Question
You work in the Accounting Policy Group of Radley International, Inc., a U.S. publicly-held manufacturer of women's handbags and other fashion accessories. In February 2020,
You work in the Accounting Policy Group of Radley International, Inc., a U.S. publicly-held manufacturer of women's handbags and other fashion accessories. In February 2020, Radley acquired Carlson International, Ltd., a UK-based company that is listed on the London Stock Exchange and NASDAQ. Carlson prepares its consolidated financial statements in accordance with IFRS. You have been assigned to the acquisition team based upon your in-depth knowledge of both U.S. GAAP and IFRS. Your role is to assist your peers at Carlson to prepare Income Statements under both IFRS and US GAAP.
IFRS 2: Stock Options Stock options were granted to key employees on January 1, 2020. The fair value per option was $10 on the grant date, and a total of 18,000 options were granted. The options vest in equal installments (i.e., graded vesting) over three years: one-third at the end of 2020, one-third at the end of 2021, and one-third at the end of 2022.
For U.S. GAAP purposes, the Controller has asked you to use the straight-line method to recognize compensation expense related to the stock options.
Required Using the information provided, prepare Carlsons Income Statements for 2021 (in Word or Excel) under IFRS and US GAAP. You are to assume that Carlsons Net Income for IFRS and US GAAP purposes is $8,000,000 before consideration of these items. For each adjustment, you must include a footnote that explains the adjustment and shows the related calculations. Ignore income taxes. All numbers are in U.S. dollars.
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