Air France-KLM“Financial Statements 2014 Air France
Air France-KLM is a Franco-Dutch airline seated in France. You can find the “Annual financial report 2014” with the financial statements for 2014 at: http://www.airfranceklm.com/sites/default/files/publications/annual_financial_report_2014_- _air_france-klm.pdf
Please discuss the following questions related to the information included in the financial report on the first 101 pages. Please always indicate the relevant pages in the financial statements connected to your answers.
1. What is the difference between the two sets of financial statements, one included on pages 3-18 and the other on pages 19 -101, concerning the entities covered?
2. What is the reason for having those two sets of financial statements? What might be the different purposes of the two sets?
3. What is the difference concerning the accounting standards used for the two sets?
4. What does the expression “International Financial Reporting Standards (IFRS) as adopted by the
European Union (EU)” mean (see para. 4.1.1. on page 29)? Please explain the reason for this
expression.
5. Would the SEC accept the financial statements on pages 19 et seqq. without reconciliation to
U.S. GAAP if the company wanted to enter the U.S. capital market and file with the SEC?
6. Look at the formats of the balance sheets of the two different financial statements.
a. In which respects are they different? What might be the reason for the difference?
b. In which respect is the balance sheet format of the balance sheet on page 22/23
different to one that would have been presented under U.S. GAAP?
7. How does the IFRSs define the difference between current and non-current assets?
8. Look at the income statement on pages 20/21:
a. Does it follow the so called “one statement approach” or the “two statement approach”?
b. What is the name of the format Air France uses to present the expenses?
c. How does this format differ from the one that would need to be used under U.S. GAAP?
d. Which of the income figures tells you whether the entity has been profitable with its core
business activities. What was this income figure for 2014?
e. What is meant by the expression “Total of other comprehensive income that will be
??reclassified to profit or loss” in the statement on p. 21?
?Please turn the page!
9. Return on Equity Ratio
a. Please calculate the Return on Equity Ratio of the years 2014 and 2013 on the basis of
the financial statements of pages 19 et seqq..
b. If you compared this ratio with the one of an airline seated in the U.S.A. and listed at the
NYSE, what might be the major challenges that you should be aware of?
10. Non-current assets held for sale:
a. Explain the general treatment of non-current assets held for sale under IFRS.
b. What is the amount of such assets in the financial statements of pages 19 et seqq. for the
years 2014 and 2013?
c. What are the events/transactions behind these figures?
11. Intangible Assets:
a. What are the two major categories of intangible assets of the Air France group?
b. How much did the group amortize of its total amount of intangible assets?
c. In general, what are the two major differences between IFRS and U.S. GAAP with regard
to the accounting of intangible assets?
12. Revaluation Method:
a. Please explain the general construct of the revaluation method under IFRS!
b. Does this method influence the net income in a different way than the historical cost
method?
c. May this method be applied for intangible assets?
d. Do you find any indications in the financial statements of pages 19 et seqq. that the
revaluation method might have been applied for particular assets?
13. Air France is seated in France. What might traditionally be the characteristics of the cultural
factors that generally have influenced the domestic accounting system of Air France? How does
the last sentence in Para. 1 of the notes on page 8 correspond with these factors?
14. Application of IFRS in the EU:
a. Under which circumstances the application of IFRS is required in the European Union?
b. Under which circumstances entities have an option to apply IFRS in the European Union?
ACCT 8087 001
Spring 2016
Homework
Case Study „Air France
–
KLM“
Financial Statements 2014
Air France
–
KLM is a Franco
–
Dutch airline seated in France. You can find the
“Annual financial report
2014” with the
financial statements for 2014 at:
http://www.airfranceklm.com/sites/default/files/publications/annual_financial_report_2014_
–
_air_france
–
klm.pdf
Please discuss the f
ollowing questions related to the information included in the finan
cial report on
the first 101
page
s
.
Please always indicate the relevant pages in the financial statements connected
to your answers.
1.
What is
the
difference between the
two sets of
financial statements, one
included
on
pages 3
–
18
and the
other on pages 19
–
101
,
concerning the entities covered?
2.
What is the reason for having those two sets of financial statements? What
might be
the
different purposes
of the two sets
?
3.
What is the diff
erence co
nce
rning the accounting standards used
for the two sets
?
4.
What does the expression “
International Finan
cial Reporting Standards (IFRS
) as ado
pted by the
European Union (EU
)”
mean (see para. 4.1.1. on page 29)?
Please explain the reason for this
ex
pression.
5.
Would the SEC accept the f
inancial statements on pages 19
et seqq.
witho
ut reconciliation to
U.S. GAAP
if the company
wanted
to
enter the U.S. capital market and
file with the SEC?
6.
Look at the format
s
of the balance sheet
s of the two different financial statements.
a.
In which respects are they different?
What might be the reason for the difference?
b.
In which respect is the
balance sheet
format of the balance sheet
on page 22/23
different to one that
would
have
be
en
presented
under
U.S. GAAP
?
7.
How does
the
IFRS
s
define the difference
between current and non
–
current assets?
8.
Look at the income statement on pages 20/21:
a.
Does it follow the so called “one statement approach” or the “two statement approach”?
b.
What is th
e name of t
he format
Air France
uses to present the expenses?
c.
How does this format differ from the one that would need to be used under U.S. GAAP?
d.
W
hich of the income figures tells
you whether the entity
has been profitable with its core
business activities. What w
as this income figure for 2014?
e.
What is meant by the expression
“
Total of other comprehensive income that will be
reclassified to profit or loss
” i
n the statement on p. 21?
Please turn the page!
9.
Return on Equity Ratio
a.
Please calculate the Return on
Equity Ratio of the years 2014 and 2013
on
the
basis of
the financial statements of pages 19 et seqq..
b.
If you compared this ratio with
the
one of an airline seated in the U.S.A. and listed at the
NYSE, what might be the major challenges that you should be
aware of?
10.
Non
–
current a
ssets held for sale:
a.
Explain the general treatment of non
–
current assets held for sale under IFRS.
b.
What is the amount of such assets in the financial statements of page
s
19 et seqq. for the
years 2014 and 2013?
c.
What are the events
/transactions behind these figures?
11.
Intangible Assets:
a.
What are the two major categories of intangible assets of the Air France group?
b.
How much did the group amortize of its total amount of intangible assets?
c.
In general, w
hat are the two major difference
s between IFRS and U.S. GAAP with regard
to the accounting of intangible assets?
12.
Revaluation Method:
a.
Please explain the general construct of the revaluation method under IFRS!
b.
Does this method influence the net income in a different way than the historica
l cost
method?
c.
May this method be applied for intangible assets?
d.
Do you find any indications in the financial statements of
pages 19 et seqq.
that the
revaluation method might have been applied for particular assets?
13.
Air France is seated in France. What might traditionally be the characteristics of the cultural
factors that generally have influenced the domestic accounting system of Air France?
How does
the last sentence in Para. 1 of the notes on page 8 correspond wit
h these factors?
14.
Application of IFRS
in the EU:
a.
Under which circumstances
the application of
IFRS
is required
in the European Union
?
b.
Under which circumstances entities have an option to apply IFRS in
the
European Union
?
This homework is due on
Saturday, January 30!
Please print your solution to the homework
out on paper having your name and
student number on it
, and bring it to class
!
