The cfo of s a harrington has learned that the us

Assignment Help Accounting Basics

Reference no: EM13583014

Does anyone would like to share the solutions for Case 5.1 - S.A. Harrington Company.Harrington Company is a U.S.-based company that prepares its consoli- dated financial statements in accordance with U.S. GAAP. The company reported income in 2011 of $5,000,000 and stockholders%u2019 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. Harrington%u2019s 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: EM13583014

Questions Cloud

Production beginning inventory 5000 units that are 100 : the detailing department of jackson manufacturing company has the following production and manufacturing cost data for

Moss exports is having a bad year net income is only 60000 : moss exports is having a bad year. net income is only 60000. also two important overseas customers are falling behind

Are you legally obliged to keep your promise what are the : you are the manager of a large flower shop. your employer james pays you a salary of 100000 per year to manage the

Based on the data how many shares of common stock are : the following data is available for box corporation at december 31 2012 common stock par 10 authorized 15000 shares

The cfo of s a harrington has learned that the us : does anyone would like to share the solutions for case 5.1 - s.a. harrington company.harrington company is a u.s.-based

Given the following determine the ending inventory and cost : given the following determine the ending inventory and cost of goods sold using the average cost method on january 1

Write an essay of 800-1000 words in which you discuss and : write an essay of 800-1000 words in which you discuss and compare servant leadership and competency-based leadership.

Determine the angle of deviation of a ray by a glass prism : determine the angle of deviation of a ray by a glass prism with a prism angle of 3o if the angle of incidence of the

Graff company had cash of 42600 net accounts receivable of : graff company had cash of 42600 net accounts receivable of 96500 and net sales of 746000. last years net accounts

User Account

All Pages