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Apple's and Philips: Financial statement comparisons

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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
â?¢ Distinguish between an expense (expired cost) and an asset.
â?¢ Distinguish between current and long-term assets.
â?¢ Distinguish between current and long-term liabilities.
â?¢ Review Apple's balance sheet and provide two examples of each of the above categories.
â?¢ 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.
â?¢ Comment on at least three differences between Apple's and Philips' balance sheets.
â?¢ Does Apple or Philips have more debt?
â?¢ Which of the two companies is the bigger one? Explain your reasoning.

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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.
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 to the ...

Solution Summary

Your tutorial is 697 words plus two references to the annual reports used and 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.

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Apple and Philips: Review of 2011 Annual Report

Refer to the latest annual financial statements for the two following companies: Apple and Philips. Generally, this information is found in the Investor Relations area of the website. In here you need to use the most current annual financial statements at least 2010-2011 at the minimun.

Clearly identify the companies, the time period, and include the link to the financial statements you are analyzing in your report.

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What about auditing standards for the two companies?

Locate the income statement for the past two years for both companies. Prepare a table comparing five items or more from each statement. This part it is important, you need to develop a comparison table, showing your knowledge on the subject

Comment on the changes from one year to another. Is the company doing better or worse? Did revenues and expenses increase or decrease?

Is it easy to discern trends or compare the information from year to year and between the two companies? Please, comments on both aspects and show some examples.

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