Essay and Letter - FOR WRITING KING

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GAAP and IRFS Balance Sheet

GAAP BALANCE SHEET IFRS BALANCE SHEET DIFFERENCES BETWEEN GAAP AND IFRS
Assets Assets Assets
Jaunty Coffee Company 2012 Jaunty Coffee Company 2012 Jaunty Coffee Company 2012
Current assets: Current assets: Current assets: - 0
Cash 86,100 Cash 86,100 Cash - 0
Short-term investments (available for sale) 15,000
Magdalena Fuentes: Magdalena Fuentes: Reported short term investment at fair value 		Short-term investments (available for sale) 15,000
Magdalena Fuentes: Magdalena Fuentes: Be reported at fair value #9? IFRS Standard		 Short-term investments (available for sale) - 0
Accounts receivable 37,000 Accounts receivable 37,000 Accounts receivable - 0
Notes receivable 25,000 Notes receivable 25,000 Notes receivable - 0
Inventory 75,000
Magdalena Fuentes: Magdalena Fuentes: Using LIFO for tax treatment 		Inventory 120,000
Magdalena Fuentes: Magdalena Fuentes: Need to use FIFO		 Inventory (45,000)
Other current assets 34,500 Other current assets 34,500 Other current assets - 0
Total current assets 272,600 Total current assets 317,600 Total current assets (45,000)
Long-term assets Long-term assets Long-term assets - 0
Long-term investments 100,000 Long-term investments 100,000 Long-term investments - 0
Property, plant, and equipment 116,000 Property, plant, and equipment 116,000 Property, plant, and equipment - 0
Less accumulated depreciation (34,800) 81,200 Less accumulated depreciation (34,800) 81,200 Less accumulated depreciation - 0
Intangible assets Intangible assets Intangible assets - 0
Goodwill 12,000 Goodwill 12,000
Magdalena Fuentes: Magdalena Fuentes: IAS 36 Goodwill can not be writen up 		Goodwill - 0
Copyright 7,000 Copyright 10,000
Magdalena Fuentes: Magdalena Fuentes: at FMV. IS 36		 Copyright - 0
Trademark 17,000 Trademark 20,000
Magdalena Fuentes: Magdalena Fuentes: at FMV. IS 36		 Trademark - 0
Accumulated amortization (7,200) 28,800 Accumulated amortization
Magdalena Fuentes: Magdalena Fuentes: Why can't you carry accumulated amortization		 Accumulated amortization 28,800
Total long-term assets 208,000 Total long-term assets 223,200 Total long-term assets (15,200)
Total assets 482,600 Total assets 540,800 Total assets (58,200)
Liabilities and stockholders' equity Liabilities and stockholders' equity Liabilities and stockholders' equity
Current liabilities Current liabilities Current liabilities - 0
Accounts payable 30,000 Accounts Payable 30,000 Accounts payable - 0
Accrued expenses 20,000 Accrued expenses 20,000 Accrued expenses - 0
Short/Current long-term debt 8,000 Short/Current long-term debt 8,000 Short/Current long-term debt - 0
Taxes payable 12,000 Taxes payable 32,370 Taxes payable (20,370)
Other current liabilities 12,000 Other current liabilities 12,000 Other current liabilities - 0
Total current liabilities 82,000 Total current liabilities 102,370 Total current liabilities (20,370)
Long-term liabilities Long-term liabilities Long-term liabilities - 0
Notes payable 17,000 Notes payable 17,000 Notes payable - 0
Bonds payable 34,500 Bonds payable 34,500 Bonds payable - 0
Deferred long-term liability charges 12,000 Deferred long-term liability charges 10,000
Magdalena Fuentes: Magdalena Fuentes: Long term contingencies lawsuit 		Deferred long-term liability charges 2,000
Other long-term liabilities 13,000 Other long-term liabilities 13,000 Other long-term liabilities - 0
Total long-term liabilities 76,500 Total long-term liabilities 74,500 Total long-term liabilities 2,000
Total liabilities 158,500 Total liabilities 176,870 Total liabilities (18,370)
Stockholders' equity Stockholders' equity Stockholders' equity - 0
Common stock 200,000 Common stock 200,000 Common stock - 0
Retained earnings 124,100 Retained earnings 163,930 Retained earnings (39,830)
Total stockholders' liability 324,100 at FMV IAS 36 Total stockholders' liability 363,930 Total stockholders' liability (39,830)
Total liabilities and stockholders' equity 482,600 Total liabilities and stockholders' equity 540,800 Total liabilities and stockholders' equity (58,200)
Additional Information
1. Short-term Investments (Available for Sale): In 2012 there were $4,000 in short-term investments, which was attributed to a gain in the exchange rate; this amount was included in the beginning value of $15,001.
2. Jaunty Coffee Company uses the LIFO method for inventory valuation. At the end of 2011 the inventory reserves were $35,000, and at the end of 2012 the reserves were $45,000.
3. Long-term contingencies lawsuit most likely will be awarded for $10,000.
4. The tax rate is 35%. add and deduct changes made and add 35% to taxes payable and 65% to R/E
5. FMV- Goodwill is $15,000; Copyright is $10,000; and Trademark is $20,000.
6. Flood damage, which is considered extraordinary, created a loss of $15,000. No change on balance sheet because it's only reported as an expense on the income statement
7. PPE & Intangible assets - Straight-line depreciation/amortization method; 10 years useful life; no salvage value No change because straight line is acceptable
8. Impairments: 2010 Copyright $4,400 ; 2011 Goodwill $5,400; 2009 Trademark $6,400
6,400

XYZ Company Balance Sheet As of 12/31/2012

Income Statement

Jaunty Coffee Co. Income Statement
For year ending Dec. 31, 2012
Sales 290,000
Cost of goods sold 100,000
Gross profit 190,000
Operating Expenses
Selling Expenses 20,000
Administrative Expenses 25,000
Depreciation Expense 11,600
Amortization 3,600
Total Operating Expenses 60,200
Income from Operations 129,800
Other Income
Interest Income 5,000
Dividend Income 10,000
Income before Income Taxes 144,800
Federal Income Tax
Tax rate 35% 50,680
Income before extraordinary items 94,120
Extraordinary items (loss) net taxes -$5,250 (9,750)
Net Income 84,370

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