Trecek Corporation incurs research and development costs of $685,000 in 2017, 30 percent of which relate to development activities subsequent to IAS 38 criteria having been met that indicate an intangible asset has been created. The newly developed product is brought to market in January 2018 and is expected to generate sales revenue for 10 years.
Assume that a U.S.–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:
Prepare journal entries for research and development costs for the years ending December 31, 2017, and December 31, 2018, under (1) U.S. GAAP and (2) IFRS.
Prepare the entry(ies) that Trecek would make on the December 31, 2017, and December 31, 2018, conversion worksheets to convert U.S. GAAP balances to IFRS.
In: Accounting
Jacque Co. is a French company located in Paris. Yankee Corp., located in New York City, acquires Jacque Co. Jacque has the Euro as its local currency and the Swiss Franc as its functional currency. Yankee has the U.S. dollar as its local currency and the U.S. dollar as its functional currency. Required: a) The year-end consolidated financial statements will be prepared in which currency? b) Explain which method is appropriate to use to use at year-end: Translation or Remeasurement?
In: Accounting
In: Finance
?Avon's Foreign-Source Income. Avon is a? U.S.-based direct seller of a wide array of products. Avon markets leading? beauty, fashion, and home products in more than 100 countries. As part of the training in its corporate treasury? offices, it has its interns build a spreadsheet analysis of the following hypothetical subsidiary? earnings/distribution analysis. Use the tax analysis presented in the table below for your basic? structure.
a. What is the total tax? payment, foreign and domestic? combined, for this? income?
b. What is the effective tax rate paid on this income by the? U.S.-based parent? company?
c. What would be the total tax payment and effective tax rate if the foreign corporate tax rate was 45% and there were no withholding taxes on? dividends?
d. What would be the total tax payment and effective tax rate if the income was earned by a branch of the U.S.? corporation?
| Case 1 | Case 2 | |
| a Foreign corporate income tax rate | 28% | 45% |
| b U.S. corporate income tax rate | 35% | 35% |
| c Foreign dividend withholding tax rate | 15% | 0% |
| d U.S. ownership in foreign firm | 100% | 100% |
| e Dividend payout rate of foreign firm | 100% | 100% |
| Foreign Subsidiary Tax Computation | ||
| 1 Taxable income of foreign subsidiary | $3,400,000 | $3,400,000 |
| 2 Foreign corporate income tax | (952,000) | (1,530,000) |
| 3 Net income available for distribution | $2,448,000 | $1,870,000 |
| 4 Retained earnings | 0 | 0 |
| 5 Distributed earnings | 2448000 | 1870000 |
| 6 Distribution to U.S. parent company | 2448000 | 1870000 |
| 7 Withholding taxes on dividends | 367200 | 0 |
| 8 Net remittance to U.S. parent | $2,080,800 | $1,870,000 |
| U.S. Corporate Tax Computation on Foreign Income | ||
| 9 Dividend received before withholding | $2,448,000 | $1,870,000 |
| 10 Add back foreign deem-paid tax | 952000 | 1530000 |
| 11 Grossed-up foreign dividend | $3,400,000 | $3,400,000 |
| 12 Tentative U.S. liability | 1190000 | 1190000 |
| 13 Less credit for foreign taxes | ||
| a foreign income taxes paid | (952,000) | (1,530,000) |
| b foreign withholding taxes paid | (367,200) | (0) |
| c total | ($1,319,200) | ($1,530,000) |
| 14 Additional U.S. taxes due | $0 | $0 |
| 15 Excess foreign tax credits | 129200 | 340000 |
| 16 After-tax income from foreign subsidiary | $2,210,000 |
$2,210,000 |
Please provide very detailed answers to all the questions asked!
In: Accounting
In: Psychology
Presented below is information related to Skysong Company. Date Ending Inventory (End-of-Year Prices) Price Index December 31, 2017 $ 87,400 100 December 31, 2018 152,755 137 December 31, 2019 148,824 156 December 31, 2020 168,493 169 December 31, 2021 200,018 182 December 31, 2022 238,140 189 Compute the ending inventory for Skysong Company for 2017 through 2022 using the dollar-value LIFO method.
