Air France-KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF's financial statements and disclosure notes for the year ended December 31, 2015, are available in Connect. This material is also available under the Finance link at the company's website (www.airfranceklm.com).
Required:
1. Read Notes 24 and 36.4. Focusing on investments accounted for at fair value through profit and loss (FVTPL):
a. As of December 31, 2015, what is the total balance of those investments in the balance sheet?
b. How much of that balance is classified as current and how much as noncurrent?
c. 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 4.3 and 22.
a. When AF can exercise significant influence over an investee, what accounting approach does it use to account for the investment? How does AF determine if it can exercise significant influence?
b. If AF is involved in a joint venture, what accounting approach does it use to account for the investment?
c. What is the carrying value of AF's equity-method investments in its December 31, 2015 balance sheet?
d. How did AF's equity-method investments affect AF's 2015 net income from continuing operations?