Barrel of Oats (BOA), a U.S.company, was acquired by an international company and BOA has a transition date of January 1, 2018 for first-time adoption of IFRS.BOA has a new cereal brand that is ready to be marketed but the company has not yet received copyright approval for the brand's logo.All costs for development of the copyright were expensed prior to IFRS January 1, 2018.BOA and its new international parent both have December 31 year-end accounting years.What should BOA do to prepare financial statements for the first time in accordance with IFRS?

Question

Quizplus · Accepted Answer

Under IFRS, development costs can be capitalized if certain criteria are met. Since the costs were expensed before the transition date, BOA can adjust its opening balance sheet by debiting the copyright asset and crediting stockholders' equity at January 1, 2018, to reflect the capitalization of development costs.