Llungby AB spent 1,000,000 krone in 2020 on the development of a new product. The company determined that 25 percent of this amount was incurred after the criteria in IAS 36 for capitalization as an intangible asset had been met. The newly developed product is brought to market in January 2021 and is expected to generate sales revenue for five years. Assume that Llungby AB is a foreign company using IFRS and 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:Prepare journal entries for development costs for the years ending December 31, 2020, and December 31, 2021, under (1) IFRS and (2) U.S. GAAP.Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020, and December 31, 2021, conversion worksheets to convert IFRS balances to U.S. GAAP. Prepare journal entries for development costs for the years ending December 31, 2020, and December 31, 2021, 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 listJournal entry worksheet12Record the development costs as per IFRS.Date12/31/20203Note: Enter debits before credits.Record entryGeneral JournalClear entryDebitCreditView general journal> Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020, and December 31, 2021, conversion worksheets toconvert IFRS balances to U.S. GAAP. (If no entry is required for a transaction/event, select "No journal entry required" in the firstaccount field.)View transaction listJournal entry worksheet<12Record the conversion entry needed for 12/31/20.Note: Enter debits before credits.Date12/31/2020Record entryGeneral JournalClear entryDebitCreditView general journal

The journal entry is the first step where a business transaction is entered into the accounting…

Answered: Llungby AB spent 1,000,000 krone in…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Llungby AB spent 1,000,000 krone in 2020 on the development of a new product. The company determined that 25 percent of this amount was incurred after the criteria in IAS 36 for capitalization as an intangible asset had been met. The newly developed product is brought to market in January 2021 and is expected to generate sales revenue for five years.

Assume that Llungby AB is a foreign company using IFRS and 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:

Prepare journal entries for development costs for the years ending December 31, 2020, and December 31, 2021, under (1) IFRS and (2) U.S. GAAP.
Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020, and December 31, 2021, conversion worksheets to convert IFRS balances to U.S. GAAP.

Prepare journal entries for development costs for the years ending December 31, 2020, and December 31, 2021, 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 development costs as per IFRS.
Date
12/31/2020
3
Note: Enter debits before credits.
Record entry
General Journal
Clear entry
Debit
Credit
View general journal
>

Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020, and December 31, 2021, conversion worksheets 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 12/31/20.
Note: Enter debits before credits.
Date
12/31/2020
Record entry
General Journal
Clear entry
Debit
Credit
View general journal

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