Question

M7: Assignment Many non-U.S. companies make annual reports available on their corporate Internet home page. Access the financial statements from the most recent annual report for a foreign company with which you are familiar to complete this assignment. Required a. Determine the set of accounting rules (GAAP) the company uses to prepare its financial statements. b. Determine whether the company provides a set of financial statements comparable to the set of financial statements provided by U.S. companies (consolidated balance sheet, consolidated income statement, consolidated cash flow statement). c. List major differences between the company's income statement and the income statement of a typical U.S. corporation d. List major differences between the company's balance sheet and the balance sheet of a typical U.S. corporation e. Determine whether the scope and content of the information provided in the notes to the financial statements are comparable to the information provided in the notes to the financial statements by a typical U.S. corporation 1. Evaluate the overall presentation of financial statements and notes to financial statements by the company in comparison with a typical U.S. corporation.

Answer 1

a) As per the generally accepted accounting principles (GAAP), companies are responsible for providing reports on their cash flows, profit-making operations, and overall financial conditions. The following three major financial statements are required under GAAP:

1. Income Statement

2.Balance sheet

3. Cash flow statement

The income statement shows the revenue earned by a company during the reporting period, along with any corresponding expenses. It is sometimes referred to as the profit and loss (P&L) statement. A company's balance sheet summarizes assets and sets them equal to liabilities and shareholder's equity. GAAP also requires a cash flow statement, which acts as a record of cash as it enters and leaves the company.

b) The company provides a set of financial statement comparable to the set of financial statements provided by US Corporation.

d)Difference between the companies balance sheet and balance sheet of a typical US corporation:

Subject	US GAAP	INDIAN GAAP
Balance Sheet	Entities may present either a classified or non-classified balance sheet. Items on the face of the balance sheet are generally presented in a decreasing order of liquidity. US public company follow SEC regulations	Accounting standards do not prescribe a particular format; certain items must be presented on the face of the balance sheet.

c) Difference between the companies income sheet and income sheet of a typical US corporation:

Subject	US GAAP	INDIAN GAAP
Income Statement	Presented as either a single-step or multiple-step format.	Does not prescribe standard format but certain income and expenditure items are disclosed in accordance with accounting standards and the companies act.