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4-11Solutions
4.22 (Nestlé S.A.; asset recognition and measurement.)
a. Both U.S. GAAP and IFRS would recognize Investment in Bond
(noncurrent asset), CHF800 million. Nestlé would record the
bond at acquisition cost, not the amount it will receive at
maturity.
b. Both U.S. GAAP and IFRS would recognize Prepaid Insurance
(current asset); CHF240 million would be recorded initially. At
Nestlé’s year- end, the balance in the Prepaid Insurance
account needs to be decreased to reflect the two months’
usage of the insurance, reducing the balance to CHF200 [=
CHF240 – (CHF240 X 2/12)] million.
c. Both U.S. GAAP and IFRS would recognize Option to Purchase
Land
(noncurrent asset), CHF6
m
illion.
d. Neither U.S. GAAP nor IFRS recognizes the employment
contract, a mutually unexecuted contract, as an asset.
e. Under U.S. GAAP, Nestlé would record only the costs of
obtaining the patent as an asset on its balance sheet, Patent
(noncurrent asset), CHF0.5 million. The remaining CHF80
million is an expense of the period. Under IFRS, Nestlé would
recognize Research Expense of CHF48 (= 60% X CHF80) million
in the period incurred and record a Development Asset
(noncurrent asset) at the acquisition cost of CHF32 million (=
40% of CHF80 million) as an asset on its balance sheet, which it
would depreciate over the useful life of the product. Under
IFRS, Nestlé would also recognize the patent as an asset on its
balance sheet, Patent (noncurrent asset), CHF0.5 million.
f. Under both U.S. GAAP and IFRS, Nestlé would not recognize the
cocoa beans as an asset until it receives the inventory.
4.23 (Ryanair Holdings, Plc.; asset recognition and measurement.)
a. Under both U.S. GAAP and IFRS, a decision on the part of
Ryanair’s board of directors does not give rise to an asset.
b. Under both U.S. GAAP and IFRS, Ryanair’s placing of an order
does not give rise to an asset.
c. Under both U.S. GAAP and IFRS, Ryanair’s payment gives rise to
an asset on their balance sheet, Deposit on Aircraft
(noncurrent asset),
€60 million.
Solutions 4-12
4.23 continued.
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d. Under both U.S. GAAP and IFRS, Ryanair’s purchase gives rise to
an asset, Landing Rights (noncurrent asset), €50 million.
e. Under both U.S. GAAP and IFRS, Ryanair’s purchase gives rise
to an asset on their balance sheet, Equipment (noncurrent
asset), €77 million. Ryanair would also record a liability,
Mortgage Note Payable (noncurrent), €65 million.
f. Under both U.S. GAAP and IFRS, Ryanair’s purchase gives rise to
an asset, Equipment (noncurrent asset), €160 million. The
carrying, or book, value of the aircraft on the seller’s books is not
relevant to Ryanair’s recording of the purchase.
4.24 (Hana Microelectronic; liability recognition and measurement.)
a. Under both U.S. GAAP and IFRS, this arrangement is a mutually
unexecuted contract; as such, it does not give rise to a liability on
Hana Microelectronics’s balance sheet.
b. Under both U.S. GAAP and IFRS, Hana Microelectronics would
record
Advances from Customers (current liability), Bt168 million.
c. Under both U.S. GAAP and IFRS, Hana Microelectronics would
record Advances from Customers (current liability), Bt84 million,
and Advances from Customers (noncurrent liability), Bt84 million.
d. Under both U.S. GAAP and IFRS, common stock does not meet
the definition of a liability because the firm need not repay the
funds in a particular amount at a particular time.
e. Under both U.S. GAAP and IFRS, Hana Microelectronic would
record Notes Payable (current liability), Bt8 million, and Notes
Payable (noncurrent liability), Bt16 million.
f. Under both U.S. GAAP and IFRS, this arrangement is mutually
unexecuted and, therefore, does not give rise to a liability.
g. Under both U.S. GAAP and IFRS, this arrangement is mutually
unexecuted and, therefore, does not give rise to a liability.
