My writer delivered an awesome dissertation on the Creek War, I definitely didn’t have the time to do all the research she did on my own.
Essay (any type)
09/08/2022
International Reporting Issues Presented below are data and accounting policy notes for the…
International Reporting Issues Presented below are data and accounting policy notes for the goodwill of three international drug companies. Bayer, a German company, prepares its statements in accordance with International Financial Reporting Standards (IFRS); Glaxo SmithKline follows United Kingdom (U.K.) rules; and Merck, a U.S. company, prepares its financial statements in accordance with U.S. GAAP. Both U.S. GAAP and IFRS do not allow amortization of goodwill. Under U.K. standards, goodwill is amortized over useful lives not to exceed 20 years. Instructions (a) Compute the return on equity for each of these companies, and use this analysis to briefly discuss the relative profitability of the three companies. (b) Assume that each of the companies uses the maximum allowable amortization period for goodwill (if any). Discuss how these companies’ goodwill amortization policies affect your ability to compare their amortization expense and income. (c) Some analysts believe that the only valid way to compare companies that follow different goodwill accounting practices is to treat all goodwill as an asset and record expense only if the goodwill is impaired.* Using the data above, make these adjustments as appropriate, and compare the profitability of the three drug companies, comparing this information to your analysis in (a). (d) IFRS requires that development costs must be capitalized if technical and commercial feasibility of the resulting product has been established. Assume that Bayer recorded €1 million of development costs in the year reported above. Discuss briefly how this accounting affects your ability to compare the financial results of Bayer and Merck.
