ASU, Inc., US company was acquired by an international company and ASU has a transition date...

ASU, Inc., US company was acquired by an international company and ASU has a transition date of January 1st 2021 for first-time adoption of FRS ASU has a new cookie brand that is ready to be marketed but the company has not yet received copyright approval for the Brand's logo. All cost for development of the copyright were expensed prior to IFRS January 1, 2021. ASU and it’s international parent both have December 31 year end accounting years what should a should you do to prepare financial statements for the first time with a IFRS?

Solutions

Expert Solution

Introduction to IFRS

International Financial Reporting Standards (IFRS) can be referred as principle-based standards, interpretations, and the framework espoused by the IASB (International Accounting Standards Board). The various standards that form an integral part of IFRS are known by the older name of International Accounting Standards.

Requirements of IFRS

The IFRS financial statement forms include the following:

A Statement of Financial Position
A Statement of Comprehensive Income that includes an income statement in addition to an individual statement of comprehensive income, which brings together Profit or Loss on the Income statement to total comprehensive income
A Statement of Changes in Equity
A Cash Flow Statement or Statement of Cash Flows
Notes, comprising a summary of the significant accounting policies
Recognizing elements of financial statements

As per IFRS standards, an item is identified in the financial statements when:

It is apparent future financial benefit will flow to or from a business entity.
The resource can be reliably measured – or else the stable measuring unit assumption is applied under the conventional cost accounting model. This implies that it is presumed that the fiscal unit of account (i.e. the financial currency) is absolutely stable (implying zero inflation or deflation); it is simply presumed that there is no inflation or deflation ever, and that the items are stated at their original nominal conventional cost from any previous date – 1 month, 1 year, 10 or 100 or 200 or more years back; implying that the stable measuring unit assumption is applied to items like issued share capital, capital reserves, retained earnings, all other items in shareholders’ equity, all items in the statement of comprehensive income (excluding salaries, rentals, wages, etc., which are inflation-adjusted per annum), etc.
Objective of IFRS financial statement forms

As per IFRS, a financial statement form should present true and fair picture of the business affairs of an organization. Since these statements are used by different constituents of the regulators/society, they are required to present the true view of financial position of the organization.

Qualitative characteristics of Financial Statements as per IFRS

As per IFRS, the main characteristics required in its main financial statement forms include:

Understandability
Relevance
Reliability
Comparability

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Consolidation of an International Subsidiary at Date of Acquisition Fairview Corporation, a U.S. company, has a...

Consolidation of an International Subsidiary at Date of Acquisition Fairview Corporation, a U.S. company, has a wholly-owned subsidiary in Mexico. The subsidary's functional currency is the Mexican peso, and translation to U.S. dollars is appropriate. The subsidiary was acquired for $10,800,000. The balance sheet of the subsidiary on the date of acquisition is as follows: Mexican Subsidiary Balance Sheet at Date of Acquisition Assets Cash and receivables P9,000,000 Inventories 21,000,000 Noncurrent assets, net 45,000,000 Total assets P75,000,000 Liabilities and stockholders'...

In 2005, North Inc. acquired an 80% interest in South Co. On the date of acquisition,...

In 2005, North Inc. acquired an 80% interest in South Co. On the date of acquisition, the book values of South’s asset and liability accounts at that time were considered to be equal to their fair values. No allocations or goodwill resulted from the combination because North’s acquisition value corresponded to the underlying book value of South The following selected account balances were from the individual financial records of these two companies as of December 31, 2019: . North South...

Ingenuous Company acquired a building on January 1, 2020 for P9,000,000. At that date, the building...

Ingenuous Company acquired a building on January 1, 2020 for P9,000,000. At that date, the building had a useful life of 30 years. On December 31, 2020, the fair value of the building was P9,600,000 and on December 31, 2021, the fair value is P9,800,000. The building was classified as an investment property and accounted for under the cost model. What amounts should be carried in the statement of financial position and recognized in profit or loss for 2021?

