Financial Statements Information for Starbucks Corporation - Case Study Example

Title of Paper Goes Here: Accounting APA Format Sixth Edition Student Name University СОNVЕRТING US GААР SТАТЕМЕNТ ТО IFRS Introduction Accounting and financial reporting follows certain principles, concepts, conventions, rules and procedures which underlie the measurement, treatment and reporting of financial accounting information. In United States, it is a requirement that business adhere to set rules and modalities commonly referred as Generally Accepted Accounting Principles (GAAP) when representing their financial statements (IFRS.com, 2016). The intended idea is to have businesses consistency and avoid misleading of information between companies in a manner that makes similar transactions to be reported a like (Ochoa, 2010). The GAAP approach enables precise and unbiased technique for determining profit and attaching worth on assets and liabilities. However, International Financial Reporting standards or IFRS offers another conventional of accounting principles advanced by International Accounting Standard Board (IASB) which has been adopted worldwide in preparing public company financial statements (IFRS.com, 2016). This assignment targets to explore these two methods of financial reporting. First we would consider financial statements information for Starbucks Corporation prepared using US GAAP method and use this data to formulate a comprehensive financial statements under the rule governing the International Financial Reporting Standards (IFRS). Background of Starbucks Corporation Starbucks is a service company operating in specialty eateries industry. It’s a household name known best for its specialty coffee worldwide with millions of customers being served every day at their more than 24,000 retail store across the world (Starbucks.com, 2016). The company dates back to 1971 when it opened its first shop in Seattle’s Pike Place Market and ever since living its mission of inspiring and nurturing human spirit as each customer enjoys their cup of coffee within their neighborhood. Financial statements (US GAAP) The following financial statements data for Starbucks were obtained from investors reports and key items included in our table below to allow comparison between US GAAP and IFRS (Starbucks.com, 2016). As verified, the total assets are equal to the total liabilities and shareholder equities. Source (Yahoo.com, 2016; Starbucks.com, 2016). Adjustments from US GAAP to IFRS There are notable important specific differences between the two methods, hence the need for adjustments to fit US GAAP into IFRG reporting. In adjustments the following journal entries were made: Source: (Gurufocus.com, 2016). Comparison of IFRS and US GAAP There are distinct differences between the two methods of accounting discussed here in reference to guidelines for managing revenue recognition. Generally IFRS is viewed to lean more on principles of accounting standards compared to the US GAAP which emphasizes on rules employed (PWC.com, 2015). Secondly, US GAAP is notably used in the United States while the IFRS methodology is utilized globally. The US GAAP guidelines focus on revenue that has been realized. It encompass a transaction exchange hence ought not to be recognized till an exchange transaction takes place. IFRS guideline captures revenue transactions within four broad classes that embrace; sale of goods, execution of services, yield of interest or royalties or construction contracts (Aharony, and Swary, 1981). Revenue realization conditions involve assumption on probability of economic benefit associated with transaction, will flow with revenue and cost can be measured reliably. It is also notable that IFRS does not authorize LIFO method, instead it utilizes single step-method aimed at impairments write down as opposed to the two steps methods in the US GAAP enabling write downs to be more probable (Altman and Kishore, 1999). IFRS also prohibit debt for which violation of covenant is experienced to be classified as non-current except in case of lender waiver being sought before balance sheet date. CONVERSION FROM US GAAP TO IFRS Source (Yahoo.com, 2016; Starbucks.com, 2016). Conclusion It was an insightful learning experience to understand how different methods of financial accounting can be used by a company in meeting its domestic and international obligations of financial statements reporting for purposes of taxation and listing on stock exchange. References Aharony, J. and I. Swary, (1981). Quarterly Dividends and Earnings Announcements and Stockholders' Returns: An Empirical Analysis, Journal of Finance, Vol 36, 1-12. Altman, E.I. and V.Kishore, (1999). The Default Experience of U.S. Bonds, Working Paper. Salomon Center. Sage Publishers. New York. Gurufocus.com (2016). Days Inventory. Retrieved from http://www.gurufocus.com/term/DaysInventory/SBUX/Days-Inventory/Starbucks-Corp IFRS.com (2016). IFRS Resources. Retrieved from http://www.ifrs.com/updates/aicpa/ifrs_faq.html#q1 Ochoa, O. (2010). Filling the "GAAP": Why Generally Accepted Accounting Principles Should Inform U.C.C. Article 9 Decisions. Texas Law Review, 89(1), 207-226. PWC.com (2015). IFRS and US GAAP: similarities and differences. Retrieved from www.pwc.com/us/en/cfodirect/assets/pdf/accounting-guides/pwc-ifrs-us-gaap-similarities-and-differences-2015.pdf Starbucks.com. (2016). Our Company. Retrieved from http://www.starbucks.ca/about- us/company-information Yahoo.com (2016). Finance. Retrieved from finance.yahoo.com/q/pr?s=SBUX+Profile Read More