Ruckman Case
| Ruckman, Inc.: Converting from U.S. GAAP to IFRS | ACTG 4240 – Assignment #4 | | Fannie Fang, Yingqi Gu, Ya Wang | 1/24/2013 |
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Ruckman Part I Solutions Page 1. For each of the 16 items listed below, briefly describe the difference in GAAP treatment and IFRS treatment. Just start with this form and type in your responses in the appropriate cells. You don’t need to give too much detail, just enough so your client can tell the difference. 2. In the “Needed to Convert?” column, very briefly describe the information you would need in order to convert the U.S. GAAP statements to comply with IFRS. If you were going to make a journal entry, what measurement or other information would you need? Please follow the bullet format I used below, if feasible. For an example – see “Inventory Flow assumption” below, which I completed for you. | Item | GAAP | IFRS | Needed to Convert to IFRS? | | Income Statement Items | 1 | Revenue | * Contingent amounts generally not being recorded as revenue until it’s resolved. * The residual method is precluded * The amount allocable to a delivered item is limited to the amount that is not contingent on the delivery of additional items. * Utilizing a multiple element account model or an incremental cost model to account for customer loyalty program. * When there is a loss on the first element but a profit on the second element, the company may defer the remaining costs until delivery of the second element. * The use of cost-to-cost revenue service revenue recognition is prohibited. * The completed-contract method is allowed which includes gross-profit approach. | * Contingent revenue would be included * The reverse residual method may be acceptable to allocate arrangement consideration. * No limitation on the amount allocated to the first item. * Reward, loyalty or similar programs are accounted for as multiple-element arrangements. * The company may remove the loss on the
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Ruckman Part I Solutions Page 1. For each of the 16 items listed below, briefly describe the difference in GAAP treatment and IFRS treatment. Just start with this form and type in your responses in the appropriate cells. You don’t need to give too much detail, just enough so your client can tell the difference. 2. In the “Needed to Convert?” column, very briefly describe the information you would need in order to convert the U.S. GAAP statements to comply with IFRS. If you were going to make a journal entry, what measurement or other information would you need? Please follow the bullet format I used below, if feasible. For an example – see “Inventory Flow assumption” below, which I completed for you. | Item | GAAP | IFRS | Needed to Convert to IFRS? | | Income Statement Items | 1 | Revenue | * Contingent amounts generally not being recorded as revenue until it’s resolved. * The residual method is precluded * The amount allocable to a delivered item is limited to the amount that is not contingent on the delivery of additional items. * Utilizing a multiple element account model or an incremental cost model to account for customer loyalty program. * When there is a loss on the first element but a profit on the second element, the company may defer the remaining costs until delivery of the second element. * The use of cost-to-cost revenue service revenue recognition is prohibited. * The completed-contract method is allowed which includes gross-profit approach. | * Contingent revenue would be included * The reverse residual method may be acceptable to allocate arrangement consideration. * No limitation on the amount allocated to the first item. * Reward, loyalty or similar programs are accounted for as multiple-element arrangements. * The company may remove the loss on the