Hirsch Company acquired equipment at the beginning of 2017 at a cost of $124,300. The equipment has a five-year life with no expected salvage value and is depreciated on a straight-line basis. At December 31, 2017, Hirsch compiled the following information related to this equipment: Expected future cash flows from use of the equipment $ 106,400 Present value of expected future cash flows from use of the equipment 90,700 Fair value (selling price less costs to dispose) 86,350 Assume that Hirsch Company is a U. S.-based company that is issuing securities to foreign investors who require financial statements prepared in accordance with IFRS. Thus, adjustments to convert from U. S. GAAP to IFRS must be made. Ignore income taxes.
Required:
Prepare journal entries for this equipment for the years ending December 31, 2020, and December 31, 2021, under (1) U. S. GAAP and (2) IFRS. Prepare the entry(ies) that Hirsch would make on the December 31, 2020, and December 31, 2021, conversion worksheets to convert U. S. GAAP balances to IFRS. Ignore the possibility of any additional impairment at the end of 2021.