Heineken IFRS vs US GAAP Essay

Like IFRS, reports prep ard under US IFRS are presented (i) rumor of fiscal position, (ii) statement of comprehensive income, (iii) statement of changes in equity, (iv) statement of coin flows, and (v) notes including explanation policies. Unlike IFRS it is not involve under US generally accepted accounting principles to present a statement of financial position as the counterbalance of the earliest comparative period. However, instant registrants are required to present statements of financial position as of the hold back of the current and prior periods. There are more item format and line item disclosure requirements for SEC registrants. Unlike IFRS, it is needed to present statements for the most recent quarters. Basis of accountingBoth standards are prepared on a modified address basis with growing emphasis on circus value. Financial statements arse be measured into a non- passing inflationary silver. When an economy becomes highly inflationary, an entity makes exp ense-level adjustments prospectively. desegregation and non-controlling interest in consolidated financial statements Consolidation under IFRS is ground under control model, which is assumed to exist when a parent smart set owns more than half of an entitys voting power, or has legal rights. US generally accepted accounting principles uses a bipolar consolidation model, which distinguishes between a variant interest model and a voting interest model. Business conspiracyThe receiving entity records the net assets at their carrying amounts in the accounts of the transferor (historical cost).Functional and presentation currencyHeinekens consolidated financial statements are presented in euro, which is the Companys real structural currency. Once the acquisition is done, the local currency would be euro, the functional currency would be US dollar, and the inform currency would be US dollar as well. Considerations assumed in the determination of functional currency The majority of the sales are going to be invoiced in U.S. dollars so that their cash inflow would be gene computed in greater proportion in that currency. Furthermore, most of the purchases of would be paid in U.S. dollars. After the acquisition, sale prices pass on be settled in U.S. dollars, according to the budget do at the departmental Controlling of CBA. The accounts receivable transactions (trade and link party) and accounts payable (trade and related parties) would be made in U.S. dollars.Foreign currency transactions legal proceeding in foreign currencies are translated to the respective functional currencies of CBA entities at the vary points at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the insurance coverage date are retranslated to the functional currency at the exchange set up at that date. The foreign currency gain or freeing arising on monetary items is the difference between amortized cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the end of the reporting period.Non-monetary assets and liabilities denominated in foreign currencies that are measured at good value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Its important to recount that unlike IFRS, US GAAP does not address whether an entity may acquit more than one reporting currency. However, the SEC has show upd that the foreign private issuer may select any reporting currency that the issuer deems appropriate. Also, under US GAAP the financial statements of a foreign operation in a highly inflationary economy are re-measured as if the parents reporting currency were its functional currency with the translation gains and losses recognized in profit or loss. Unlike IFRS, this accounting is followed for financial sta tements of the period that begins aft(prenominal) the economy becomes highly inflationary.Property, Plant and Equipment (PPE)Heineken measures its items of PPE at cost less presidency grants received accumulated depreciation and accumulated impairment losses. Heineken also derogate from its PPE items under straight line basis, and major components that are accounted for separately, since this most intimately reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Its important to call that under US GAAP, estimates of useful and relief value, and the method of depreciation, are reviewed only when events or changes in circumstances indicate that the current estimates or depreciation method are no agelong appropriate. Unlike IFRS, the revaluation of property, plant and equipment is not permitted.InventoriesHeineken Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the weighted av erage cost formula, and includes expenditure incurred in acquiring the inventories, proceeds or conversion costs and other costs incurred in saving them to their existing location and condition. Net realizable value is the estimated marketing price in the ordinary course of business, less the estimated costs of completion and selling expenses. Unlike IFRS, inventories are measured at the lower of cost and market. on a lower floor US GAAP FIFO (first in first out) method is allowed. Also, stocktaking is written down to market when net market is less than the cost, in difference with IFRS that states that it should be done when the realizable value is less than the cost.hired assetsLeases in terms of which Heineken assumes substantially all the risks and rewards of ownership are classify as pay haves. Upon initial recognition PPE acquired by way of finance lease is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments at parentage of the lease. Lease payments are apportioned between the outstanding liability and finance charges so as to achieve a constant periodic rate of interest on the remaining balance of the liability.Other leases are in operation(p) leases and are not recognized in Heineken statement of financial position. Payments made under operating leases are charged to profit or loss on a straight-line basis over the term of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognized as an expense in the period in which termination takes place. IAS 17 and US GAAP are conceptually similar, but ISAS 17 provides less specific guidance than US GAAP and leaves it to interpretation, substance over form.