The 2014 financial statements of LVMH Moet Hennessey-Louis Vuitton S.A. are presented in Appendix C at the end of this book. LVMH is a Paris-based holding company and one of the world’s largest and best-known luxury goods companies. As a member-nation of the European Union, French companies are required to prepare their consolidated (group) financial statements using International Financial Reporting Standards (IFRS). After reviewing LVMH’s consolidated balance sheet in Appendix C, prepare answers to the following questions:

a. Under U.S. GAAP, the balance sheet equation is defined as Assets = Liabilities + Shareholders’ Equity.
Describe how the balance sheet equation is defined under IFRS. Does the IFRS definition of the balance sheet equation change the informational content of the consolidated sheet?

b. Under U.S. GAAP, current assets and current liabilities are listed before noncurrent assets and noncurrent liabilities. Describe the listing sequence of LYMH’s assets and liabilities. Does the listing sequence impact the informational content of the consolidated balance sheet?

c. Under U.S. GAAP, current assets are listed according to their expected liquidity, with the most liquid current assets listed first and the least liquid current assets listed last. How would you describe the listing sequence of current assets for LVMH?

d. Under U.S. GAAP, the balance sheet equation is defined as A = L + SE. LVMH replaces the label ‘shareholders’ equity” with just “equity.” What might explain this difference in labeling of this section of the consolidated balance sheet?