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. In Note 3: Summary of accounting policies, part 3.13.4: Leases, AF states that “leases are classified as finance leases when the lease arrangement transfers substantially all the risks and rewards of ownership to the lessee..” Is this the policy companies using U.S. GAAP follow in accounting for capital leases? Explain.
2. Look at AF’s Note 30: Financial debt and Note 33: Lease commitments. Does AF obtain use of its aircraft more using operating leases or finance leases? Do lessees report operating and finance lease commitments the same way? Explain.



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  • CreatedDecember 23, 2013
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