Question: Air France KLM AF a French company prepares its financial

Air France-KLM (AF) , a French company, prepares its financial statements according to International Financial Reporting Standards. AF's annual report for the year ended March 31, 2011, which includes financial statements and disclosure notes, is provided with all new textbooks. This material also is included in AF's "Registration Document 2010-11," dated June 15, 2011 and is available at

1. AF's property, plant, and equipment is reported at cost. The company has a policy of not revaluing property, plant, and equipment. Suppose AF decided to revalue its flight equipment on March 31, 2011, and that the fair value of the equipment on that date was €12,000 million. Prepare the journal entry to record the revaluation assuming that the journal entry to record annual depreciation had already been recorded.
2. Under U.S. GAAP, what alternatives do companies have to value their property, plant, and equipment?
3. AF calculates depreciation of plant and equipment on a straight-line basis, over the useful life of the asset. Describe any differences between IFRS and U.S. GAAP in the calculation of depreciation.
4. When does AF test for the possible impairment of fixed assets? How does this approach differ from U.S. GAAP?
5. Describe the approach AF uses to determine fixed asset impairment losses.
6. The following is included in AF's disclosure note 3.12: "Intangible assets are held at initial cost less accumulated amortization and any accumulated impairment losses." Assume that on March 31, 2011, AF decided to revalue its Other intangible assets (see Note 16) and that the fair value on that date was determined to be €360 million. Amortization expense for the year already has been recorded. Prepare the journal entry to record the revaluation.

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