Instructions : Restate Broadwell\'s consolidated financial statements in accorda
ID: 2462938 • Letter: I
Question
Instructions: Restate Broadwell's consolidated financial statements in accordance with U.S. GAAP and enter debit credit entries in Broadwell worksheet using IFRS to US GAAP worksheet
Adjustment notes: IFRS to US GAAP adjustments; current year ending Dec 31
1: Broadwell expenses all interest costs as incurred. U.S. GAAP requires interest costs incurred during the construction of property, plant and equipment to be capitalized. Under U.S. GAAP Broadwell would have capitalized 13 million and amortized 5 million for the current year.
2: During the current year, Broadwell recognized under IFRS restructuring charges totaling 1,726 million. The following schedule illustrates adjustments necessary to reconcile these charges to amounts determined under U.S. GAAP
3: Due to the difference in carrying value of long-lived assets after write-downs described in (2), there is a difference in the amount of depreciation expense taken under IFRS and U.S. GAAP. An adjustment is made for the current year to record an additional 5 million of depreciation under U.S. GAAP.
4: Broadwell has expensed software costs as incurred. For U.S. GAAP purposes external consultant costs incurred in the development of software for internal use have been capitalized. These costs are being amortized over a three year period. The capitalization of software costs accords with common practice in the U.S. telecommunications industry. Broadwell has capitalized, as disclosed in the reconciliation of net income (loss) and shareholders’ equity to U.S. GAAP, 220 million and amortized 37 million in the previous year and capitalized 370 million and amortized 188 million in the current year.
5: During the current year, Broadwell’s share of personnel and other restructuring charges recorded by affiliates amounted to 50 million. These restructuring charges do not meet all the recognition criteria contained in EITF 94-3 and therefore cannot be expensed in the current year, under U.S. GAAP.During the current year, Broadwell’s share of personnel and other restructuring charges recorded by affiliates amounted to 50 million. These restructuring charges do not meet all the recognition criteria contained in EITF 94-3 and therefore cannot be expensed in the current year, under U.S. GAAP.
Broadwell Restatement worksheet (in millions) IFRS Reconciling Debt Adjustments Credit US GAAP Consolidated Statement of Operations Net revenues 9,842 Capitalized cost and changes in inventories 277 Total 10,119 Goods and services purchased 1,666 Personnel expenses 2,584 Other operating expenses 2,090 Depreciation and amortization 1,739 Restructuring charges 1,726 Total operating expenses 9,805 Operating income 314 Interest expense -428 Financial income 25 Income (loss) before income taxes and equity in net loss of affiliated companies -89 Income tax expense 1 Income (loss) before equity in net loss of affiliated companies -90 Equity in net loss of affiliated companies -325 Net income (loss) -415 Consolidated Retained Earnings Statement Retained earnings, 1/1 -151 Net loss -415 Profit distribution declared -1,282 Conversion of loan payable to equity 3,200 Retained earnings, 12/31 1,352 Consolidated Balance Sheet Asset Current assets Cash and cash equivalents 256 Securities available for sale 51 Trade accounts receivable 2,052 Inventories 169 Other current assets 34 Total current assets 2,562 Non-current assets Property, plant and equipment 11,453 Investments 1,238 Other non-current assets 220 Total non-current assets 12,911 Total assets 15,473 Liabilities and shareholders’ equity Current liabilities Short-term debt 1,178 Trade accounts payable 889 Accrued pension cost 789 Other current liabilities 2,213 Total current liabilities 5,069 Long-term liabilities Long-term debt 6,200 Finance lease obligation 439 Accrued pension cost. 1,488 Accrued liabilities 709 Other long-term liabilities 338 Total long-term liabilities 9,174 Total liabilities 14,243 Shareholders’ equity Retained earnings 1,352 Unrealized market value adjustment on securities available for sale 39 Cumulative translation adjustment -161 Total shareholders’ equity 1,230 Total liabilities and shareholders’ equity 15,473Explanation / Answer
Adjustment notes: IFRS to US GAAP adjustments; current year ending Dec 31
Broadwell Restatement worksheet (in millions) IFRS Reconciling Debt Adjustments Credit US GAAP Consolidated Statement of Operations Net revenues 9,842 Capitalized cost and changes in inventories 277 Total 10,119 Goods and services purchased 1,666 Personnel expenses 2,584 Other operating expenses 2,090 Depreciation and amortization 1,739 Restructuring charges 1,726 Total operating expenses 9,805 Operating income 314 Interest expense -428 Financial income 25 Income (loss) before income taxes and equity in net loss of affiliated companies -89 Income tax expense 1 Income (loss) before equity in net loss of affiliated companies -90 Equity in net loss of affiliated companies -325 Net income (loss) -415 Consolidated Retained Earnings Statement Retained earnings, 1/1 -151 Net loss -415 Profit distribution declared -1,282 Conversion of loan payable to equity 3,200 Retained earnings, 12/31 1,352 Consolidated Balance Sheet Asset Current assets Cash and cash equivalents 256 Securities available for sale 51 Trade accounts receivable 2,052 Inventories 169 Other current assets 34 Total current assets 2,562 Non-current assets Property, plant and equipment 11,453 Investments 1,238 Other non-current assets 220 Total non-current assets 12,911 Total assets 15,473 Liabilities and shareholders’ equity Current liabilities Short-term debt 1,178 Trade accounts payable 889 Accrued pension cost 789 Other current liabilities 2,213 Total current liabilities 5,069 Long-term liabilities Long-term debt 6,200 Finance lease obligation 439 Accrued pension cost. 1,488 Accrued liabilities 709 Other long-term liabilities 338 Total long-term liabilities 9,174 Total liabilities 14,243 Shareholders’ equity Retained earnings 1,352 Unrealized market value adjustment on securities available for sale 39 Cumulative translation adjustment -161 Total shareholders’ equity 1,230 Total liabilities and shareholders’ equity 15,473