Hrrington company is a us-based company that prepares its

Reference no: EM13581933

Harrington Company is a U.S.-based company that prepares its consolidated financial statements in accordance with U.S. GAAP. The company reported income in 2011 of $5,000,000 and stockholders equity at December 31, 2011, of $40,000,000. The CFO of S. A. Harrington has learned that the U.S. Securities and Exchange Commission is considering requiring U.S. companies to use IFRS in preparing consolidated financial statements. The company wishes to determine the impact that a switch to IFRS would have on its financial statements and has engaged you to prepare a reconciliation of income and stockholders%u2019 equity from U.S. GAAP to IFRS. You have identified the following five areas in which S. A. Harringtons accounting principles based on U.S. GAAP differ from IFRS.

1. Restructuring

2. Pension plan

3. Stock options

4. Revenue recognition

5. Bonds payable

The CFO provides the following information with respect to of these accounting differences.

Restructuring Provision

The company publicly announced a restructuring plan in 2011 that created a valid expectation on the part of the employees to be terminated that the company will carry out the restructuring. The company estimated that the restructuring would cost $300,000. No legal obligation to restructure exists as of December 31, 2011.

Pension Plan

In 2009, the company amended its pension plan, creating a past service cost of $60,000. Half of the past service cost was attributable to already vested employees who had an average remaining service life of 15 years, and half of the past service cost was attributable to nonvested employees who, on average, had two more years until vesting. The company has no retired employees

Stock options

were granted to key officers on January 1, 2011. The grant date fair value per option was $10, and a total of 9,000 options were granted. The options vest in equal installments over three years: one-third vest in 2010, one-third in 2011, and one-third in 2012. The company uses a straight-line method to recognize compensation expense related to stock options.

Revenue Recognition

The company entered into a contract in 2011 to provide engineering services to a long-term customer over a 12-month period. The fixed price is $250,000, and the company estimates with a high degree of reliability that the project is 30 percent complete at the end of 2011.

Bonds Payable

On January 1, 2010, the company issued $10,000,000 of 5 percent bonds at par value that mature in five years on December 31, 2014. Costs incurred in issuing the bonds were $500,000. Interest is paid on the bonds annually.

Required: Prepare a reconciliation schedule to reconcile 2011 net income and December 31, 2011 stockholders%u2019 equity from a U.S. GAAP basis to IFRS. Ignore income taxes. Prepare a note to explain each adjustment made in the reconciliation schedule.

Reference no: EM13581933

Questions Cloud

You are planning to save for retirement over the next 30 : you are planning to save for retirement over the next 30 years. to do this you will invest 800 a month in a stock

In an eye that is farsighted the eye focuses parallel rays : in an eye that is farsighted the eye focuses parallel rays so that the image would form behind the retina. in an eye

Can adolescents actually be addicted to video games locate : there are options provided from which to select article. once located job will be to summarize the article according to

In addition to the paper a micosoftreg excelreg spreadsheet : capital budgeting caseyour company is thinking about acquiring another corporation. you have two choices-the cost of

Hrrington company is a us-based company that prepares its : harrington company is a u.s.-based company that prepares its consolidated financial statements in accordance with u.s.

Draw ogives from the following data and measure the median : question 1 draw ogives from the following data and measure the median value. verify it by actual calculation.central

Given the importance of attachment what could our society : look over the attachment studies presented in your text particularly bowlby ainsworth and harlow.given the importance

Adriana company is highly automated and uses computers to : adriana company is highly automated and uses computers to control manufacturing operations. the company uses a

Two 19kg masses are 15m apart center to center on a : two 1.9kg masses are 1.5m apart center to center on a frictionless table. each has 9.3?c of charge.what is the

User Account

All Pages