Case Study International

Finance

Group - 10Rishti Gambhir (A018)

Yashovardhan Kanodia (B037)

Pawan Pandey (B049)

Harsh Sangoi (B053)

Krati Rathi (C068)

Sanchit Jhunjhunwala (D022)

Introduction to Case

Publicly traded multinational high-technology products and services company

Follows the IFRS system for financial reporting

Come to be known as a growth stock

Over the last year, stock price has gone up considerably

Q1FY10 reported an EPS of 52 cents a share

Q1FY11 has analyst projections of EPS at 58 cents a share v/s management estimate of 51 cents

In the event of EPS falling below analyst projections, the strong P/E position is likely to weaken

About Batson International,

S.A.

Areas IFRS US GAAP

Period record method Entities are recorded via Discrete-period-method

Entities are recorded via Integral-period-method

Inventory Write down Inventory write-down can be reversed Any reversal in inventory write-off is prohibited

Deferred Tax Deferred taxes are shown as separate line items on the balance sheet

Deferred taxes are included with assets and liabilities

Intangible Assets Intangible assets are recognized if the asset has a future economic benefit

Intangible assets are considered at fair value

Uncommon Expenses Uneven cost incurred in interim periods should be deferred only if deferral is also done at the end of financial period

Uneven Cost should be charged at an appropriate amount in all the interim periods in which it is expensed.

Advertisement Cost Advertising cost must be taken into the provisional period.

Advertising cost can be deferred to multiple periods.

IFRS vs US GAAP

Exhibit -1

Record sales in the first quarter of last year – exceeding performance

EPS per share rose to 52 cents per share compared to 45 from the first quarter Y-O-Y

Company declares the reason being increased demand and increased shareholder value through strategic acquisition

Management committed to growth through diversification

Good sign for the shareholders- expecting higher eps in the upcoming quarters

Exhibit -2Talks about IAS 34

Financial reporting period VS Interim period

Treatment of non regular flow of income and uneven incurred expenses

Tax rate for the Interim period

Planned maintenance and overall expenses treatment

Measurement procedures to be followed

Exhibit -3

Talks about Accounting Standards Codification Topic 270 “Interim Reporting “

Different types of views of interim reporting

Treatment of costs that benefit more than one period

Quantity discounts to customers if based on annual sales volume

Accounting treatment of Property taxes

Advertisement Costs incurred within a fiscal year

Difference between IAS 34 and ASC 270