Accounting for prepayments. LG Corporation, a Korean multinational firm, reported an ending balance for Prepayments of KRW
Question:
Accounting for prepayments. LG Corporation, a Korean multinational firm, reported an ending balance for Prepayments of KRW 345,609 million for the year ending December 31, 2007. For the year ended December 31, 2006, the ending balance in this account was KRW 260,324. Suppose that at the beginning of 2007, the Prepayments balance consisted of three months of prepaid rent on factory warehouses; at the end of the three months, LG prepaid one year of rent. LG follows Korean generally accepted accounting principles and reports its results in million of Korean won (KRW). For purposes of this problem, assume that LG uses either U.S. GAAP or IFRS (the choice will not matter).
a. What journal entry did LG make in each of the three months, January- March of 2007, associated with its prepaid rent?
b. What journal entry did LG make at the end of March 2007 to reflect its prepayments of one year of rent?
c. What journal entry did LG make in each of the months April-December of 2007 associated with its prepaid rent?
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...
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Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
