Sorocaba Ltda. sold a building to Banco Janeiro on January 1, 2017, for 223,000 reais and then leased it back under a 10-year lease agreement, which is accounted for as an operating lease. The building had a carrying amount of 170,500 reais and a fair value of 223,000 reais on the date of sale. Assume that a foreign company using IFRS 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 sale and leaseback for the years ending December 31, 2017, and December 31, 2018, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017, and December 31, 2018, conversion worksheets to convert IFRS balances to U.S. GAAP.

A) Journal entries

1. Record the entry for the gain on sale of building as per IFRS.

2. Record the entry for the gain on sale of building as per U.S. GAAP.

3. Record the entry for recognizing amortized deferred gain on sale of building in Profit and Loss account under U.S. GAAP.

4. Record the entry for the gain on sale of building as per IFRS.

5. Record the entry for recognizing amortized deferred gain on sale of building in Profit and Loss account under U.S. GAAP.

B)

1. Record the conversion entry needed for 12/31/17.

2. Record the conversion entry needed for 12/31/18.