On January 1, 2020, Xiamen Company made amendments to its defined benefit pension plan that resulted in 62,500 yuan of past service cost. The plan has 5,190 active employees with an average expected remaining working life of 10 years. There currently are no retirees under the plan. Assume that Xiamen Company 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 the past service cost 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.
On January 1, 2020, Xiamen Company made amendments to its defined benefit pension plan that resulted in 62,500 yuan of past service cost. The plan has 5,190 active employees with an average expected remaining working life of 10 years. There currently are no retirees under the plan. Assume that Xiamen Company 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 the past service cost 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2020, Xiamen Company made amendments to its defined benefit pension plan that resulted in 62,500 yuan of past service cost. The plan has 5,190 active employees with an average expected remaining working life of 10 years. There currently are no retirees under the plan.
Assume that Xiamen Company 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 the past service cost 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.
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