Red Co. acquired 100% of Brown, Inc. on January 1, Year1. On that date, Brown had:...

Red Co. acquired 100% of Brown, Inc. on January 1, Year1. On that date, Brown had: Book value Fair Value expected life Land 42,000 52,000 forever Building 200,000 600,000 20 years Equipment 350,000 250,000 10 years What will be the net effect on consolidated expenses for the year ended December 31, Year 1 related to the acquisition allocations of Brown? a. An increase in total expenses of $10,000 b. A reduction in total expenses of $10,000 c. An increase in...

Black Co. acquired 100% of Blue, Inc. on January 1, 2020. On that date, Blue had...

Black Co. acquired 100% of Blue, Inc. on January 1, 2020. On that date, Blue had land with a book value of $38,000 and a fair value of $49,000. Also, on the date of acquisition, Blue had a building with a book value of $250,000 and a fair value of $460,000. Blue had equipment with a book value of $340,000 and a fair value of $280,000. The building had a 10-year remaining useful life and the equipment had a 5-year...

Question 1 The Parent Company PC acquired 80% of Subsidiary SA for 160. At the date...

Question 1 The Parent Company PC acquired 80% of Subsidiary SA for 160. At the date of acquisition, 31 December 2014, the two individual statements of financial position are as follows: PC ASSETS Equity & Liabilities Equipment 240 Capital 300 Investment in SA 160 Net Income 20 Liabilities 80 Total 400 Total 400 SA ASSETS Equity & Liabilities Equipment 230 Capital 140 Net Income 60 Liabilities 30 Total 230 Total 230 On 31 December 2016, the two statements of financial...

2. You are the CEO of a US manufacturing company. You are being acquired by a...

2. You are the CEO of a US manufacturing company. You are being acquired by a large Japanese company who wants to incorporate your products as a component in their final products. They currently use the Kaizen Costing system and they have indicated that beginning next year, the US Company will use the same system. The CFO wants to understand better the differences and how it will change her responsibilities. How do you help her understand those differences? What plans...

Exceed, a US Company acquired all of the Outstanding Common Stock of Silver company on Jan...

Exceed, a US Company acquired all of the Outstanding Common Stock of Silver company on Jan 1 2019. Silver Company's functional currency is the peso. The exchange rates are as follows: Peso 1 = Jan. 1 $0.39 Dec. 31 $0.32 Average for the year $0.35 REQUIRED: Translate the 2019 financial statements of the subsidiary to U.S. Dollars from Pesos. Peso Exchange Rate US $ Income Statement Net Sales 820,000 Costs & Expenses (550,000) Net Income 270,000 Statement of Retained Earnings...

Ace, Inc., a US company, has been approached by Lakson Group, a company from Pakistan, to...

Ace, Inc., a US company, has been approached by Lakson Group, a company from Pakistan, to explore the possibility of a joint venture in Pakistan to produce widgets. Ace is currently exporting 100,000 widgets a year to Pakistan? importer SS Import-Export Co. at 5,000 Pakistan rupees (PKR) each. The spot exchange rate is 100 PKR per $1. Currently, each widget costs Ace $30 to produce and ship to Pakistan. However, the current import agreement Ace has obtained from the Pakistani...

Consolidation several years subsequent to date of acquisition—Equity method Assume that a parent company acquired a...

Consolidation several years subsequent to date of acquisition—Equity method Assume that a parent company acquired a subsidiary on January 1, 2014. The purchase price was $785,000 in excess of the subsidiary’s book value of Stockholders’ Equity on the acquisition date, and that excess was assigned to the following [A] assets: [A] Asset Original Amount Original Useful Life Property, plant and equipment (PPE), net $140,000 16 years Patent 245,000 7 years License 105,000 10 years Goodwill 295,000 Indefinite $785,000 The [A]...

Subjects