Parnell Company acquired construction equipment on January 1, 2023, at a cost of $77,000. The equipment was expected to have a useful life of five years and a residual value of $14,000 and is being depreciated on a straight-line basis. On January 1, 2024, the equipment was appraised and determined to have a fair value of $73,600, a salvage value of $14,000, and a remaining useful life of four years. In measuring property, plant, and equipment subsequent to acquisition under IFRS, Parnell would opt to use the revaluation model in IAS 16. Assume that Parnell Company is a U.S.-based company that 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: Prepare journal entries for this equipment for the years ending December 31, 2023, and December 31, 2024, under (1) U.S. GAAP and (2) IFRS. Prepare the entry(ies) that Parnell would make on the December 31, 2024, conversion worksheet to convert U.S. GAAP balances to IFRS.
Parnell Company acquired construction equipment on January 1, 2023, at a cost of $77,000. The equipment was expected to have a useful life of five years and a residual value of $14,000 and is being depreciated on a straight-line basis. On January 1, 2024, the equipment was appraised and determined to have a fair value of $73,600, a salvage value of $14,000, and a remaining useful life of four years. In measuring property, plant, and equipment subsequent to acquisition under IFRS, Parnell would opt to use the revaluation model in IAS 16. Assume that Parnell Company is a U.S.-based company that 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: Prepare journal entries for this equipment for the years ending December 31, 2023, and December 31, 2024, under (1) U.S. GAAP and (2) IFRS. Prepare the entry(ies) that Parnell would make on the December 31, 2024, conversion worksheet to convert U.S. GAAP balances to IFRS.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 11E: On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated...
Related questions
Question
Parnell Company acquired construction equipment on January 1, 2023, at a cost of $77,000. The equipment was expected to have a useful life of five years and a residual value of $14,000 and is being
Assume that Parnell Company is a U.S.-based company that 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:
-
Prepare
journal entries for this equipment for the years ending December 31, 2023, and December 31, 2024, under (1) U.S. GAAP and (2) IFRS. -
Prepare the entry(ies) that Parnell would make on the December 31, 2024, conversion worksheet to convert U.S. GAAP balances to IFRS.
REQUIRED A:
- Record the entry for the surplus on revaluation of equipment due to conversion from U.S. GAAP to IFRS.
Note: Enter debits before credits.
| 1. |
|
|
- Record the entry for depreciation expense as per U.S. GAAP.
Note: Enter debits before credits.
| 2. |
|
|
- Record the entry for depreciation expense as per IFRS.
Note: Enter debits before credits.
| 3. |
|
|
- Record the entry for the revaluation of equipment as per IFRS.
Note: Enter debits before credits.
| 4. |
|
|
- Record the entry for depreciation expense as per IFRS.
Note: Enter debits before credits.
| 5. |
|
|
REQUIRED B:
- Record the entry for recording profit on revaluation of equipment due to conversion from U.S. GAAP to IFRS.
Note: Enter debits before credits.
| 1. |
|
|
- Record the entry for additional depreciation expense on revaluation of equipment due to conversion from U.S. GAAP to IFRS.
Note: Enter debits before credits.
| 2. |
|
|
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 7 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT