Posted: November 14th, 2015

ACT 330 International Financial Reporting Standards (Cross-listed with INB 450 International Accounting) Assessment Instrument Individual Assignment 2

School of Business Administration ACT 330 International Financial Reporting Standards (Cross-listed with INB 450 International Accounting) Assessment Instrument Individual Assignment 2 (10 marks) Due Date: November 20 (before 9 pm) Instructor: Professor Mohamed Ibrahim This assignment addresses the following three course learning outcomes (CLOs). The CLOs are mapped to the assignment questions as follows: Course Learning Outcome Question 1. Contrast the main differences in accounting practices around the world, their causes and problems, and how to deal with the issue of accounting diversity Question 1 (4 marks) 2. Apply International Financial Reporting Standards (IFRS) to different asset items and reconcile their results with GAAP. Question 2 (2 marks) 3. Differentiate International Financial Reporting Standards (IFRS) for liability and equity items from GAAP. Question 3 (4 marks) General Instructions Answer each of the following Questions and show all your workings. Please type your answers and send them in a file that carries your name as attachment by e-mail to ([email protected]). Use your official cud mail. I will not provide feedback to those who send their assignments through Hotmail, or Gmail or yahoo or and the like. Do not use a cover page. Do not use color. Just use black and 12 points font. You will be penalized for not following instructions. Question 1 (4 marks) This question deals with the issue of accounting diversity (CLO1) Instructions: 1. Visit the webpage of Emirates Group and obtain the annual report for Emirates Airline for 2014. 2. Visit the webpage of American Airlines and obtain the annual report for 2014. 3. Read the annual report of each airline, compare them, and identify at least 2 pieces of evidence for accounting diversity. 4. Write the evidence you found for accounting diversity and cite the page number(s) out of the annual report that supports your answer. Question 2 (2 marks) This question deals with leases (CLO 2) Star Tours Company entered into a five-year lease on January 1, 2014 with Dubai Marina Company for a customized 28 feet boat. The following are the other terms of the lease: 1. Annual lease payments of 20,000 AED are due on January 1 of each year. The implicit interest rate in the lease is 10%. 2. Estimated guaranteed residual value is 70,000 AED. Star Company absorbs any gains or losses in the fluctuations of the fair value of the boat’s residual value. 3. The fair value of the boat at the time of inception is 200,000 AED. 4. There is an option to purchase the boat at end of the lease term for 60,000 AED. 5. The lease is non-cancelable and may not be extended. 6. Estimated useful life of the boat is 8 years. Discuss whether Star Company should classify the lease as finance lease or operating lease under IAS 17. Question 3 (4 marks) This question deals with classification of liabilities (CLO 3) White Company has the following account balances on its books as of November 20, 2015: Cash AED 35,000 Accounts payable AED 80,000 Bank loans (due March 1, 2016) AED 1,000,000 Note Payable (payable May 1, 2017) AED 500,000 You gathered the following additional information: 1. There are bank overdrafts in the amount of AED 20,000. The Company uses an integrated cash management system. 2. The Company has a written agreement with its bank to re-finance the loans with a due date in 2018. The agreement was done after examining the financial needs of the Company. Required: Contrast the classification of the above items on the balance sheet as of Nov. 20, 2015 under both IAS 37 and under GAAP.