{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Chapter 4 Homework Answers (3nd)

Chapter 4 Homework Answers (3nd) - 3 years Annual...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 4 Homework Assignment Answers Exercise 1 1. Monroe Company – Inventory IFRS U.S. GAAP Historical cost 20,00 0 Historical cost 20,000 Estimated selling price 17,000 Replacement cost 14,00 0 Costs to complete and sell 2,000 Net realizable value 15,00 0 Net realizable value 15,000 Normal profit margin 20% Inventory loss 5,000 NRV - profit margin 12,00 0 Market 14,000 Inventory loss 6,00 0 a. (1) IFRS: Year 1 Inventory loss $5,000 Year 2 Cost of goods sold $16,800 (2) U.S. GAAP: Year 1 Inventory loss $6,000 Year 2 Cost of goods sold $15,800 b. Year 1: IFRS result in $1,000 larger income before tax, assets, and stockholders’ equity. Year 2: IFRS result in $1,000 smaller income before tax; assets and stockholders’ equity are the same at the end of Year 2 under both IFRS and U.S. GAAP. Problem 3 Jefferson Company – Property, Plant and Equipment (measurement subsequent to acquisition) Cost, 1/2/Y1 $10,000,000 Useful life 5 years Annual depreciation $2,000,000 Book value, 12/31/Y2 $6,000,000 IFRS Allowed Alternative Fair value, 1/2/Y3 $12,000,000 Remaining useful life
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 3 years Annual depreciation $4,000,000 a. Depreciation expense IFRS U.S. GAAP Years 1 and 2 $2,000,000 $2,000,000 Years 3, 4, and 5 $4,000,000 $2,000,000 Income before tax is the same under IFRS and U.S. GAAP in Years 1 and 2. Income before tax is $2,000,000 smaller under IFRS in Years 3, 4, and 5. b. End of Year Equipment (book value) 1 2 3 4 5 IFRS Beginning $10 m $8 m $6 m $8 m $4 m Revaluation 6 m Depreciation expense (2 m) (2 m) (4 m) (4 m) (4 m) Ending $8 m $6 m $8 m $4 m $0 U.S. GAAP Beginning $10 m $8 m $6 m $4 m $2 m Depreciation expense (2 m) (2 m) (2 m) (2 m) (2 m) Ending $8 m $6 m $4 m $2 m $0 End of Year Stockholders’ equity 1 2 3 4 5 IFRS Beginning $0 ($2 m) ($4 m) ($2 m) ($6 m) Revaluation $6 m Depreciation expense ($2 m) ($2 m) ($4 m) ($4 m) ($4 m) Ending ($2 m) ($4 m) ($2 m) ($6 m) ($10 m) U.S. GAAP Beginning $0 ($2 m) ($4 m) ($6 m) ($8 m) Depreciation expense ($2 m) ($2 m) ($2 m) ($2 m) ($2 m) Ending ($2 m) ($4 m) ($6 m) ($8 m) ($10 m)...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern