Requirement – 1
International Financial Reporting Standards
They are commonly known as IFRS. These are set of accounting standards which are developed by independent (Non-profit) organization called as International Accounting Standards Board (IASB). These are universally accepted set of standards which state the rules and standards for accounting at global level.
Revenue recognized point of long term contract
A long-term contract qualifies for revenue recognition over time. The seller can recognize the revenue as per percentage of the completion of the project, which is recognized as revenue minus cost of completion until date.
If a contract does not meet the performance obligation norm, then the seller cannot recognize the revenue till the project is complete.
To indicate: The method of revenue recognition which is used by the Company TK for long-term construction contracts.
Requirement – 2
To discuss: The manner in which the accounting for the contract differs.
Want to see the full answer?
Check out a sample textbook solutionChapter 5 Solutions
INTERMEDIATE ACCOUNTING
- Problems 18–25 assume that a foreign company using IFRS 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 for each problem.Mikkeli OY acquired a brand name with an indefinite life in 2015 for 40,000 markkas. At December 31, 2017, the brand name could be sold for 35,000 markkas, with zero costs to sell. Expected cash flows from the continued use of the brand are 42,000 markkas, and the present value of this amount is 34,000 markkas.a. Determine the appropriate accounting for this brand name for the year ending December 31, 2017, under (1) IFRS and (2) U.S. GAAP.b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017, conversion worksheet to convert IFRS balances to U.S. GAAP.arrow_forwardfinancial management ch 17 hw question 3arrow_forwardQuestion 25 Emu Ltd is an Australian company that receives management consulting services from a US company called Holleewood Incorporated. On 15 June 2023, Emu Ltd received an invoice from Holleewood Incorporated amounting to US$7 million for services provided over the period 1 January 2023 to 31 May 2023. On 15 July 2023, Emu Ltd paid the invoice. The functional currency of Emu Ltd is A$ and its financial year ends on 30 June. Applicable exchange rates are as follows. 1 January 31 May 2023 Average 1 Jan. 2023 to 31 May 2023 15 June 2023 30 June 2023 15 July 2023 Required Prepare the entries of Emu Ltd to record the effects of the management fee transaction in accordance with AASB 121/IAS 21. A$1=US$0.72 A$1=US$0.66 A$1=US$0.67 A$1=US$0.59 A$1=US$0.57 A$1=US$0.55arrow_forward
- 15.1arrow_forwardINVOICE issued date 05/05/2020 as below: You have received an invoice from one of our suppliers and you are required to prepare: (i) Double entry for the invoice you have received base on the account and supplier number provided. (ii) Base on tax point of view, specify each item whether it is Capital or Revenue expenditure.arrow_forwardrrrrrrrarrow_forward
- Mr. Tahir is thinking to start our business to supply Consumer goods. He also expected that the annual turnover of the business will be more that £ 150000 He invested in the business £ 10000000 He is selling the following goods £ Per month 12000 1. luxury food, 2. Adult clothing and Footwear 3. domestic electricity/gas 4. books, 5. children's clothes and footwear 8000 5000 13000 11000 Secondly, he is running a nonprofit making educational institution, with 1000 students. Annually he was generating fund from the institution of 2100000 p a. Mr Tahir, is registered for VAT, incurred the following expenditure (including VAT) during the quarter ended 31 December 2020. 14,500 New car for salesman (private use) 28,200 Three new motor vanS 29,370 Second-hand container lorry 4,935 Entertaining UK customers 5.250 Employeesarrow_forwardProblem 14arrow_forwardProblems 18–25 assume that a foreign company using IFRS 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 for each problem.Tapatio S.A. de C.V. acquired a new piece of manufacturing equipment on January 1, 2016, for a cash price of 500,000 pesos. The equipment was expected to have a useful life of 10 years and no residual value, and is being depreciated on a straight-line basis. On January 1, 2017, the equipment was appraised and determined to have a fair value of 540,000 pesos, zero salvage value, and a remaining useful life of 9 years. Tapatio uses the revaluation model in IAS 16 to measure equipment subsequent to acquisition. Any revaluation surplus will be recycled to retained earnings when the equipment is disposed of.a. Determine the appropriate accounting for this equipment for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP.b.…arrow_forward
- Problems 18–25 assume that a foreign company using IFRS 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 for each problem.On January 1, 2017, Xiamen Company made amendments to its defined benefit pension plan that resulted in 60,000 yuan of past service cost. The plan has 5,000 active employees with an average expected remaining working life of 15 years. There currently are no retirees under the plan.a. Determine the appropriate accounting for the past service cost for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP.b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017, and December 31, 2018, conversion worksheets to convert IFRS balances to U.S. GAAP.arrow_forward4213 PRACTICAL EXERCISE 1.4 A Payroll consists of Basic Pay, Allowances, Gross Salary, Deductions and Net Salary. The Allowances are 23% of the Basic Pay while the Deductions are 12% of the Gross Salary. In the given worksheet, indicate in each cell what will be inserted, that is - a value or a formula. In the case of a formula, write down the formula in the cell. A C E F Stationery Supplies Ltd Name Basic Allowances Gross Salary Deductions Net Pay Salary 4 Lewis Francis Edwin 13 Totalsarrow_forwardH-9arrow_forward
- Accounting Information SystemsFinanceISBN:9781337552127Author:Ulric J. Gelinas, Richard B. Dull, Patrick Wheeler, Mary Callahan HillPublisher:Cengage LearningFinancial & Managerial AccountingAccountingISBN:9781337119207Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
- Fundamentals of Financial Management, Concise Edi...FinanceISBN:9781305635937Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Financial AccountingAccountingISBN:9781305653535Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning