Mikkeli OY acquired a brand name with an indefinite life in 2020 for 44,800 markkas. At December 31, 2020, the brand name could be sold for 36,500 markkas, with zero costs to sell. Expected cash flows from the continued use of the brand are 47,050 markkas, and the present value of this amount is 35,500 markkas. Assume that Mikkeli OY 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: a. Prepare journal entries for this brand name for the year ending December 31, 2020, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020 conversion worksheet to convert IFRS balances to U.S. GAAP. What entry(ies), if any, would be made at 12/31/21, assuming that the Brand has suffered no further impairment in 2021.
Mikkeli OY acquired a brand name with an indefinite life in 2020 for 44,800 markkas. At December 31, 2020, the brand name could be sold for 36,500 markkas, with zero costs to sell. Expected cash flows from the continued use of the brand are 47,050 markkas, and the present value of this amount is 35,500 markkas. Assume that Mikkeli OY 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: a. Prepare journal entries for this brand name for the year ending December 31, 2020, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020 conversion worksheet to convert IFRS balances to U.S. GAAP. What entry(ies), if any, would be made at 12/31/21, assuming that the Brand has suffered no further impairment in 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Mikkeli OY acquired a brand name with an indefinite life in 2020 for 44,800 markkas. At December 31, 2020, the brand name could be
sold for 36,500 markkas, with zero costs to sell. Expected cash flows from the continued use of the brand are 47,050 markkas, and the
present value of this amount is 35,500 markkas.
Assume that Mikkeli OY 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:
a. Prepare journal entries for this brand name for the year ending December 31, 2020, under (1) IFRS and (2) U.S. GAAP.
b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020 conversion worksheet to convert IFRS balances
to U.S. GAAP. What entry(ies), if any, would be made at 12/31/21, assuming that the Brand has suffered no further impairment in 2021.
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