Answer | |||
A) Prepare journal entries for this sale and leaseback for the years ending December 31, 2017, and December 31, 2018, under (1) U.S. GAAP and (2) IFRS. | |||
Journal entries | |||
Date | Particulars | Debit($) | Credit($) |
1. US GAAP | |||
Jan 1, 2017 | Cash A/c Dr | $6,07,000 | |
To Deferred gain on sale A/c | $ 82,000 | ||
To Building A/c | $5,25,000 | ||
Dec 31, 2017 | Deferred gain on sale A/c Dr (82,000/4) | $ 20,500 | |
To Gain on sale A/c | $ 20,500 | ||
Dec 31, 2018 | Deferred gain on sale A/c Dr | $ 20,500 | |
To Gain on sale A/c | $ 20,500 | ||
2. IFRS | |||
Jan 1, 2017 | Cash A/c Dr | $6,07,000 | |
To Gain on sale A/c | $ 82,000 | ||
To Building A/c | $5,25,000 | ||
B) Prepare the entry(ies) that Rawl would make on the December 31, 2017, and December 31, 2018, conversion worksheets to convert U.S. GAAP balances to IFRS. | |||
Journal entry | |||
Date | Particulars | Debit($) | Credit($) |
Jan 1, 2017 | Deferred gain on sale A/c Dr (82,000-20500) | $ 61,500 | |
To Gain on sale A/c | $ 61,500 | ||
Jan 1, 2018 | Deferred gain on sale A/c Dr | $ 41,000 | |
To Retained earnings A/c | $ 41,000 | ||
(Being effect of conversion entry from US GAAP to IFRS) | |||
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