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Llungby AB spent 1,000,000 krone in 2020 on the development of a new product. The company determined that 25 percent of this amount was incurred after the criteria in IAS 36 for capitalization as an intangible asset had been met. The newly developed product is brought to market in January 2021 and is expected to generate sales revenue for five years. Assume that Llungby AB is a foreign company using IFRS and is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes. Required: a. Prepare journal entries for development costs for the years ending December 31, 2020, and December 31, 2021, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020, and December 31, 2021, conversion worksheets to convert IFRS balances to U.S. GAAP. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Prepare journal entries for development costs for the years ending December 31, 2020, and December 31, 2021, under (1) IFRS and (2) U.S. GAAP. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Date General Journal Credit Debit 750,000✔ 12/31/2020 Development expense Intangible asset ✓ 250,000✔ Cash 1,000,000 ✓ 1 < Required A Required B >
Llungby AB spent 1,000,000 krone in 2020 on the development of a new product. The company determined that 25 percent of this amount was incurred after the criteria in IAS 36 for capitalization as an intangible asset had been met. The newly developed product is brought to market in January 2021 and is expected to generate sales revenue for five years. Assume that Llungby AB is a foreign company using IFRS and is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes. Required: a. Prepare journal entries for development costs for the years ending December 31, 2020, and December 31, 2021, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020, and December 31, 2021, conversion worksheets to convert IFRS balances to U.S. GAAP. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020, and December 31, 2021, conversion worksheets to convert IFRS balances to U.S. GAAP. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Date General Journal Credit Debit 250,000✔ 12/31/2020 ✓ Development expense Intangible asset ✓ 250,000 12/31/2021 Retained earnings ✓ 250,000✔ Intangible asset ✓ 750,000 X ✓ 1,000,000 X 1 2 Amortization expense