Accounting Homework Case 2 - Cherie R Gunn Case#2...

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Cherie R. Gunn Case #2 Accounting 302 November 3, 2013 Air France – KLM Requirement 1: Air France – KLM uses the International Financial Reporting Standard (IFRS) accounting standard IAS 32, which refers to issuing bonds, and how to record them to the company’s books. Under this method, the company uses what is considered the “net method” to record debt. This means that when a debt is recorded, the entire amount is recorded to the debt account and amortized over the life of the debt with no accounting of the discount. In contrast if they were to use the “gross method” where a debt can be lower than the face value of the bond is recorded as a contra liability account and named a discount. Under the US Generally Accepted Accounting Principles (GAAP) debt costs are recorded on the books separately as an asset and amortized and reported on the statement. This is according to the ASC 470- 50-40 code under the FASB standard. The IFRS reduce the debt amount by the debt issue costs.
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  • Spring '16
  • Accounting, Case 2 KLM Repot, International Financial Reporting Standards, Financial Accounting Standards Board, convertible debt, fair value option

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