4-13Solutions
4.25(Berlin Philharmonic; liability
recognition and measurement.)
a. Under both U.S. GAAP and IFRS, the Berlin Philharmonic
would record Advances from Customers (current liability),
€3,040,000.
b. Under both U.S. GAAP and IFRS, the Berlin Philharmonic does
not recognize a liability because it has not yet received benefits
obligating it to pay.
c. Under both U.S. GAAP and IFRS, the Berlin Philharmonic
would record Accounts Payable (current liability), €185,000.
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d. Under both U.S. GAAP and IFRS, the Berlin Philharmonic would
not normally recognize a liability for an unsettled lawsuit unless
payment is probable and the entity can reliably estimate the
loss. Because the suit has not yet come to trial, it is unclear
whether any liability exists.
e. Under both U.S. GAAP and IFRS, the Berlin Philharmonic would
not recognize a liability for this mutually unexecuted contract.
f. Under both U.S. GAAP and IFRS, accounting normally does
not recognize a liability for mutually unexecuted contracts.
Thus, at the time of contract signing, the Berlin Philharmonic
would record no liability. In 2012, however, the firm would
record a liability for the portion of the yearly compensation
earned by Sir Simon Rattle each month, or Salary Payable
(current liability), €0.167 million per month.
4.26 (Royal Dutch Shell; recognition and measurement of a loss
contingency.) Under both U.S. GAAP and IFRS, the recognition of a
loss contingency
requires that a loss be probable. Although U.S. GAAP does not
define
probable, a rule of thumb used in practice defines probable as
greater than or equal to 80%; under IFRS, the threshold for probable
is 51% (more likely than not). The measurement of the loss
contingency depends first on whether it meets the recognition
criterion; only if the loss is probable will it be measured and
reported on the balance sheet. The measurement depends on
which set of accounting standards is applied.
Solutions4-14
4.26 continued.
a. Refer to the preceding discussion of the recognition criteria
under both U.S. GAAP and IFRS. The information given indicates
that engineers view the probability of loss to be 10%. Because
this probability does not meet the threshold percentages under
U.S. GAAP or IFRS, no liability will be recorded under either set of
accounting standards.
b. The probability of loss is now 51%. This meets the probable
threshold under IFRS, but not under U.S. GAAP. Therefore, IFRS
will show a liability on the balance sheet, but U.S. GAAP would
not. The amount of the liability shown under IFRS would be the
“best” estimate of the amount of future cash outflows. In this
example, the best estimate could be either the outcome with
the highest probability of occurrence,
$5 million (with probability 51%), or it could be the expected loss
$2.55
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million (= 0.51 X $5 million + 0.49 X $0). IFRS provides enough
latitude to permit either of these “best” estimates.
c. Under the environmentalists’ estimates, there is a 100%
probability of loss. Thus, both U.S. GAAP and IFRS would record
a liability. The measurement of the amount of the liability
varies under the two accounting approaches. Under U.S. GAAP,
the firm would record the most likely amount of damages, or
$4,000 million, because this is the estimate with the highest
probability of occurrence (45% is greater than either 35% or
20%). Under IFRS, the firm would record the “best” estimate.
The best estimate could be either the outcome with the highest
probability of occurrence, $4,000 million (with probability
45%), or it could be the expected loss $1,910 million (= 0.45 X
$4,000 million + 0.35 X $300 million + 0.20 X $25 million). IFRS
provides enough latitude to permit either of these “best”
estimates.
d. Under the environmentalists’ estimates, the probability of loss is
85%.
This exceeds the threshold for recognition of a liability under
both U.S. GAAP and IFRS. Under U.S. GAAP, the amount
recorded will be
$5,000 million because this is the outcome with the highest
probability
of occurrence. The amount recorded under IFRS is the best
estimate, which in this example is also likely to be $5,000
million. However, IFRS provides enough latitude that the best
estimate might also be the expected value of $4,250 million (=
0.85 X $5,000 + 0.15 X $0).
4-15Solutions
4.27 (Magyar Telekom; efect of recording errors on balance sheet
equation.) (amounts in millions of Hungarian forints [HUF])
Transaction Shareholders
’ Number Assets = Liabilities + Equity
(1) No No
No (2) O/S HUF 900 O/S HUF 900
No (3) U/S HUF 14,500 U/S HUF 14,500
No
(4) NoaNo
N
o
(5) U/S HUF 6,000 U/S HUF 6,000
N
o
(6) U/S HUF 1,200 No U/S HUF 1,200
(7) No No
N
o
aThe value of total assets is correctly stated; the problem is that
rather than debiting Property for the insurance payment, the
firm should have debited Prepaid Insurance.
