Brussels Corp., a new U.S. based company, is interested in financial reporting under international accounting standards (IFRS). It has decided to account for its transactions under both U.S. GAAP and IFRS for a one year period. At the end of the one year period, Brussels will prepare its financial statements and notes under both U.S. GAAP and IFRS. As the accountant, you are responsible for journalizing the transactions and preparing any necessary adjusting entries.

January 2, 2016

Brussels issues 25,000 shares of mandatorily redeemable preferred stock for $247 per share.

February 28, 2016

Brussels purchases 200,000 inventory items at a cost of $36 per item. Brussels will use the perpetual method and FIFO, if the methods are allowed. (Brussels pays cash.)

June 30, 2016

Brussels leases two similar assets in two different manufacturing plants. The leases were separately negotiated. The assets each have an economic life of ten years and a seven year lease. Brussels incremental borrowing rate is 6%. The lease neither transfer ownership nor have bargain purchase options. Additional details for each leased asset follow:

Asset A: Has a fair market value of $400,000 and payments under the lease are $60,000 each year. The first payment is due at the inception of the lease.

Asset B: Has a fair market value of $400,000 and payments under the lease are $61,000 each year. The first payment is due at the inception of the lease.

December 31, 2016 Additional Information 1. The following information is available for the inventory items purchased on February 28, 2016:

Net Realizable Value (NRV) = $36.40

Replacement Cost = $34.80

NRV minus normal profit margin = $32.20

Ignore taxes for this exercise.