Ending Inventory 2017:
Ending Inventory 2018:
Ending Inventory 2019:
Ending Inventory 2020:
Ending Inventory 2021:
Ending Inventory 2022:
In: Accounting
In: Accounting
the data group showing
common shre unlimited authorized 240000 shares issued and
outstanding 528000
retained earning 500000
during 2020 the following equity transtions
apr 15 repurchased and retired 9800 shares at $20.40 per
share
may 1 repurchased and retired 21000 common shares at $23.60 per
share
nov. 1 the board of directors declared at 2:1 share split effective
on this data
prepare journel entries
2. prepare company equity section loss of $156000
prepare the company equity section on the dec. 31 2020 assuming loss os the year og $156000
In: Accounting
On January 1, 2019, Monica Company acquired 70 percent of Young Company’s outstanding common stock for $700,000. The fair value of the noncontrolling interest at the acquisition date was $300,000.
Young reported stockholders’ equity accounts on that date as follows:
| Common stock—$10 par value | $ | 100,000 | |
| Additional paid-in capital | 100,000 | ||
| Retained earnings | 520,000 | ||
In establishing the acquisition value, Monica appraised Young's assets and ascertained that the accounting records undervalued a building (with a five-year remaining life) by $40,000. Any remaining excess acquisition-date fair value was allocated to a franchise agreement to be amortized over 10 years.
During the subsequent years, Young sold Monica inventory at a 30 percent gross profit rate. Monica consistently resold this merchandise in the year of acquisition or in the period immediately following. Transfers for the three years after this business combination was created amounted to the following:
| Year | Transfer Price | Inventory Remaining at Year-End (at transfer price) |
||||||
| 2019 | $ | 60,000 | $ | 21,000 | ||||
| 2020 | 80,000 | 23,000 | ||||||
| 2021 | 90,000 | 29,000 | ||||||
In addition, Monica sold Young several pieces of fully depreciated equipment on January 1, 2020, for $47,000. The equipment had originally cost Monica $72,000. Young plans to depreciate these assets over a five-year period.
In 2021, Young earns a net income of $250,000 and declares and pays $80,000 in cash dividends. These figures increase the subsidiary's Retained Earnings to a $850,000 balance at the end of 2021. During this same year, Monica reported dividend income of $56,000 and an investment account containing the initial value balance of $700,000. No changes in Young's common stock accounts have occurred since Monica's acquisition.
Prepare the 2021 consolidation worksheet entries for Monica and Young.
Compute the net income attributable to the noncontrolling interest for 2021
.
In: Accounting
| Sofie Company buys stock in Nut Corporation in cash on January 1, 2020, and reports the investment as having no significant influence. | |||||||||
| The percentage of investment | 15% | Amount paid | $6,000,000 | ||||||
| On January 1, 2022 Sofie Company makes the following additional investment in Nut Corporation and changes to the equity method of reporting for this investment: | |||||||||
| The additional percentage of investment | 25% | Additional amount paid | $15,000,000 | ||||||
| December 31, 2020 | December 31, 2021 | ||||||||
| Fair value of the 15% investment is as follows: | $6,200,000 | $6,450,000 | |||||||
| Nut Corporation reported the following amounts for the years: | |||||||||
| 2020 | 2021 | 2022 | |||||||
| Net Income | $150,000 | $200,000 | $250,000 | ||||||
| Cash dividends (Paid at year-end) | $50,000 | $80,000 | $100,000 | ||||||
|
Additional information: Nut Corporation reported no comprehensive income and any basis difference is attributed to goodwill. Required: Develop a table showing the calculation of what the amount Sofie Corporation will report on the balance sheet for the investment in Nut Corporation on December 31, 2022. |
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In: Accounting