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4.28 (Sivensa; efect of recording errors on balance sheet equation.)
(amounts in thousands of U.S. dollars)
Transaction Shareholde
r
s’
Number Assets = Liabilities + Equity
(1)
U/S
$ 8,000
U/S
$
8,000
N
o
(2) O/S $ 4,000
O/S $
4,000
N
o
(3)
U/S
$ 800
U/S
$ 800
N
o
(4) O/S $ 1,000
O/S $
1,000
N
o
(5)
U/S
$ 2,500
N
o U/S $2,500
(6)
O/S $
4,900a
N
o
N
o
U/S
$
4,900a
aThe response “No” is also acceptable here.
Solutions4-16
4.29 (Hathway Atlantic Airways Limited; balance sheet format,
terminology, and accounting methods.) (amounts in millions of
Hong Kong dollars [HKD])
a. HATHWAY ATLANTIC AIRWAYS LIMITED
Balance Sheet, U.S. GAAP
(amounts in millions of HKD)
December 31,
Year 11 Year
10
Current Assets: Assets
4.29 a.
continued.
Cash and Cash Equivalentsa ……….. HKD 21,649
HKD 15,624
Trade and Other Receivables………… 11,376 8,735
I
n
ve
n
t
or
yb …………………………………… 882 789
Assets Pledged Against Current
Liabilitiesc ………………………………
91
0
1
, 35
2
Total Current Assets …………….
3
4
,
81
7
2
6
, 50
0
Noncurrent Assets:
Investments in Associates
10,054 8,
82
6
Fixed Assets
………………………………..
62,388
57,60
2
Other Long-Term Receivables and
Investments
…………………………
…..
3,519
3,40
6
Intangible Assets
…………………………
7,782
7,74
9
Assets Pledged Against
Noncurrent
Li
ab
ili
t
i
e
s
d …………………………..
….
7
,
83
3
8
,
16
4
Total Noncurrent A
ss
et
s
………..
9
1
,
57
6
8
5
, 74
b. HATHWAY ATLANTIC AIRWAYS LIMITED
Balance Sheet, IFRS
(amounts in millions of
H
K
D)
Noncurrent
Assets:
Asset
s
December 31,
Year 11 Year
10
Intangible Assets ………………………… HKD 7,782 HKD
7,749
Fixed Assets ……………………………….. 62,388 57,602
Assets Pledged Against Noncurrent
Li
ab
ili
t
i
e
s
d ……………………………… 7,833 8,164
Investments in Associates ……………. 10,054 8,826
Other Long-Term Receivables and
Investments
……………………………..
3
,
51
9
3
, 40
6
Total Noncurrent A
ss
et
s
………..
9
1
,
57
6
8
5
, 74
7
Current Assets:
I
n
ve
n
t
or
yb
882 789
Assets Pledged Against Current
Liabilitiesc …………………………..
….
910 1,
35
2
4.29 a.
continued.
Trade and Other
Receivables…………
11,376
8,73
5
Cash and Cash Equivalentsa
………..
2
1
,
64
9
1
5
, 62
Total Current Assets
………………..
3
4
,
81
7
2
6
, 50
Total Assets
…………………………….
H K D 12
6
, 39
3
H K D
11
2
, 24
7
4-19Solutions
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4.29 b. continued.
Liabilities and Shareholders’ Equity
Noncurrent Liabilities:
Long-Term
Liabilities
………………….. HKD 40,323
HKD 33,956
Retirement Benefit
Obligations
……. 268 170
Deferred Tax Liabilityf …………………
6
,
77
1
6
, 50
8
Total Noncurrent Liabilities ……..
