Question

The following is a recent consolidated statement of financial position on December 31 of a recent year for LVMH, a French company that markets the Louis Vuitton® and Moët Hennessy® brands.
LVMH
Statement of Financial Position
December 31 (in millions of euros)
Assets
Brands and other intangible assets—net ........ € 9,104
Goodwill—net . .................. 5,027
Property, plant, and equipment—net ......... 6,733
Investment in associates .............. 223
Non-current available for sale financial assets ...... 3,891
Other non-current assets ............... 319
Deferred tax . ................... 668
Non-current assets ................ €25,965
Inventories . ................... € 5,991
Trade accounts receivable .............. 1,565
Income taxes receivable . .............. 96
Other current assets ................ 1,255
Cash and cash equivalents . ............ 2,292
Current assets ................... €11,199
TOTAL ASSETS ................. €37,164
Liabilities and Equity
Share capital ................... € 147
Share premium................. 1,782
Treasury shares ................. (607)
Revaluation reserves . ................ 1,244
Other reserves . ................. 11,370
Cumulative translation adjustment ......... 230
Net profit, group share ............... 3,032
Equity, group share ............... €17,198
Minority interests . ................ 1,006
Total equity ................... €18,204
Long-term borrowings .............. € 3,432
Provisions .................. 1,167
Deferred tax . .................. 3,354
Other non-current liabilities ............ 3,947
Total non-current liabilities ............. €11,900
Short-term borrowings .............. € 1,834
Trade accounts payable .............. 2,298
Income taxes payable .............. 446
Provisions .................. 339
Other current liabilities ............. 2,143
Total current liabilities . .............. € 7,060
TOTAL LIABILITIES AND EQUITY ....... €37,164
a. Identify presentation differences between the balance sheet of LVMH and a balance sheet prepared under U.S. GAAP. Use the Mornin’ Joe balance sheet on page 626 as an example of a U.S. GAAP balance sheet. (Ignore minority interests and cumulative translation adjustment.)
b. Compare the terms used in this balance sheet with the terms used by Mornin’ Joe (page 626), using the table below.
Income statement data:
Advertising expense ................ $ 150,000
Cost of merchandise sold............... 3,700,000
Delivery expense .................. 30,000
Depreciation expense—office buildings and equipment.... 30,000
Depreciation expense—store buildings and equipment ..... 100,000
Dividend revenue.................. 4,500
Gain on sale of investment................ 4,980
Income from Pinkberry Co. investment............ 76,800
Income tax expense................... 140,500
Interest expense................... 21,000
Interest revenue.................... 2,720
Miscellaneous administrative expense............. 7,500
Miscellaneous selling expense.............. 14,000
Office rent expense................... 50,000
Office salaries expense.................. 170,000
Office supplies expense................. 10,000
Sales......................... 5,254,000
Sales commissions................... 185,000
Sales salaries expense................... 385,000
Store supplies expense.................. 21,000
Retained earnings and balance sheet data:
Accounts payable ................... $ 194,300
Accounts receivable................... 545,000
Accumulated depreciation—office buildings and equipment.. 1,580,000
Accumulated depreciation—store buildings and equipment .. 4,126,000
Allowance for doubtful accounts............. 8,450
Available-for-sale investments (at cost) ........... 260,130
Bonds payable, 5%, due 2022............... 500,000
Cash ........................ 246,000
Common stock, $20 par (400,000 shares authorized;
100,000 shares issued, 94,600 outstanding) ........ 2,000,000
Dividends:
Cash dividends for common stock............ 155,120
Cash dividends for preferred stock............ 100,000
Stock dividends for common stock ........... 66,240
Goodwill ...................... 500,000
Income tax payable .................. 44,000
Interest receivable .................. 1,125
Investment in Pinkberry Co. stock (equity method)..... 1,009,300
Investment in Dream Inc. bonds (long term) ......... 90,000
Merchandise inventory (December 31, 2014), at lower
of cost (FIFO) or market................. $ 778,000
Office buildings and equipment............. 4,320,000
Paid-in capital from sale of treasury stock......... 13,000
Excess of issue price over par—common stock....... 886,800
Excess of issue price over par—preferred stock....... 150,000
Preferred 5% stock, $80 par (30,000 shares authorized;
20,000 shares issued) .................. 1,600,000
Premium on bonds payable............... 19,000
Prepaid expenses................... 27,400
Retained earnings, January 1, 2014............ 9,319,725
Store buildings and equipment............... 12,560,000
Treasury stock (5,400 shares of common stock at cost of
$33 per share) ...................... 178,200
Unrealized gain (loss) on available-for-sale investments.... (6,500)
Valuation allowance for available-for-sale investments ... (6,500)
LVMH Term Mornin’ Joe U.S. GAAP Term
Statement of financial position
Share capital
Share premium
Other reserves
Provisions
c. What does the “Revaluation reserves” in the Equity section of the balance sheetrepresent?


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  • CreatedFebruary 28, 2014
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