Name : Rifky Mahendra

Nim : 1900012264

First Assignment Intermediate Financial Accounting I

rifky1900012264@webmail.uad.ac.id

1. Differences of IFRS and GAAP

GAAP is rule-based, whereas IFRS is based on principles only. In measuring asset
value, GAAP assesses using historical value, while IFRS assesses using fair value.
The focus of financial statements on GAAP is the Profit and Loss Statement, while
IFRS focuses on the Statement of Financial Position (balance sheet) and the Income
Statement.
2. BE2-2, BE2-5, BE2-8, BE2-9, BE2-14
 BE2-2 (LO2) Match the qualitative characteristics below with the following
statements.
a. Timelinessp =
b. Completeness : d. Includes all the information that is necessary for a
faithful representation of the economic phenomena that it purports to
represent.
c. Free from error =
d. Understandability = e. Quality of information that allows users to
comprehend its meaning.
e. Faithful representation = a. Quality of information that assures users that
information represents the economic phenomena that it purports to
represent.
f. Relevance = b. Information about an economic phenomenon that changes
past or present expectations based on previous evaluations.
g. Neutrality =
h. Confirmatory value = c. The extent to which information is accurate in
representing the economic substance of a transaction.
 BE2.5 (LO2) Explain how you would decide whether to record each of the
following expenditures as an asset or an expense. Assume all items are material.
a. Legal fees paid in connection with the purchase of land are €1,500.
 b. Eduardo SA paves the driveway leading to the office building at a cost of
€21,000.
c. A meat market purchases a meat-grinding machine at a cost of €3,500.
d. On June 30, Monroe and Meno, medical doctors, pay 6 months' office rent to
cover the month of July and the next 5 months
e. Smith's Hardware pays €9,000 in wages to laborers for construction on a
building to be used in the business.
f. Alvarez's Florists pays wages of €2,100 for November to an employee who
serves as driver of their delivery truck.
Answer :
a. recorded as a load account due to the cost of € 1,500 for the
purchase of land
b. recorded as a load as it cost € 21,000 to pave the road to the office
c. recorded as a cost account because it aims to make work easier
d. recorded as a cost account because it has a useful life of 5 months
e. recorded as a load account to pay construction workers' salaries of
€ 9,000
f. is recorded as a cost account because it pays the flower delivery
driver's employee salary of € 2,100
 BE2.8 (LO3) Identify which basic assumption of accounting is best described in
each of the following items.
a. The economic activities of FedEx Corporation (USA) are divided into 12-
month periods for the purpose of issuing annual reports.
b. Total S.A. (FRA) does not adjust amounts in its financial statements for
the effects of inflation.
c. Barclays (GBR) reports current and non-current classifications in its
statement of financial position.
d. The economic activities of Tokai Rubber Industries (JPN) and its
subsidiaries are merged for accounting and reporting purposes.
Answer :
a. Periodicity - firms can divide economic activities
be a period of time.
b. Monetary unit - money is a common denominator.
c. Sustainability - company that lasts moderately
 long to fulfill goals and commitments.
d. Economic entity - The company continues to maintain its activities
separate from their owners and other business units.
 BE2.9 (LO4) Identify which basic principle of accounting is best described in
each of the following items.
a. Parmalat (ITA) reports revenue in its income statement when it delivers
goods instead of when the cash is collected.
b. Google (USA) recognizes depreciation expense for a machine over the 2-
year period during which that machine helps the company earn revenue.
c. Oracle Corporation (USA) reports information about pending lawsuits in
the notes to its financial statements.
d. Fuji Film (JPN) reports land on its statement of financial position at the
amount paid to acquire it, even though the estimated fair value is greater.

Answer :

a. Revenue recognition - revenue is to be recognized when it is

probable that future economic benefits will flow to the company
and reliable measurement of the amount of revenue is possible.
b. Expense Recognition - outflows or “using up” of assets or
incurring of liabilities (or a combination of both) during a period as
a result of delivering or producing goods and/or rendering services.
c. Full disclosure - providing information that is of sufficient
importance to influence the judgment and decisions of an informed
user.
d. Measurement - as a medium for measuring economic resources and
liabilities.
 BE2.14 (LO1,2,4) Fill in the blanks related to the following statements.
1. Financial reporting imposes cost; the benefits of financial reporting
should justify those cost
2. The information provided by financial report for general purpose
focuses on the needs of all capital providers, not just the needs of a
particular group.
3. A depiction of economic phenomena is economic chart descriptions if
it includes all the information that is necessary for faithful
representation of the economic phenomena that it purports to represent.
4. Compness the quality of information that allows users to comprehend
its meaning.
5. Can be compared is the quality of information that permits users to
identify similarities in and differences between two sets of economic
phenomena.
6. Information about economic phenomena has confirmation value if it
confirms or changes past or present expectations based on previous
evaluations.