4
7
,
36
2
4
0
,
63
4
Current Liabilities:
Income Taxes Payablee ………………… 2,475 2,902
Trade and Other Payables ……………. 14,787 10,999
Current Portion of Long-Term
Li
ab
ili
t
i
e
s
……………………………….. 4,788 7,503
Unearned Transportation
Revenue
..
6
,
25
4
4
, 67
1
Total Current Liabilities …………..
2
8
,
30
4
2
6
,
07
5
Total Liabilities ……………………….
7
5
,
66
6
6
6
, 70
9
Shareholders’ Equity:
Minority Interests ……………………….. 178 152
Share Capital ……………………………… 788 787
Reserves………………………………………
4
9
,
76
1
4
4
, 59
9
Total Shareholders’
Equity
………..
5
0
,
72
7
4
5
, 53
8
Total Liabilities and Share-
holders’ Eq
ui
tyg ……………………. HKD 12
6
,39
3
HKD
11
2
,24
7
Terminology
aLiquid Funds.
bStock.
cRelated Pledged Security Deposits (Current Portion of Long-Term
Debt).
dRelated Pledged Security Deposits (Noncurrent Portion of
Long-Term
Debt).
eTaxation.
fDeferred
Taxation.
gFunds Attributable to Hathway Shareholders.
Solutions 4-20
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4.30 (Infotech Limited; balance sheet format, terminology, and
accounting method.)
a. Infotech Limited, U.S. GAAP formatted balance sheet.
INFOTECH L
IMI
T
E
D
Balance
S
hee
t
(amounts in millions of Rs.
C
r
o
re) March 3
Current
Assets:
Asset
s
Year 12 Year 11
Cash and Cash Equivalents ……………………. Rs 6,429
Rs 5,470
Accounts R
ecei
vab
l
e ……………………………….. 3,093 2,292
Other Current A
ss
et
s
………………………………
2
,
70
5
1
, 19
9
Total Current Assets ………………………….. R
s 1
2
, 22
7
R
s
8
, 96
1
Noncurrent Assets:
Investments
…………………………………………… Rs 964 Rs 8
39
Property, Plant, and Eq
ui
pm
en
t ………………. 3,931 3,107
Deferred Tax A
ss
et
s
………………………………..
9
9
7
9
Total Noncurrent A
ss
et
s
……………………… R
s
4
, 99
4
R
s
4
, 02
5
Total Assets ………………………………………. R
s 1
7
, 22
1
R
s 1
2
, 98
6
Liabilities and Shareholders’ Equity
Current
Liabilities
…………………………………….. Rs 1,483
Rs 1,162
Provisions ………………………………………………….
2
,
24
8
66
2
Total Liabilities …………………………………. R
s
3
, 73
1
R
s
1
, 82
4
Shareholders’ Equity:
Contributed Capital……………………………….. Rs 286 Rs
286
Retained Earnings…………………………………..
1
3
,
20
4
1
0
, 87
6
Total Shareholders’
Equity
………………….. R
s
1
3
, 49
0
R
s 1
1
, 16
2
Total Liabilities and Shareholders’
Equity ……………………………………………. R
s
1
7
,22
1
R
s 1
2
,98
6
4-21Solutions
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ization.
4.30 continued.
b. Infotech Limited, IFRS formatted balance sheet.
INFOTECH L
IMI
T
E
D Balance
S
hee
t
(amounts in millions of Rs.
C
r
o
re)
March 31
Noncurrent Assets:
AssetsYear 12 Year 11
Property, Plant, and Eq
ui
pm
en
t ………………. Rs 3,931
Rs 3,107
Deferred Tax A
ss
et
s
……………………………….. 99 79
Investments
……………………………………………
96
4
83
9
Total Noncurrent A
ss
et
s
……………………… R
s
4
, 99
4
R
s
4
, 02
5
Current Assets:
Other Current A
ss
et
s
……………………………… Rs 2,705
Rs 1,199
Accounts R
ecei
vab
l
e ……………………………….. 3,093 2,292
Cash and Cash Equivalents …………………….
6
,
42
9
5
, 47
0
Total Current Assets ………………………….. R
s
1
2
, 22
7 R
s
8
, 96
1
Total Assets ………………………………………. R
s
1
7
, 22
1 R
s 1
2
, 98
6
Liabilities and Shareholders’ Equity
Provisions …………………………………………………. Rs 2,248
Rs 662
Current
Liabilities
……………………………………..
