Trecek Corporation incurs research and development costs of$650,000 in 2017, 30 percent of which relate to developmentactivities subsequent to IAS 38 criteria having been met thatindicate an intangible asset has been created. The newly developedproduct is brought to market in January 2018 and is expected togenerate sales revenue for 10 years.
Assume that a U.S.–based company is issuing securities toforeign investors who require financial statements prepared inaccordance with IFRS. Thus, adjustments to convert from U.S. GAAPto IFRS must be made. Ignore income taxes.
Required:
Prepare journal entries for research and development costs forthe 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 December31, 2017, and December 31, 2018, conversion worksheets to convertU.S. GAAP balances to IFRS.
