Mikkeli OY acquired a brand name with an indefinite life in 2020 for 46,000 markkas....
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Accounting
Mikkeli OY acquired a brand name with an indefinite life in 2020 for 46,000 markkas. At December 31, 2020, the brand name could be sold for 38,000 markkas, with zero costs to sell. Expected cash flows from the continued use of the brand are 48,270 markkas, and the present value of this amount is 37,000 markkas.
Assume that Mikkeli OY 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 this brand name for the year ending December 31, 2020, under (1) IFRS and (2) U.S. GAAP.
Record the entry for the loss on impairment of brand as per IFRS.
Record the entry for the loss on impairment of brand as per U.S. GAAP.
b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020 conversion worksheet to convert IFRS balances to U.S. GAAP. What entry(ies), if any, would be made at 12/31/21, assuming that the Brand has suffered no further impairment in 2021.
Record the conversion entry needed for 12/31/20.
Record the conversion entry needed for 12/31/21.
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