The 2017 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 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 financial statements, consider the following questions.

Required

a. Identify two assets listed in the group balance sheets that indicate that LVMH uses the accrual basis of accounting. Which income statement accounts of LVMH are affected by adjustments to these assets accounts?

b. Identify two liabilities listed in the group balance sheets that indicate that LVMH uses the accrual basis of accounting. Which income statement accounts of LVMH are affected by these adjustments?

Appendix C

CONSOLIDATED INCOME STATEMENT (EUR millions, except for earnings per sharel Notes 2017 2016 2015 Revenue Cost of sales 23 42,636 37,600 35,664 (14,783) (13,039) (12,553) Gross margin 27,853 24,561 23,111 Marketing and selling expenses (16,395) [14,607) [13,830) General and administrative expenses [3.162) [2,931) 12.663) Income (loss) from joint ventures and associates 7 (3) 3 (13) Profit from recurring operations 23-24 8,293 7,026 6,605 Other operating income and expenses 25 (180) (122) (221) Operating profit 8,113 6,904 6,384 Cost of net financial debt [62] (83) (78) Other financial income and expenses [117] (349) (336) Net financial income [expense] 26 [179] (432) [414] Income taxes 27 (2,318) (2,109) 11,969) Net profit before minority interests Minority interests Net profit, Group share 5,616 4,363 4,001 17 [487] (382) (428) 5,129 3,981 3,573 Basic Group share of net earnings per share (EUR) Number of shares on which the calculation is based 28 10.21 7.92 7.11 502,412,694 502,911,125 502,395,491 Diluted Group share of net earnings per share (EUR) Number of shares on which the calculation is based 28 28 10.18 504,010,291 7.89 504,640,459 7.08 504,894,946