1
,
48
3
1
, 16
2
Total Liabilities …………………………………. R
s
3
, 73
1
R
s
1
, 82
4
Shareholders’ Equity:
Contributed Capital……………………………….. Rs 286 Rs
286
Retained Earnings…………………………………..
1
3
,
20
4
1
0
, 87
6
Total Shareholders’
Equity
………………….. R
s
1
3
, 49
0 R
s 1
1
, 16
2
Total Liabilities and Shareholders’
Equity ……………………………………………. R
s
1
7
,22
1 R
s 1
2
,98
6
Solutions4-22
4.31 (Svenson; balance sheet format, terminology, and accounting
methods.)
SVE
N
S
ON
U.S. GAAP Balance
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ization.
S
hee
t
For Fiscal Year 7
(
amo
un
t
s in millions of
SEK
)
Current Assets: Asse
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ization.
d. Under both U.S. GAAP and IFRS, Ryanair’s purchase gives rise to
an asset, Landing Rights (noncurrent asset), €50 million.
e. Under both U.S. GAAP and IFRS, Ryanair’s purchase gives rise
to an asset on their balance sheet, Equipment (noncurrent
asset), €77 million. Ryanair would also record a liability,
Mortgage Note Payable (noncurrent), €65 million.
f. Under both U.S. GAAP and IFRS, Ryanair’s purchase gives rise to
an asset, Equipment (noncurrent asset), €160 million. The
carrying, or book, value of the aircraft on the seller’s books is not
relevant to Ryanair’s recording of the purchase.
4.24 (Hana Microelectronic; liability recognition and measurement.)
a. Under both U.S. GAAP and IFRS, this arrangement is a mutually
unexecuted contract; as such, it does not give rise to a liability on
Hana Microelectronics’s balance sheet.
b. Under both U.S. GAAP and IFRS, Hana Microelectronics would
record
Advances from Customers (current liability), Bt168 million.
c. Under both U.S. GAAP and IFRS, Hana Microelectronics would
record Advances from Customers (current liability), Bt84 million,
and Advances from Customers (noncurrent liability), Bt84 million.
d. Under both U.S. GAAP and IFRS, common stock does not meet
the definition of a liability because the firm need not repay the
funds in a particular amount at a particular time.
e. Under both U.S. GAAP and IFRS, Hana Microelectronic would
record Notes Payable (current liability), Bt8 million, and Notes
Payable (noncurrent liability), Bt16 million.
f. Under both U.S. GAAP and IFRS, this arrangement is mutually
unexecuted and, therefore, does not give rise to a liability.
g. Under both U.S. GAAP and IFRS, this arrangement is mutually
unexecuted and, therefore, does not give rise to a liability.
4-13Solutions
4.25(Berlin Philharmonic; liability
recognition and measurement.)
a. Under both U.S. GAAP and IFRS, the Berlin Philharmonic
would record Advances from Customers (current liability),
€3,040,000.
b. Under both U.S. GAAP and IFRS, the Berlin Philharmonic does
not recognize a liability because it has not yet received benefits
obligating it to pay.
c. Under both U.S. GAAP and IFRS, the Berlin Philharmonic
would record Accounts Payable (current liability), €185,000.
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is
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ibution allowed without express
a
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hor
ization.
d. Under both U.S. GAAP and IFRS, the Berlin Philharmonic would
not normally recognize a liability for an unsettled lawsuit unless
payment is probable and the entity can reliably estimate the
loss. Because the suit has not yet come to trial, it is unclear
whether any liability exists.
e. Under both U.S. GAAP and IFRS, the Berlin Philharmonic would
not recognize a liability for this mutually unexecuted contract.
f. Under both U.S. GAAP and IFRS, accounting normally does
not recognize a liability for mutually unexecuted contracts.
Thus, at the time of contract signing, the Berlin Philharmonic
would record no liability. In 2012, however, the firm would
record a liability for the portion of the yearly compensation
earned by Sir Simon Rattle each month, or Salary Payable
(current liability), €0.167 million per month.
