Free Essay About Balance Sheet

Differences between IFRS and Us GAAPs in approach to valuation

US GAAPs do not permit revaluation of assets to fair values. It is founded on the assumption that the business is a going concern and has no intention to sell its assets. On the other hand, IFRS allow revaluation of assets to fair value, of assets that require revaluation on a regular basis.
US GAAPs allows valuation of inventory using both LIFO and FIFO methods. This is unlike IFRS, which prohibits valuation of inventory costs using the LIFO method. The argument is that LIFO method overstates the value of closing stock thereby reducing the tax expense for the firm. The two also differs in the treatment of inventory write-downs. IFRS allows a business to reverse inventory write-downs in future periods when certain conditions are met. US GAAPs, on the other hand, prohibit the reversal of inventory write-downs in future periods.
2. Difference between assets and expenses
An asset is a property owned or controlled by a business and from whose use the company expects future flow of benefits (Weil, Schipper & Francis, 2012). On the other hand, expenses are costs incurred in running a business or generating income. Assets are reported on the balance sheet while expenses are debited in the statement of operations in order to determine the profit from operations.
3. Difference between current and long-term assets
Current assets are those that the firm expects to use for less than one year while long-term assets are those expected to last for a period of more than one year (Weil, Schipper & Francis, 2012).
4. Difference between current and long-term liabilities
Current liabilities are obligations due/payable within one year while long-term liabilities are those obligations that are expected to become due after more than one accounting period.

Apple’s balance sheet as at 27th September, 2014

Current assets 27 September, 2014 28th September, 2013
Cash and cash equivalents $13,844 $14,259
Inventories $2,111 $1,764
Long-term assets
Property, plant and equipment $20,624 $16,597
Long-term marketable securities $130,162 $106,215
Current liabilities
Accounts payable $30,196 $22,367
Accrued expenses $18,453 $13,856
Long-term liabilities
Long-term debt $28,987 $16,960
Deferred revenue $3,031 $2,625
6. Retained earnings
Retained earnings account gives the amount of profit not distributed to shareholders in the form of dividends and other forms (Weil, Schipper & Francis, 2012). Income increases the amount of retained earnings while losses reduce the balance of the account. Dividends also decrease the amount of retained earnings.
As at 28th September, 2013, the balance of Apple’s retained earnings account was $104,256. During the year, the company made a net income of $39,510 thereby increasing retained earnings. However, the company paid dividends amounting to $11,215, repurchased common stock worth $45,000 and issued common stock worth $399. All these were financed by retained earnings thereby reducing its balance. The balance as at 27th September, 2014 was $87,152.
7. Differences between Apple’s and Samsung’s balance sheets
Apple’s balance sheet gives the financial position of the firm as at the end of September each year while that of Samsung gives its financial position as at 31st December each year.
Apple’s balance sheet is expressed in US Dollars only while that of Samsung is expressed both in US Dollars and Korean Won.
For the year 2013, Samsung’s current assets were more than its non-current assets while current assets of Apple were less than its non-current assets. Samsung had more current assets than Apple.
8. In the year 2013, Apple had more debt ($83,451 million) than Samsung ($60,702.178 million).
9. Apple is bigger than Samsung. As at 28th September, 2013, Apple’s total assets were $207,000 million while total assets for Samsung as at 31st December, 2013 were $202,857.025 million. This indicates that Apple had more assets than Samsung hence it is bigger.

References

Weil, R., Schipper, K., & Francis, J. (2012). Financial Accounting: An Introduction to Concepts, Methods and Uses. New York: Cengage Learning.