Question

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 www.airfranceklm.com.

Required:
1. Read Notes 3.10.2, 3.10.5, 22, 32.3 and 32.4. Focusing on investments accounted for at fair value through profit and loss (FVTPL):
a. As of March 31, 2011, what is the balance of those investments in the balance sheet? Be specific regarding which line of the balance sheet includes the balance.
b. How much of that balance is classified as current and how much as noncurrent?
c. Is that balance stated at fair value? How do you know?
d. How much of the fair value of those investments is accounted for using level 1, level 2, and level 3 inputs of the fair value hierarchy? Given that information, assess the reliability (representational faithfulness) of this fair value estimate.
2. Complete Requirement 1 again, but for investments accounted for as available for sale.
3. Read Notes 3.3.2, 10, and 20.
a. When AF can exercise significant influence over an investee, what accounting approach do they use to account for the investment? How does AF determine if it can exercise significant influence?
b. If AF exercises joint control over an investee by virtue of a contractual agreement, what accounting method does it use? Is there an alternative?
c. Why did AF change how it accounts for its investment in WAM (Amadeus)? What was the initial approach that AF used, and what approach did it change to using for this investment?
d. What is the carrying value of AF's equity-method investments in its March 31, 2011 balance sheet?
e. How did AF's equity-method investments affect AF's 2011 net income from continuing operations?



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  • CreatedDecember 23, 2013
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