4.26 (Royal Dutch Shell; recognition and measurement of a loss
contingency.) Under both U.S. GAAP and IFRS, the recognition of a
loss contingency
requires that a loss be probable. Although U.S. GAAP does not
define
probable, a rule of thumb used in practice defines probable as
greater than or equal to 80%; under IFRS, the threshold for probable
is 51% (more likely than not). The measurement of the loss
contingency depends first on whether it meets the recognition
criterion; only if the loss is probable will it be measured and
reported on the balance sheet. The measurement depends on
which set of accounting standards is applied.
Solutions4-14
4.26 continued.
a. Refer to the preceding discussion of the recognition criteria
under both U.S. GAAP and IFRS. The information given indicates
that engineers view the probability of loss to be 10%. Because
this probability does not meet the threshold percentages under
U.S. GAAP or IFRS, no liability will be recorded under either set of
accounting standards.
b. The probability of loss is now 51%. This meets the probable
threshold under IFRS, but not under U.S. GAAP. Therefore, IFRS
will show a liability on the balance sheet, but U.S. GAAP would
not. The amount of the liability shown under IFRS would be the
“best” estimate of the amount of future cash outflows. In this
example, the best estimate could be either the outcome with
the highest probability of occurrence,
$5 million (with probability 51%), or it could be the expected loss
$2.55
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ibution allowed without express
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hor
ization.
million (= 0.51 X $5 million + 0.49 X $0). IFRS provides enough
latitude to permit either of these “best” estimates.
c. Under the environmentalists’ estimates, there is a 100%
probability of loss. Thus, both U.S. GAAP and IFRS would record
a liability. The measurement of the amount of the liability
varies under the two accounting approaches. Under U.S. GAAP,
the firm would record the most likely amount of damages, or
$4,000 million, because this is the estimate with the highest
probability of occurrence (45% is greater than either 35% or
20%). Under IFRS, the firm would record the “best” estimate.
The best estimate could be either the outcome with the highest
probability of occurrence, $4,000 million (with probability
45%), or it could be the expected loss $1,910 million (= 0.45 X
$4,000 million + 0.35 X $300 million + 0.20 X $25 million). IFRS
provides enough latitude to permit either of these “best”
estimates.
d. Under the environmentalists’ estimates, the probability of loss is
85%.
This exceeds the threshold for recognition of a liability under
both U.S. GAAP and IFRS. Under U.S. GAAP, the amount
recorded will be
$5,000 million because this is the outcome with the highest
probability
of occurrence. The amount recorded under IFRS is the best
estimate, which in this example is also likely to be $5,000
million. However, IFRS provides enough latitude that the best
estimate might also be the expected value of $4,250 million (=
0.85 X $5,000 + 0.15 X $0).
4-15Solutions
4.27 (Magyar Telekom; efect of recording errors on balance sheet
equation.) (amounts in millions of Hungarian forints [HUF])
Transaction Shareholders
’ Number Assets = Liabilities + Equity
(1) No No
No (2) O/S HUF 900 O/S HUF 900
No (3) U/S HUF 14,500 U/S HUF 14,500
No
(4) NoaNo
N
o
(5) U/S HUF 6,000 U/S HUF 6,000
N
o
(6) U/S HUF 1,200 No U/S HUF 1,200
(7) No No
N
o
aThe value of total assets is correctly stated; the problem is that
rather than debiting Property for the insurance payment, the
firm should have debited Prepaid Insurance.
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ights reserved. No
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is
t
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ibution allowed without express
a
u
t
hor
ization.
4.28 (Sivensa; efect of recording errors on balance sheet equation.)
(amounts in thousands of U.S. dollars)
Transaction Shareholde
r
s’
Number Assets = Liabilities + Equity
(1)
U/S
$ 8,000
U/S
$
8,000
N
o
(2) O/S $ 4,000
O/S $
4,000
N
o
(3)
U/S
$ 800
U/S
$ 800
N
o
(4) O/S $ 1,000
O/S $
1,000
N
o
(5)
U/S
$ 2,500
N
o U/S $2,500
(6)
O/S $
4,900a
N
o
N
o
U/S
$
4,900a
aThe response “No” is also acceptable here.
