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Unformatted text preview: Appendix C - IFRS Comprehensive Case PART A: FINANCIAL STATEMENTS, INCOME MEASUREMENT, AND CURRENT ASSETS Question A1 Under U.S. GAAP, we present current assets and liabilities before noncurrent assets and liabilities. IAS No. 1 doesnt prescribe the format of the balance sheet, but balance sheets prepared using IFRS often report noncurrent items first. BAs balance sheet presents noncurrent assets and liabilities before current assets and liabilities and also presents equity before liabilities. Another difference is the order of the individual line items within categories. For example, in the U.S., current assets generally are listed in order of liquidity, with cash and cash equivalents listed first, followed by short-term investments, accounts receivable, and then inventories. BAs current assets appear to be listed in the reverse order of liquidity. Question A2 BA classifies its expenses by both natural descriptions (e.g. employee costs, fuel and oil costs, and landing fees) and functions (e.g. restructuring costs and selling costs). In the U.S., expenses are classified by function. Question A3 BA classifies interest paid as an operating cash flow and interest received and dividends received as investing cash flow. Under IFRS, companies can report interest paid as either an operating or financing cash flow and interest and dividends received as either operating or investing cash flows. Under U.S. GAAP, these are all classified as operating cash flows. AppC-1 IFRS COMPREHENSIVE CASE Appendix C - IFRS Comprehensive Case Answers to Questions (continued) Question A4 From note 2: IFRIC 13 Customer Loyalty Programmes; effective for periods beginning on or after July 1, 2008, which addresses accounting by entities that operate or otherwise participate in customer loyalty programmes for their customers. IFRIC 13 applies to sales transactions in which the entities grant their customers award credits that, subject to meeting further qualifying conditions, the customers can redeem in the future for free or discounted goods or services. The interpretation requires that an entity recognizes credits that it awards to customers as a separately identifiable component of revenue, which would be deferred at the date of the initial sale. This approach is consistent with U.S. GAAPs accounting for multiple- deliverable contracts (ASC 6052515), in that the revenue associated with BA miles is deferred and recognized separately from the revenue associated with the flights that customers use to earn the miles. Per note 26, BA has a liability for unredeemed frequent flyer liabilities of only 1 million, so this does not appear to have generated a very large deferred liability for BA....
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This note was uploaded on 05/02/2011 for the course ACC 311 taught by Professor Pak during the Spring '11 term at Cal Poly.
- Spring '11
- Assets And Liabilities