Air FranceKLM Case Mcgrawhill Intermediate Financial Accounting

LO

Air FranceKLM AF a FrancoDutch company, prepares its financial statements according to International Financial Reporting Standards. AFs financial statements and disclosure notes for the year ended December are available in Connect.

Required:

AFs 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 December and that the fair value of the equipment on that date was million. Prepare the journal entry to record the revaluation assuming that the journal entry to record annual depreciation had already been recorded. Hint: you will need to locate the original cost and accumulated depreciation of the equipment at the end of the year in the appropriate disclosure note.

Under US GAAP, what alternatives do companies have to value their property, plant, and equipment?

AF calculates depreciation of plant and equipment on a straightline basis, over the useful life of the asset. Describe any differences between IFRS and US GAAP in the calculation of depreciation.

When does AF test for the possible impairment of fixed assets? How does this approach differ from US GAAP?

Describe the approach AF uses to determine fixed asset impairment losses. Hint: see Note How does this approach differ from US GAAP?

The following is included in AFs disclosure note : Intangible assets are recorded at initial cost less accumulated amortization and any accumulated impairment losses. Assume that on December AF decided to revalue its Other intangible assets see Note and that the fair value on that date was determined to be million. Amortization expense for the year already has been recorded. Prepare the journal entry to record the revaluation.