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Basis Of Accounting Case 1

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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 Any impairment losses recorded are associated with disposal of property, plant, and equipment with outdated technologies.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

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