LaBolg Entity has reported under its national GAAP, but has recently converted all of its financial statements to IFRS in the year 20X5. Under LaBolg's national GAAP, an expenditure of $500,000 for R&D made in 20X2 should have been expensed immediately. However, under IFRS the expenditure should be capitalized and expensed over its 10-year useful life. Make the necessary adjusting journal entries that LaBolg would have to make to appropriately adjust the statement of financial position at the date of transition (Jan. 1, 20X4).

Question

Quizplus · Accepted Answer

The Answer of LaBolg Entity has reported under its national GAAP, but has recently converted all of its financial statements to IFRS in the year 20X5. Under LaBolg's national GAAP, an expenditure of $500,000 for R&D made in 20X2 should have been expensed immediately. However, under IFRS the expenditure should be capitalized and expensed over its 10-year useful life. Make the necessary adjusting journal entries that LaBolg would have to make to appropriately adjust the statement of financial position at the date of transition (Jan. 1, 20X4).

LaBolg Entity Has Reported Under Its National GAAP, but Has