Diondrea Nixon

International Accounting
Professor Blunt
September 20, 2023

S. A. Harrington Company

To reconcile S. A. Harrington Company's 2015 net income and December 31, 2015, stockholders'
equity from a U.S. GAAP basis to IFRS, we will address each of the identified accounting
differences: Restructuring, Pension Plan, Stock Options, Revenue Recognition, and Bonds
Payable. Below is a reconciliation schedule with explanations for each adjustment:
Reconciliation Schedule from U.S. GAAP to IFRS

Net Income Reconciliation:

Description U.S. GAAP Amount ($) IFRS Adjustment ($) IFRS Amount ($)
Net Income per U.S. GAAP $5,000,000 - $5,000,000
Adjustments:
1. Restructuring Provision -$300,000 +$300,000 $0
2. Pension Plan -$60,000 +$60,000 $0
3. Stock Options - Compensation - Compensation
Expense ($10,000 * Expense ($10,000
9,000 * 2/3) * 9,000 * 2/3)
4. Revenue Recognition - Recognized - Recognized
Revenue ($250,000 Revenue ($250,000
* 30%)* 30%)
Total Adjustments -$360,000 +$360,000 $0
Net Income per IFRS $4,640,000 - $4,640,000
Explanation of Adjustments:
1. Restructuring Provision Adjustment:
 Under U.S. GAAP, a restructuring provision of -$300,000 was recognized because
the company created a valid expectation of employee terminations.
 Under IFRS, the provision is reversed because IFRS requires a legal obligation
for recognition. As of December 31, 2015, no legal obligation exists. Hence, the
adjustment adds back the restructuring provision.
2. Pension Plan Adjustment:
 U.S. GAAP recognized a past service cost of -$60,000 related to the pension plan.
 Under IFRS, past service cost is recognized immediately when it arises.
Therefore, the adjustment adds back the past service cost.
3. Stock Options Adjustment:
 The adjustment is made to reverse the compensation expense recognized under
U.S. GAAP related to stock options. U.S. GAAP recognizes this expense over
time, while IFRS may recognize it differently based on vesting or other factors.
4. Revenue Recognition Adjustment:
 U.S. GAAP recognized revenue of $250,000 based on the percentage of
completion (30% complete).
 Under IFRS, revenue recognition may differ based on the criteria for recognizing
progress. In this case, the adjustment is made to reflect revenue recognized based
on IFRS criteria.
Stockholders' Equity Reconciliation:
The stockholders' equity reconciliation will mainly focus on the adjustments related to pension
plan and restructuring, as these directly impact equity.

Description U.S. GAAP Amount ($) IFRS Adjustment ($) IFRS Amount ($)
Stockholders' Equity per U.S. GAAP $40,000,000 - $40,000,000
Adjustments:
1. Restructuring Provision Adjustment -$300,000 +$300,000 $0
2. Pension Plan Adjustment -$60,000 +$60,000 $0
Total Adjustments -$360,000 +$360,000 $0
Stockholders' Equity per IFRS $39,640,000 - $39,640,000
The adjustments made to stockholders' equity reflect the reversal of the restructuring provision
and the recognition of the past service cost related to the pension plan under IFRS.

This reconciliation schedule provides a clear breakdown of the adjustments required to align S.
A. Harrington Company's financial statements from U.S. GAAP to IFRS, along with
explanations for each adjustment made.