ipl-logo

Basis Of Accounting Case 1

1750 Words7 Pages

Francisco Colin Professor John Valenzuela Accounting 465 21 October 2014 Case #2 Basis of Accounting In order for Chris to convert financial statements from U.S. GAAP to IFRS successfully, Ruckman, Inc. needs to include a balance sheet, income statement, statement of comprehensive income, changes in equity statement, cash flow statement, and footnotes to the statements. Like U.S. GAAP, IFRS recommends to separate current and non-current assets and liabilities on the balance sheet. First, Chris must determine what assets and liabilities IFRS requires and exclude the ones IFRS does not required. Second, classify all the assets, liabilities, and equity accordance to IFRS. Third, retrieve information about the measure of all items. Lastly, …show more content…

GAAP and IFRS both share some similarities on accounting property, plant, and equipment. The amounts based on cost required depreciation. Under IFRS (IAS 16), for asset depreciation it is required to be depreciated separately. For U.S. GAAP, asset depreciation is over a useful life. Under IFRS, the re-measurement of residual value is different from what was previously estimated and the change is accounted either upward or downward. U.S. GAAP only records the re-measurement of the residual value when it has decreased. For investment property, Ruckman needs to adopt either the fair value model or cost model. The fair value is the change of value in investment property recognized as a profit or loss. Cost model deals with the measured at historical cost less accumulated depreciation. In the semiconductor industry, building; plant and equipment; office equipment; and construction in progress are some of the PP&E depreciated. Ruckman must record the disposal, the write off, impairment loss recognize in profit or loss, and depreciation expense. Any impairment losses recorded are associated with disposal of property, plant, and equipment with outdated technologies. Intangible …show more content…

GAAP cover short-term employee benefits, post-employment benefits, termination benefits, and other long-term employee benefits. Under IAS 19, Chris must use normal accrual accounting to measure short-terms benefits such as absences and bonuses. Those benefits are to be settled within 12 months of the reporting period. Both IFRS and U.S. recognized contributions due from the employer under defined contribution plan. Also both recognized defined benefit plan under the present value of the services given to the employees in each period. IFRS and U.S. GAAP implement actuarial method for defined benefit plans. Chris must be aware that both apply major differences to the method. Under IFRS, projected unit credit method is required. U.S. GAAP uses difference methods depending on the plan’s benefit. Under IFRS, Ruckman, Inc. can still provide retirement benefits based on the employees salaries and the number of years the employee has been with the company. Ruckman, Inc. may be required to make contributions to the retirement plan. This is determined at a rate equal to the monthly basic salary of the employees. Overall, the costs of the contributions are recognized in profit or loss. Operating

Show More
Related
1187 Words | 5 Pages

ACC 201 Final Project Part I Accounting Cycle Report Vanessa Ann Williams Southern New Hampshire University The accountant cycle has really impacted me to gain insight on the financial side of Peyton Company. In the accountant cycle, there are many particular directions involve determining the growth of the company such as steps, role, omission and financial statements. It’s important to apply every step from the accountant cycle to make a financial critical decision in the long run. This report will have a breakdown of how to apply the accountant cycle for Peyton Company to be aware of future financial decisions to keep the company holding strong.

Read More
529 Words | 3 Pages

Clients must keep records and books of accounts including cash book, sales ledger, purchases ledger and general ledger. Supporting documents such as invoices, bank statements, pay-in slips, cheque butts, and receipts for payments, payroll records and copies of receipts issued should be retained. A valuation of the stock in trade should be made at the end of the accounting period and the appropriate records maintained. Company should record sufficient to explain each transaction and to enable a true and fair profit & loss account and balance sheet to be prepared. At the end of the accounting period, a physical stock-take should be made to ascertain the quantity and the cost of the stock in hand or the cost of work in progress statements and

Read More
740 Words | 3 Pages

Pension Plans By Tay’veun Glenn Introduction Pensions are known as a retirement account that most employers maintain to give employees who have stayed with the company a payout upon retirement. Most employers give recipients of pension accounts a choice between a lump-sum payment or monthly annuity payments that are based upon the amount of time that the employee worked and their final salary prior to leaving the company. There are different types of pension plans and the use of each one is dependent on the employer. The Governmental Accounting Standards Board and Financial Accounting Standards Board both have to report pensions and have designated different ways to account for it.

Read More
864 Words | 4 Pages

Task 3 Limited companies have a legal duty to produce a balance sheet of their annual accounts which are submitted to Companies House, Shareholders and HM Revenue & Customs. Producing a balance sheet is essential for any organisation who wish to raise finance, the majority of lenders or investors will want to see a set of business accounts. A balance sheet will closely monitor the performance of the business, showing the shareholder’s equity, liabilities and assets of the business. Ratio calculations evaluate the financial results of any business in order to gauge its performance. Ratios allow businesses to compare against different principles using the figures on the balance sheet.

