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Financial Accounting

15th Edition
Carl Warren + 2 others
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
ISBN: 9781337272124
Textbook Problem
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IFRS Activity 2

The following is a recent consolidated statement of financial position on December 31 of a recent year for LVMH, a French company that markets the Louis Vuitton® and Moët Hennessy® brands:

Chapter MJ, Problem 2IFRS, IFRS Activity 2 The following is a recent consolidated statement of financial position on December , example  1

  1. a. Identify presentation differences between the balance sheet of LVMH and a balance sheet prepared under U.S. GAAP. Use the Mornin’ Joe balance sheet (Exhibit 2) as an example of a U.S. GAAP balance sheet. (Ignore minority interests and cumulative translation adjustment.)
  2. b. Compare the terms used in this balance sheet with the terms used by Mornin’ Joe (Exhibit 2), using the table that follows:

Chapter MJ, Problem 2IFRS, IFRS Activity 2 The following is a recent consolidated statement of financial position on December , example  2

  1. c. What does the “Revaluation reserves” in the Equity section of the balance sheet represent?

(a)

To determine

Explain the differences in the presentation of balance sheet of Company L and MJ International.

Explanation

Generally Accepted Accounting Principles (GAAP): These are the guidelines necessary to create accounting principles for the implementation of financial information reporting in the Country U.

International Financial Reporting Standards (IFRS): IFRS are a set of international accounting standards which are framed, approved, and published by International Accounting Standards Board (IASB) for the preparation and disclosure of international financial reports.

The following are the differences in the presentation of balance sheet of Company L and MJ International:

  • The order of presentation of financial items on the statement of financial position of Company L are different from the presentation of financial items on the balance sheet of MJ International.
  • The assets presented on the statement of financial position of Company L are in the following order:
  • Non-current assets:
  • Intangible assets
  • Property, plant, and equipment
  • Current assets:
  • Inventories
  • Trade accounts receivables
  • Cash and cash equivalents
  • The assets presented on the balance sheet of MJ International are in the following order:
  • Current assets:
  • Cash and cash equivalents
  • Accounts receivables
  • Inventories
  • Prepaid insurance
  • Investments
  • Property, plant, and equipment
  • Intangible assets
  • After assets, equity is reported followed by liabilities on the statement of financial position of Company L...

(b)

To determine

Compare the financial statement terms used by Company L and MJ International.

(c)

To determine

Discuss the term ‘revaluation reserves’ reported in equity section by Company L.

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