Question

Pamell Company acquired construction equipment on January 1, 2017, at a cost of $79,200. The equipment was expected to have a useful life of five years and a residual value of $13,000 and is being depreciated on a straight-line basis. On January 1, 2018, the equipment was appraised and determined to have a fair value of $75,700, a salvage value of $13,000, 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 a US-based company 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: a. Prepare journal entries for this equipment for the years ending December 31, 2017, and December 31, 2018, under (1) U.S. GAAP and (2) IFRS b. Prepare the entryſies) that Parnell would make on the December 31, 2018 conversion worksheet to convert U.S. GAAP balances to IFRS. Complete this question by entering your answers in the tabs below. Required A Required D Prepare the entry for this equipment for the years ending December 31, 2017, and December 31, 2018, under (1) U.S. GAAP and (2) IFRS. (If no entry is required for a transaction/event, select "No journal entry required in the first account field.) View transaction list Journal entry worksheet

Answer 1

solution working Note: I computation of depreciation expenses under straight Line method according to U.S. GAAP cost $79.200 useful life-5 years Resideal value = $ 13,000 Depreciation per year= cost - Residual value useful life 79,2006-) 13.000 5 years - $ 13,240 warking Note 2 Hotion of value of eauipment as on 12/31/17 and 1234, 2018 Particulars As on 2/31/2017 Ason 12131/2018 $ 79,200 $ 65,960 $13,940 $ 13,200 Book value at the year beginning of the year Less' Depreciation during the war Rook value at the end of year $65.960 $ 52.720

worting Note: 3 computation of value of eauilment under IFRS as per IAS 16 in una Particulars Amount (SS) 79.200 Book value as on 1117 Less depreciation ( 79,200-13,000) 13,240 Book valo as an 31112117 7 65,960 131112117 Revalued figure as on 111118 $75,700 9,740 Gain on revaluation (fair value on 1/1/18 (-) Book value) (75,700 (-) 65,960) 102 remaining useful life 4 years salvage value Depreciation during the year 2018 (75,700(-) 13,000) value of eauilment on 12/31/2018 (75, tool, 60,025 $13,000 15,675 Isifts

of conversion from Asper working Note: 4 computation of net effect U.S. GAAP to IFRS mu ~ Asper Panticulars GAAP 2017 value of equipment $65,960 as on 12/31/17 Defreciation $13,96 IERS Profit / Expenses 65,960 131240 60,025 $4,305 2018 vabe of equipment &52,720 asan 1213118 Depreclation $13,240 15,675 ($2,4351

Preparation of Journal entries for the equipment for the yuar ending December 21,2017 and december 31,2018 , undes (1) U.S, GAAP and (2) IFRS Dalt 12131117 Account Hilo and explanation Debit C) Credit (8) Depreclation expense 13.200 Accumulado cupreciation 13.240 eauipment (To record entry for depreciation tufense as per 0.5-GAAP) 213119 Depreciation efense Accumulated depreciation 13,240 13,240 (To recond the entry for depreciation expense as per IFRS) No entry required for revaluation of equipment 110/18 iyu Will8 caulement 9,700 Grain an Revaluation of 9,400 eavilment at fair valere (To Record entry for the one revaluation of equipment as per IFRS Depreciation expense 13,940 Accumulated Depreciation 13.quo r eauilment (To record entry for depreciation Ofense as per U.S. GAAP) 12331118 19131118 Debreciation expense 15,67s Accumulated Depreciation eauilment (To record entry for Depreciation exfense as per IFRS) 15.675

Ô Dreparation of entries that Parnell would make on the December 31,2018 conversion worksheet to convert U.S. GAAP balances to IFRS Date Credit ($) 7305 Account title and explanation Debit ($) Equipment 7305 Gain on revaleat eauipment (To record the entry for recording Profit on revaluation of equipment due to conversion from U.S. GAAP to IFRS) 2435 2435 Depreciation expense 20 Accumulated Depreciation equipment (To record the entry for Additional depreciation expense ton revaluation of eauipment due to conversion from U.S. GAAP to IFRS)