Financial Analysis on Bessrawl Corporation

December 16, 2022

Financial Analysis on Bessrawl Corporation

Order Number	636738393092
Type of Project	ESSAY
Writer Level	PHD VERIFIED
Format	APA
Academic Sources	10
Page Count	3-12 PAGES

Instructions/Descriptions

Financial Analysis on Bessrawl Corporation

Financial, Analysis, Bessrawl, Corporation

INSTRUCTIONS: This case asks us to prepare a reconciliation schedule to convert 2014 income and stockholders’ equity from a U.S GAAP basis to IFRS. It begins on page 177 and ends on page 178 of the textbook, at the end of Chapter 4.
Your case study submission does not need to follow APA formatting. You may submit your reconciliation in Word or Excel with the key goal being to present your work in a clear and understandable fashion.

Case 4-1

Bessrawl Corporation is a U.S.-based company that prepares its consolidated financial statements in accordance with U.S. GAAP. The company reported income in 2014 of $1,000,000 and stockholders’ equity at December 31, 2014, of $8,000,000.

The CFO of Bessrawl has learned that the U.S. Securities and Exchange Commission is considering requiring U.S. companies to use IFRS in preparing consolidated financial statements. The company wishes to determine the impact that a switch to IFRS would have on its financial statements and has engaged you to prepare a reconciliation of income and stockholders’ equity from U.S. GAAP to IFRS. You have identified the following five areas in which Bessrawl’s accounting principles based on U.S. GAAP differ from IFRS.

Inventory
Property, plant, and equipment
Intangible assets
Research and development costs
Sale-and-leaseback transaction

Bessrawl provides the following information with respect to each of these accounting differences.

Inventory

At year-end 2014, inventory had a historical cost of $250,000, a replacement cost of $180,000, a net realizable value of $190,000, and a normal profit margin of 20 percent.

Property, Plant, and Equipment

The company acquired a building at the beginning of 2013 at a cost of $2,750,000. The building has an estimated useful life of 25 years, an estimated residual value of $250,000, and is being depreciated on a straight-line basis. At the beginning of 2014, the building was appraised and determined to have a fair value of $3,250,000. There is no change in estimated useful life or residual value. In a switch to IFRS, the company would use the revaluation model in IAS 16 to determine the carrying value of property, plant, and equipment subsequent to acquisition.

Intangible Assets

As part of a business combination in 2011, the company acquired a brand with a fair value of $40,000. The brand is classified as an intangible asset with an indefinite life. At year-end 2014, the brand is determined to have a selling price of $35,000 with zero cost to sell. Expected future cash flows from continued use of the brand are $42,000, and the present value of the expected future cash flows is $34,000.

Research and Development Costs

The company incurred research and development costs of $200,000 in 2014. Of this amount, 40 percent related to development activities subsequent to the point.

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RUBRIC

Excellent Quality

95-100%

Introduction

45-41 points

The context and relevance of the issue, as well as a clear description of the study aim, are presented. The history of searches is discussed.

Literature Support

91-84 points

The context and relevance of the issue, as well as a clear description of the study aim, are presented. The history of searches is discussed.

Methodology

58-53 points

With titles for each slide as well as bulleted sections to group relevant information as required, the content is well-organized. Excellent use of typeface, color, images, effects, and so on to improve readability and presenting content. The minimum length criterion of 10 slides/pages is reached.

Average Score

50-85%

40-38 points

More depth/information is required for the context and importance, otherwise the study detail will be unclear. There is no search history information supplied.

83-76 points

There is a review of important theoretical literature, however there is limited integration of research into problem-related ideas. The review is just partly focused and arranged. There is research that both supports and opposes. A summary of the material given is provided. The conclusion may or may not include a biblical integration.

52-49 points

The content is somewhat ordered, but there is no discernible organization. The use of typeface, color, graphics, effects, and so on may sometimes distract from the presenting substance. It is possible that the length criteria will not be reached.

Poor Quality

0-45%

37-1 points

The context and/or importance are lacking. There is no search history information supplied.

75-1 points

There has been an examination of relevant theoretical literature, but still no research concerning problem-related concepts has been synthesized. The review is just somewhat focused and organized. The provided overview of content does not include any supporting or opposing research. The conclusion has no scriptural references.

48-1 points

There is no logical or apparent organizational structure. There is no discernible logical sequence. The use of typeface, color, graphics, effects, and so on often detracts from the presenting substance. It is possible that the length criteria will not be reached.