Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
39. Acceptable Treatments
Acceptable under
IFRS
U.S.
GAAP Both Neither
the debt.
Case 5-1 S. A. Harrington Company
Reconciliation from U.S. GAAP to IFRS
2015
Income under U.S. GAAP
$5,000,0
00
Adjustments:
Explanation of Adjustments
Restructuring. Under U.S. GAAP, the restructuring is not recognized in 2015 because a legal
obligation does not yet exist.
Case 5-1 S. A. Harrington Company (continued)
Stock Options. The total compensation cost related to the stock options is $90,000. Under U.S.
Under IFRS, compensation expense would be recognized as follows:
Installment
Compensation
Cost per
Installment
Compensation
Expense
2014
Compensation
Expense
2015
Compensation
Expense
2015
Revenue Recognition. No revenue would be recognized on this service contract under U.S.
GAAP because the services have not yet been completed.
Case 5-1 S. A. Harrington Company (continued)
Under IFRS, the bond issuance costs reduce the carrying amount of the bonds to $9,500,000,
and the effective interest rate is determined to be 6.193% [$9,500,000 cash inflow on January 1,
2014; $500,000 cash outflow on December 31, 2014 – 2018; and $10,000,000 cash outflow on