Read More
677 Words | 3 Pages

Target’s Pension plan is referred to as a defined benefit plan. This type of policy provides an already determined monthly retirement amount depending on the retiree 's specific age and service length. Additionally, for this kind of arrangement, each employee understands the agreement and its associated terms while Target agrees to invest in the fund to reach its obligation to its employees. The policy covers employees who are eligible and meet the requirement of age and length of service. The plans allocation of assets within the program work together to reduce the cost of funding the pension obligations (Target 2016 Annual Report).

Read More
243 Words | 1 Pages

Companies are expected to abide by the rules set forth dealing with reporting and keeping track of all documentation that has to do with employees’ benefits, pension plans, and anything else of the like. Pension plans can vary from employer to employer, but the overall system in accounting for the pension expenses are all naturally the same. According to Shim, FASB 158 outlines a certain procedure on how an employers should amortize for pension expenses (151).

Read More
149 Words | 1 Pages

The straight-line method presents two important points: -the depreciation expense is the same every year -the book value of the asset is gradually reduced every until it is the same as the residual value at the end of the asset’s useful life. First of all, Target uses this method because of its simplicity.

Read More
479 Words | 2 Pages

Goodwill and intangibles are evaluated for impairment annually in the fourth quarter of each fiscal year or whenever the carrying values exceed the current fair value. The company retains a significant portion of the risks associated with workers’ compensation, employee health, property liability; and third party insurance to limit the exposure related to certain

Read More
464 Words | 2 Pages

Therefore, all proposals must be consistent and in compliance with state and federal laws regardless if the firm has a defined contribution plan or defined benefits. A defined benefit plan namely a pension program is a form of retirement account in which the employer forks up all the money and promises to give the payout upon the person’s retirement. Pension plans were ongoing since the employee just needed to show up for work. Additionally, the pension plan took into account how long a person was on the job along with their earing average salary. In general majority of defined benefits plans no longer exist.

Read More
1213 Words | 5 Pages

Under IFRS, the frequency of actuarial valuations is not mandated and discount rates are determined by reference to the market yield on the balance sheet. Additionally, under IAS 19 the principles apply to pension and other post-retirement benefits payable, after employment, but before retirement. However, under U.S GAAP, the actuarial valuations are required annually, and discount rates should reflect the rates at which pension benefits could be effectively settled. The volatility in investment returns between 2014 and 2015 demonstrates that states cannot rely on higher-than-expected returns to eliminate unfunded liabilities. Pension plan sponsors are able to measure the payments progress specifically for states and local governments with huge unfunded

Read More
1247 Words | 5 Pages

The benefit amount is determined by a formula that considers factors such as the employee's salary history and length of service. The employer typically assumes the investment risk and is responsible for ensuring sufficient assets in the plan to pay the promised benefits. A DC, on the other hand, is a retirement plan where the employer and employee both contribute a set amount to an individual account. The employee assumes the investment risk and responsibility for the growth of the account

Read More
736 Words | 3 Pages

The Employment Retirement Income Security Act of 1974 institutes standards for plans and imposes rules regarding the federal income tax effects of transactions associated with these plans (Arthur, 2004).

Read More
477 Words | 2 Pages

On the contrary, a service company is exempt from depreciation due to their intangibility. Measuring these two companies require a different set of procedures to get an accurate result. We can also consider that there would be two different types of expenses, a merchandising company would regard the cost of the goods sold. While a servicing company evaluates the operating expenses for their services. Although measuring income for companies can be similar, it is apparent that there are subtle differences.

Read More
1321 Words | 6 Pages

There is also workers compensation and unemployment compensation that are also important. “Some benefits, such as unemployment and worker’s compensation, are federally required” (Mazurek, n.d. Para 2). Although these things are normally included in the benefits package the employee still has to pay out of their check for them so the employees need to know the costs that he or she will incur during the plan’s upcoming year and request to have the estimated amount taken from their wages into the plan to cover these expenses. The company also pays to fund both the Social Security and

Read More
778 Words | 4 Pages

Under a defined-benefit retirement plan, you receive a promised or “defined” payout at retirement. These plans are usually noncontributory in which the employees do not have to pay anything into them. The payout, which you receive as taxable income is based on a formula that takes into account your age at retirement, salary level, and years of service. Moreover, the formulas can vary dramatically from company to company. Some focus only on salary during the final few years of services, which is better for you, while others use an average of all your years ‘salary as a based to calculate pension benefits.

Read More

More about Basis Of Accounting Case 1

Related Topics

Open Document