Solutions4-16
4.29 (Hathway Atlantic Airways Limited; balance sheet format,
terminology, and accounting methods.) (amounts in millions of
Hong Kong dollars [HKD])
a. HATHWAY ATLANTIC AIRWAYS LIMITED
Balance Sheet, U.S. GAAP
(amounts in millions of HKD)
December 31,
Year 11 Year
10
Current Assets: Assets
4.29 a.
continued.
Cash and Cash Equivalentsa ……….. HKD 21,649
HKD 15,624
Trade and Other Receivables………… 11,376 8,735
I
n
ve
n
t
or
yb …………………………………… 882 789
Assets Pledged Against Current
Liabilitiesc ………………………………
91
0
1
, 35
2
Total Current Assets …………….
3
4
,
81
7
2
6
, 50
0
Noncurrent Assets:
Investments in Associates
10,054 8,
82
6
Fixed Assets
………………………………..
62,388
57,60
2
Other Long-Term Receivables and
Investments
…………………………
…..
3,519
3,40
6
Intangible Assets
…………………………
7,782
7,74
9
Assets Pledged Against
Noncurrent
Li
ab
ili
t
i
e
s
d …………………………..
….
7
,
83
3
8
,
16
4
Total Noncurrent A
ss
et
s
………..
9
1
,
57
6
8
5
, 74
b. HATHWAY ATLANTIC AIRWAYS LIMITED
Balance Sheet, IFRS
(amounts in millions of
H
K
D)
Noncurrent
Assets:
Asset
s
December 31,
Year 11 Year
10
Intangible Assets ………………………… HKD 7,782 HKD
7,749
Fixed Assets ……………………………….. 62,388 57,602
Assets Pledged Against Noncurrent
Li
ab
ili
t
i
e
s
d ……………………………… 7,833 8,164
Investments in Associates ……………. 10,054 8,826
Other Long-Term Receivables and
Investments
……………………………..
3
,
51
9
3
, 40
6
Total Noncurrent A
ss
et
s
………..
9
1
,
57
6
8
5
, 74
7
Current Assets:
I
n
ve
n
t
or
yb
882 789
Assets Pledged Against Current
Liabilitiesc …………………………..
….
910 1,
35
2
4.29 a.
continued.
Trade and Other
Receivables…………
11,376
8,73
5
Cash and Cash Equivalentsa
………..
2
1
,
64
9
1
5
, 62
Total Current Assets
………………..
3
4
,
81
7
2
6
, 50
Total Assets
…………………………….
H K D 12
6
, 39
3
H K D
11
2
, 24
7
4-19Solutions
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ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
4.29 b. continued.
Liabilities and Shareholders’ Equity
Noncurrent Liabilities:
Long-Term
Liabilities
………………….. HKD 40,323
HKD 33,956
Retirement Benefit
Obligations
……. 268 170
Deferred Tax Liabilityf …………………
6
,
77
1
6
, 50
8
Total Noncurrent Liabilities ……..
4
7
,
36
2
4
0
,
63
4
Current Liabilities:
Income Taxes Payablee ………………… 2,475 2,902
Trade and Other Payables ……………. 14,787 10,999
Current Portion of Long-Term
Li
ab
ili
t
i
e
s
……………………………….. 4,788 7,503
Unearned Transportation
Revenue
..
6
,
25
4
4
, 67
1
Total Current Liabilities …………..
2
8
,
30
4
2
6
,
07
5
Total Liabilities ……………………….
7
5
,
66
6
6
6
, 70
9
Shareholders’ Equity:
Minority Interests ……………………….. 178 152
Share Capital ……………………………… 788 787
Reserves………………………………………
4
9
,
76
1
4
4
, 59
9
Total Shareholders’
Equity
………..
5
0
,
72
7
4
5
, 53
8
Total Liabilities and Share-
holders’ Eq
ui
tyg ……………………. HKD 12
6
,39
3
HKD
11
2
,24
7
Terminology
aLiquid Funds.
bStock.
cRelated Pledged Security Deposits (Current Portion of Long-Term
Debt).
dRelated Pledged Security Deposits (Noncurrent Portion of
Long-Term
Debt).
eTaxation.
fDeferred
Taxation.
gFunds Attributable to Hathway Shareholders.
