In: Accounting
1. Discuss the differences in the evaluation methods for pp&e permitted under IFRS and under us GAAP?
2. Build a common size balance sheet?
1) Difference between the evaluation methods for P P&E under IFRS and under US GAAP :-
U.S. GAAP IFRS
a) Component Depreciation is not allowed but a) Depreciation of individual components required when
used in frequent cases components lives are different
b) Revaluation not allowed of property , plant b) Revaluation Model may be applied , which permit to value
and equipment property, plant & equipment at fair value
c) No specific guidance for accounting for c) Record investment in property at fair value with changes in
property investment fair value recognized in income statement
d) Costs of improvement , modernize accounted d) Costs of improvement , modernize accounted
as seperate component , costs should be for major part is capitalized if it is replacement of
deferred and amortized over the period component
of benefit
2) COMMON SIZE BALANCE SHEET :-
BALANCE SHEET FOR COMPANY ------
FOR THE YEAR ENDED DECEMBER 31, 20--
CURRENT ASSETS
Cash $ 1,00,000 1.41%
Accounts Receivable $ 8,37,940 11.81%
Inventory $ 11,95,648 16.85%
Total Current Assets $ 21,33,588 30.07%
Total Fixed Assets $ 49,62,540 69.93%
Total Assets $ 70,96,128 100%
CURRENT LIABILITIES
Accounts Payable $ 8,20,715 11.57%
Accrued Expenses $ 390410 5.50%
Short Term Debt $ 10,425 0.15%
Total Current Liabilities $ 12,21,550 17.22%
Long Term Debt $ 40,85,624 57.58%
Total Liabilities $ 53,07,174 74.80%
Shareholder's Equity $ 17.88,954 25.20%
TOTAL LIABILITIES AND EQUITY $ 70,96,128 100%