The main purpose of this module is to review the balance sheet in more detail. I
ID: 2385854 • Letter: T
Question
The main purpose of this module is to review the balance sheet in more detail.Is there a difference in approach to valuation by US GAAP and IFRS? Discuss and note two or three specific differences. In addition, briefly
• Distinguish between an expense (expired cost) and an asset.
• Distinguish between current and long-term assets.
• Distinguish between current and long-term liabilities.
• Review Apple’s balance sheet and provide two examples of each of the above categories.
• Discuss retained earnings and how income or loss and dividends affect this account. Review Apple’s retained earnings account and explain how it changes between the two past years.
• Comment on at least three differences between Apple’s and Philips’ balance sheets.
• Does Apple or Philips have more debt?
• Which of the two companies is the bigger one? Explain your reasoning.
Modular Case Assignment Expectations:
Explanation / Answer
1) expense is of revenue nature but an asset is of capital nature. Expense will reduce your income statment but asset does not affect your income statement except for the annual depreciation charged. Expense - rent, Asset - Land 2) Current asset measn which are realisable in the ordinary course of business. It means that they will be realised in the next one year or in the one operating cycle of the company. However long term assets such as land/ building etc will give you enduring benefit over a period of time say for more than 1 year. Current asset - stock, long term asset - land 3)Current asset means which are payable in the ordinary course of business. It means that they will be payable in the next one year or in the one operating cycle of the company. However long term liabilities such as long term loan etc means liabilities whihc needs to be repaid after more than 1 years. Current liabilities - accounts payable, long term liabilities - Bank loans Since the Balance sheet of the tw companies are not provided I cannot comment on further questions. Regards
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