Solutions 4-20
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ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
4.30 (Infotech Limited; balance sheet format, terminology, and
accounting method.)
a. Infotech Limited, U.S. GAAP formatted balance sheet.
INFOTECH L
IMI
T
E
D
Balance
S
hee
t
(amounts in millions of Rs.
C
r
o
re) March 3
Current
Assets:
Asset
s
Year 12 Year 11
Cash and Cash Equivalents ……………………. Rs 6,429
Rs 5,470
Accounts R
ecei
vab
l
e ……………………………….. 3,093 2,292
Other Current A
ss
et
s
………………………………
2
,
70
5
1
, 19
9
Total Current Assets ………………………….. R
s 1
2
, 22
7
R
s
8
, 96
1
Noncurrent Assets:
Investments
…………………………………………… Rs 964 Rs 8
39
Property, Plant, and Eq
ui
pm
en
t ………………. 3,931 3,107
Deferred Tax A
ss
et
s
………………………………..
9
9
7
9
Total Noncurrent A
ss
et
s
……………………… R
s
4
, 99
4
R
s
4
, 02
5
Total Assets ………………………………………. R
s 1
7
, 22
1
R
s 1
2
, 98
6
Liabilities and Shareholders’ Equity
Current
Liabilities
…………………………………….. Rs 1,483
Rs 1,162
Provisions ………………………………………………….
2
,
24
8
66
2
Total Liabilities …………………………………. R
s
3
, 73
1
R
s
1
, 82
4
Shareholders’ Equity:
Contributed Capital……………………………….. Rs 286 Rs
286
Retained Earnings…………………………………..
1
3
,
20
4
1
0
, 87
6
Total Shareholders’
Equity
………………….. R
s
1
3
, 49
0
R
s 1
1
, 16
2
Total Liabilities and Shareholders’
Equity ……………………………………………. R
s
1
7
,22
1
R
s 1
2
,98
6
4-21Solutions
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r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
4.30 continued.
b. Infotech Limited, IFRS formatted balance sheet.
INFOTECH L
IMI
T
E
D Balance
S
hee
t
(amounts in millions of Rs.
C
r
o
re)
March 31
Noncurrent Assets:
AssetsYear 12 Year 11
Property, Plant, and Eq
ui
pm
en
t ………………. Rs 3,931
Rs 3,107
Deferred Tax A
ss
et
s
……………………………….. 99 79
Investments
……………………………………………
96
4
83
9
Total Noncurrent A
ss
et
s
……………………… R
s
4
, 99
4
R
s
4
, 02
5
Current Assets:
Other Current A
ss
et
s
……………………………… Rs 2,705
Rs 1,199
Accounts R
ecei
vab
l
e ……………………………….. 3,093 2,292
Cash and Cash Equivalents …………………….
6
,
42
9
5
, 47
0
Total Current Assets ………………………….. R
s
1
2
, 22
7 R
s
8
, 96
1
Total Assets ………………………………………. R
s
1
7
, 22
1 R
s 1
2
, 98
6
Liabilities and Shareholders’ Equity
Provisions …………………………………………………. Rs 2,248
Rs 662
Current
Liabilities
……………………………………..
1
,
48
3
1
, 16
2
Total Liabilities …………………………………. R
s
3
, 73
1
R
s
1
, 82
4
Shareholders’ Equity:
Contributed Capital……………………………….. Rs 286 Rs
286
Retained Earnings…………………………………..
1
3
,
20
4
1
0
, 87
6
Total Shareholders’
Equity
………………….. R
s
1
3
, 49
0 R
s 1
1
, 16
2
Total Liabilities and Shareholders’
Equity ……………………………………………. R
s
1
7
,22
1 R
s 1
2
,98
6
Solutions4-22
4.31 (Svenson; balance sheet format, terminology, and accounting
methods.)
SVE
N
S
ON
U.S. GAAP Balance
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ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
S
hee
t
For Fiscal Year 7
(
amo
un
t
s in millions of
SEK
)
Current Assets: Asse