Sapporo K$.$K$.$ was sued by a competitor in late $2023,$ and company management concluded that there was a $55$ percent

probability that the company would lose the lawsuit. The best estimate of the loss on December $31,2023,$ was $4,000,000$ yen.

$2024,$ the lawsuit is concluded with Sapporo paying its competitor $5,000,000$ yen on May $15,2024.$

Assume that Sapporo K$.$K$.$ is a foreign company using IFRS and is owned by a company using U$.$S$.$ GAAP. Thus, IFRS balances

must be converted to U$.$S$.$ GAAP to prepare consolidated financial statements. Ignore income taxes.

Required:

a$.$ Prepare journal entries for this lawsuit for the years ending December $31,2023,$ and December $31,2024,$ under $(1)$ IFRS and

$(2)$ U$.$S$.$ GAAP.

b$.$ Prepare the entry$($ies$)$ that the U$.$S$.$ parent would make on the December $31,2023,$ and December $31,2024,$ conversion

worksheets to convert IFRS balances to U$.$S$.$ GAAP.