ACCTG 663 San Diego State University US GAAP and IFRS Analysis The Analysis of the differences between US GAAP and IFRS accounting treatments of ASSETS. U

ACCTG 663 San Diego State University US GAAP and IFRS Analysis The Analysis of the differences between US GAAP and IFRS accounting treatments of ASSETS.

Use the E&Y guide to identify the areas of disparities. Always analyze the distinctions and show their impact on IS and BSh items.

Always provide examples from each company’s financial statements to support your Analysis.

In cases, when you find no differences in accounting treatments used by companies, please provide the numerical and textual support for the “no disparity ” claim from the 10K report of each company.

The project starts with the Introduction.

INTRODUCTION

In the Introduction, please discuss the companies’ characteristics, their role (significance) for industry, the national economy, and the market.

Establish motivation for your Analysis based on:

the significance of your companies for the industry, economy, market
importance of comparison (and reconciliation) for the decision-making
expediency for raising capital internationally

Discuss:

make a quick summary of the areas of your inquiry
the direction vs. enumeration of the impact of the differences in accounting treatments*
briefly discuss your expectations (what do you expect to find as the result of your analysis)

*please, discuss the importance of annual reports direct comparability for the decision- makers, AND how complicated (if not sometimes impossible) is to quantify the effect of the differences between US GAAP and IFRS on the financial position of a company. In many cases, one can just determine the direction of the impact, but it remains almost impossible to enumerate an implication.

FOR EXAMPLE:

1. Due to the difference in the definition of “probable,” the revenue recognition point (OR A/R, OR allowances for bad debt, etc.) might be different. Thus, the amount of revenue recognized during any given year is impacted by whether the accounting event (item) was defined (or not) as “probable.” In this case, we can predict and show the direction of the impact, BUT to measure the effect is tricky.

2. Because IFRS allows the reversal of the PPE impairment, the reported NI (RE and ultimately Equity) under IFRS can be higher due to this event. Unlike the example above, we can enumerate the difference between reported NI (IFRS) and NI (US GAAP), because we know how much the book value of PPE was boosted by due to the reversal.

Area that You need to talk about (6 pages)

Inventory (Balance Sheet, Assets)

Don’t forget to provide examples from your companies Financial Statements

For each requirement below, please analyze the differences (if any) and their impact on the amount of recorded TA and NI (RE, Equity)

Does the reporting entities use the last-in, first-out (LIFO) method to value inventory?
Does the reporting entity use different costing methods for inventories that are similar and use to the entity?
Does the reporting entity classify major spare parts as inventories? Analyze the differences and their impact on the amount of recorded total assets

Property, Plant, and Equipment (Balance Sheet, Assets)

Don’t forget to provide examples from your companies Financial Statements

For each requirement below, please analyze the differences (if any) and their impact on the amount of recorded TA and NI (RE, Equity).

Does the reporting entity carry PP&E at a revalued amount? OR use the historical costs approach?
Does the reporting entity depreciate PP&E using a composite estimated life for an entire asset as opposed to following a component approach

Intangible Assets (Balance Sheet, Assets)

Don’t forget to provide examples from your companies Financial Statements

For each requirement below, please analyze the differences (if any) and their impact on the amount of recorded TA and NI.

Did the entities incur costs relating to research and development activities (other than software development costs)?
Did the entities incur costs relating to computer software that was sold, leased, or otherwise marketed?
Did the entities incur costs relating to computer software developed for internal use?
Did the entities account for intangible assets at cost?
Did the entities incur advertising expenditures?