AirFrance IFRS comprehensive case Part D D4. Note 31.3 lists a number of conting

Question

AirFrance IFRS comprehensive case Part D

D4. Note 31.3 lists a number of contingent liabilities. Are amounts for those items recognized as a liability on AF's balance sheet? Explain.

D5. Sealy Corporation reported the following line items in its statement of cash flows:

Amortization of discount on secured notes …………………….382,000

Amortization of debt issuance cost and other……………....... 1,175,000

In AF's financial statements, Note 32: “Financial Debt” describes the company's long-term debt. Neither of the two items above is reported in the financial statements of Air France, and neither is likely to appear there in the future. Why?

D6. Examine the long-term borrowings in AF's balance sheet and the related note. Note that AF has convertible bonds outstanding that it issued in 2005. Prepare the journal entry AF would use to record the issue of convertible bonds. Prepare the

Explanation / Answer

D4

Under IFRS the accounting standard IAS 37 defines contingent liability. It is basically a provision made in the balance sheet if it satisfies following conditions

·         Possible obligation or liability arising out of future events which is beyond the control of company

·         The amount of obligation or liability cannot be ascertained by company with accuracy

·         The contingent liability will be shown in balance sheet if the company feels the probability of its occurrence is more than 50%

if it reasonably satifies the above the items will be shown in airfrance balance sheet

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.