Purchase Solution

Difference in approach to valuation by US GAAP IFRS

Not what you're looking for?

Ask Custom Question

Reviewing balance sheets in detail.
Is there a difference in approach to valuation by US GAAP and IFRS?
Discuss and note two 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.

Purchase this Solution

Solution Summary

Your tutorial is 597 words plus four references, There are two exhibits for the 2011 balance sheet of Apple and Philips.

Solution Preview

Detailed Balance Sheet Analysis

US GAAP and IFRS differ in how they value some assets and some liabilities. Here are some examples:

When an asset has lost value (impaired), the book value is reduced under US GAAP and IFRS. However, IFRS permits recovery of prior write downs. US GAAP does not. This can result in very different valuations or book values for long term assets.

2. R&D
Development costs are capitalized and amortized under IFRS. In US GAAP, new product or project development is considered a period cost. That is, it is expensed when it is incurred, without regard to the possibility of future results.

When valuation is needed (because the transaction was in a prior period or bulk purchase prevents knowing the value of individual items purchased) there are differences in US GAAP and IFRS. US GAAP specifies using an "exit value." That is, the price to sell to market participants. When there are no active trades, you have to resort to either looking at similar assets that are traded or using a fair value model using internal inputs. That is, use the cash ...

Solution provided by:
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution

Free BrainMass Quizzes
Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.


This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Lean your Process

This quiz will help you understand the basic concepts of Lean.