China Easter Airlines (CEA) Corp prepares a set of financial statements in accordance with IFRS (in Chinese renminbi-RMB). Until 2007, the company also provided a reconciliation of IFRS net income and net assets to US GAAP. The attached excerpt was taken from a recent annual report.(see attachment)
Explain the difference between 1. IFRS net income and US GAAP net income and 2. IFRS net assets (owners' equity) and US GAAP net assets that resulted from the accounting difference related to "revaluation of fixed assets."© BrainMass Inc. brainmass.com October 2, 2020, 3:43 am ad1c9bdddf
1. Explain the difference between IFRS net income and US GAAP net income.
The difference between IFRS and US GAAP net income for China Easter Airlines in the 2001-2003 time frame (footnote provided) stems from the handling of long term operating assets. In reviewing the footnote disclosure reconciling IFRS and US GAAP, you find the reversal of depreciation expense, differences in gains and losses from disposal of long term assets and adjustments to the temporary differences arising from differences between tax depreciation and depreciation expense in US GAAP financial statements.
Why do these differences occur? First, depreciation differs. In US GAAP, long term operating assets are depreciated over their useful lives using one of for acceptable methods, but typically ...
Your tutorial is 474 words (no references, just footnote of China Easter Airlines for 2003 showing the reconciliation of US GAAP to IFRS). Three reasons for the differences are given and the impact on income and assets is discussed.