Purchase Solution

Analyze the Balance Sheet: Differences between Apple's and Philips GAAP IFRS Footnotes.

Not what you're looking for?

Ask Custom Question

The case requires you to analyze the balance sheet for the two companies 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.

Purchase this Solution

Solution Summary

Your tutorial is 697 words and also includes two references to the annual reports used, cut-and-paste exhibits for the 2011 balance sheet of Apple and Philips, and a partial equity section for Apple to make inclusion in a final report easy.

Solution Preview

Is there a difference in approach to valuation by US GAAP and IFRS? Discuss and note two or three specific differences.
Yes, there are differences between US GAAP and IFRS for valuation of items on the balance sheet. I will discuss differences in how they handle impairments, research and development and asset valuation.


First, long term assets that are impaired can only be written down under U.S. GAAP. Under IFRS, once an asset is impaired, it is possible to write it back up if there is a recovery of value. U.S. GAAP does not permit recovered value to be recognized; impairments are permanent.


In US GAAP, research and development is considered a period cost. That is, it is expensed when it is incurred, without regard to the possibility of future results. Under IFRS, research is a period expense but development is capitalized

In US GAAP, assets are valued at the "exit value." That is, the price that you could get from selling it to market participants. This creates a bit of a problem when there are no market participants as happened at the end of 2008! When active trading is missing, there is a hierarchy used for valuation. First, you use actively traded asset values for items that are similar ...

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
Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Learning Lean

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

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.