company in late 2023. General counsel concluded that there was an 80 percent probability that the company would lose the lawsuit. The range of loss is estimated to be $21,000 to $73,500, with no amount in the range more likely than any other. They settled the lawsuit in 2024, with Harrington making a payment of $63,000. Assume that Harrington Company is a U.S.-based company that is issuing securities to foreign investors who require financial statements prepared accordance with IFRS. Thus, adjustments to convert from U.S. GAAP to IFRS must be made. Ignore income taxes. Required: Prepare journal entries for this lawsuit for the years ending December 31, 2023, and December 31, 2024, under (1) U.S. GAAP and (2) IFRS. Prepare the entry(ies) that Harrington would make on the December 31, 2023, and December 31, 2024, conversion worksheets to convert U.S. GAAP balances to IFRS. Record the entry for the litigation liability as per U.S. GAAP. Note: Enter debits before credits. REQUIRED A: 1 Date General Journal Debit Credit 12/31/2023 Record the entry for the litigation liability as per IFRS. Note: Enter debits before credits. 2 Date General Journal Debit Credit 12/31/2023 Record the entry for the settlement of litigation liability as per U.S. GAAP. Note: Enter debits before credits. 3 Date General Journal Debit Credit 12/31/2024 Record the entry for the settlement of litigation liability as per IFRS. Note: Enter debits before credits. 4 Date General Journal Debit Credit 12/31/2024 REQUIRED B: Record the conversion entry needed for 12/31/23. Note: Enter debits before credits. 1 Date Account Title Debit Credit 12/31/2023 Record the conversion entry needed for 12/31/24. Note: Enter debits before credits. 2 Date Account Title Debit Credit 12/31/202

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

Prepare journal entries for this lawsuit for the years ending December 31, 2023, and December 31, 2024, under (1) U.S. GAAP and (2) IFRS.
Prepare the entry(ies) that Harrington would make on the December 31, 2023, and December 31, 2024, conversion worksheets to convert U.S. GAAP balances to IFRS.