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Difference in approach to valuation by US GAAP and IFRS?

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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.
- 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.

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Solution Summary

Your tutorial is 445 words plus links to the annual reports and includes screen shots of the balance sheet of Apple and Philips for 2010 and 2011 suitable to add as exhibits in your final paper (attached)

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- Discuss and note two or three specific differences.
- Comment on at least three differences between Apple's and Philips' balance sheets.

In reviewing the balance sheets of Philips and Apple, there are a number of differences and some similarities. First, Philips uses IFRS and Apple uses U.S. GAAP. Although Philips could report their long term assets at appraised value because this is an option in IFRS (but not U.S. GAAP), they used cost less accumulated depreciation just like US GAAP. So, this was not a difference. Goodwill is amortized on Philip's balance sheet and this is no longer U.S. GAAP. Goodwill can be impaired but not amortized for U.S. GAAP. Apple's balance ...

Solution provided by:
Carol Sargent, PhD
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  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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