Prepare a reconciliation schedule to convert 2014 income

Assignment Help Financial Accounting

Reference no: EM13697263

Prepare a reconciliation schedule to convert 2014 income as well as stockholders'' equity on December 31, 2014 from US GAAP to IFRS.

Make sure your reconciliation statement is accompanied by an adequate explanation and reference for every one of your adjustments. Ignore income taxes.

Case Study: Kiki Corporation

Kiki Corporation, a US company, prepares its financial statements under US GAAP. For 2014, the company reported $1,000,000 income and stockholders' equity balance of $8,000,000 on December 31, 2014. In preparation for a possible adoption of IFRS by the US companies, the management wishes to explore possible impacts of the move. You are engaged to prepare a reconciliation schedule to convert 2014 income as well as stockholders' equity on December 31, 2014 from US GAAP basis to IFRS.

The following information is provided by the company's accounting department:

1) In 2010, the company acquired a brand with a fair value of $50,000. The brand was booked as an intangible asset with an indefinite life. At the end of 2014, the brand had a selling value of $46,000 with zero selling expense. Expected future cash flows from continued use of the brand are $52,000 and the present value of the expected future cash flows is $43,000.

2) In 2014, Kiki Corporation incurred research and development costs of $200,000. Of this amount, 45% related to development activities subsequent to the point at which criteria had been met indicating that an intangible asset existed. As of the end of 2014, development of the new product had not been completed.

3) At the end of 2014, Kiki Corporation had an inventory item with a historical cost of $250,000, a replacement cost of $170,000, a net realizable value of $190,000, and a normal profit margin of 20 percent.

4) In January 2012, the company realized a gain on the sale-and-leaseback of an office building in the amount of $150,000. The lease is accounted for as an operating lease, and the term of the lease is five years.

5) The company acquired a building at the beginning of 2013 at a cost of $2,750,000. The building has an estimated useful life of 25 years, an estimated residual value of $500,000, and is being depreciated on a straight-line basis. At the beginning of 2014, the building was appraised and determined to have a fair value of $3,250,000. There is no change in estimated useful life or residual value. In a switch to IFRS, the company would use revaluation model in IAS 16 to determine the carrying value of property, plant, and equipment subsequent to acquisition.

Reference no: EM13697263

Questions Cloud

Drawbacks of punishment vs. reinreinforcement : Discuss the Benefits and Drawbacks of Punishment vs. reinReinforcement and provide a clear discussion of the a) Ethical, b) Legal, c) Individual and d) Socio-cultural factors to consider when selecting either punishment or reinforcement when workin..

Calculate the standard cell potential for each cells : Problem- Calculate the standard cell potential for each of the following cells then writes the overall reaction. (These reactions are given in the correct order for each half-cell reaction.)

Explain electronegative enough to form bonds to xenon : Problem- The hydrogen atom is not actually electronegative enough to form bonds to xenon. Were the xenon-hydrogen bond to exist, what would be the structure of XeH4

Explain the heat capacities don''t change with temperature : Problem- Assuming that the heat capacities don't change with temperature, how much energy in kilojoules is needed to heat 6.95g of Hg from a temperature of -52.5?C to 40.0?C

Prepare a reconciliation schedule to convert 2014 income : Prepare a reconciliation schedule to convert 2014 income as well as stockholders'' equity on December 31, 2014 from US GAAP to IFRS.

Explain mechanism for the benzilic acid rearrangement : Problem- The initial step in the accepted mechanism for the benzilic acid rearrangement involves attack of hydroxide ion at a carbonyl carbon in a benzil molecule. Why might this mode of attack be expected

Iron-deficiency anemia but she has no clue what it is : Problem- Ms. Pallor is a 24 year old graduate student at California State University. She tells you she has iron-deficiency anemia but she has no clue what it is, why she has it, or what she can do about it. You decide to take the time to provide ..

Explain the molecular structures of the fluorocarbons : Problem- Based on the molecular structures of the fluorocarbons, account for the difference in their solubilities.

User Account

All Pages