Sapporo K.K. was sued by a competitor in late 2020, 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, 2020, was 4,000,000 yen. In 2021, the lawsuit is concluded with Sapporo paying its competitor 5,000,000 yen on May 15, 2021.

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:

1. Prepare journal entries for this lawsuit for the years ending December 31, 2020, and December 31, 2021, under (1) IFRS and (2) U.S. GAAP.
2. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020, and December 31, 2021, conversion worksheets to convert IFRS balances to U.S. GAAP.

Prepare journal entries for this lawsuit for the years ending December 31, 2020, and December 31, 2021, under (1) IFRS and (2) U.S. GAAP. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet 4 Note: Enter debits before credits. Prepare journal entries for this lawsuit for the years ending December 31, 2020, and December 31, 2021, under (1) IFRS and (2) U.S. GAAP. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet Prepare journal entries for this lawsuit for the years ending December 31, 2020, and December 31, 2021, under (1) IFRS and (2) U.S. GAAP. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet 12 Note: Enter debits before credits. Prepare journal entries for this lawsuit for the years ending December 31, 2020, and December 31, 2021, under (1) IFRS and (2) U.S. GAAP. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet Note: Enter debits before credits. Prepare the entry(ies) that the U.S. parent would make on the December 31,2020 , and December 31 , 2021 , conversion worksheets to convert IFRS balances to U.S. GAAP. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet Record the conversion entry needed for 12/31/20. Note: Enter debits before credits. Prepare the entry(ies) that the U.S. parent would make on the December 31,2020 , and December 31 , 2021 , conversion worksheets to convert IFRS balances to U.S. GAAP. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet Record the conversion entry needed for 12/31/21. Note: Enter debits before credits