Audi vs Ford Financial statements comparison

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Ford vs. Audi Group Financial Statements:

Presented By: Jonathon Rakosky Scott Knudsen Daniel Thu Jay Suh Ford vs. Audi Group Financial Statements

Outline:

Outline Management Report -- Jonathon Balance Sheet -- Daniel and Scott Audit Report -- Jay

Management Report:

Management Report

Audi Group Management Report:

Audi Group Management Report Includes Business Strategy Economic Situation Financial Performance Indicators Social Aspects Risk, Opportunity and Outlook Disclaimers

Audi Group Management Report:

Audi Group Management Report Shares Economy Audi Group Shares Audi Group Shares vs. Economy Economic Environment Car Market German Car Market Audi Group Sales

Audi Group Management Report:

Audi Group Management Report Financial Performance Indicator Revenue Main Source Sales Balance Sheet Increase PPE

Audi Group Management Report:

Audi Group Management Report Risk Types Internal Control preventative measures Opportunity Economic State Social Trends Outlooks Anticipated Financial Performance Planned Investments

Management Report Pros and Cons:

Management Report Pros and Cons Pros Positive Affect on Financial Statement Information about sustainability Cons Accuracy No Standard for Comparability

Balance Sheet - Format :

Balance Sheet - Format Format - IFRS Assets and Liabilities Required current & non-current classification Listed in increasing order of liquidity Format – U.S. GAAP Assets and Liabilities Not required current and non-current classification Present as Total Assets and Total Liabilities Decreasing order of liquidity

Balance Sheet - Format:

Balance Sheet - Format Audi (IFRS) vs. Ford (GAAP) comparison Current & Non-current classification can deliver extra details

Balance Sheet - PPE:

Balance Sheet - PPE Property, Plant and Equipment IFRS Tangible assets held for use in production of goods and services and expected to be used for more than one reporting period U.S. GAAP Does not have a comprehensive standard that addresses long-lived assets

Balance Sheet - PPE:

Balance Sheet - PPE IFRS (option to choose one of two models) Asset Class Land & building, machinery, aircraft, ship, etc. Cost Model Historical cost - accumulated depreciation - accumulated impairment loss Revaluation Model Fair value at the date of evaluation - accumulated depreciation - accumulated impairment losses

Balance Sheet - PPE:

Balance Sheet - PPE U.S. GAAP Cost Model Historical cost - accumulated depreciation - accumulated impairment loss Revaluation Model Not Allowed

Balance Sheet - PPE:

Balance Sheet - PPE Depreciation Method IFRS Componentization required U.S. GAAP Componentization not required Capitalized as one asset

Balance Sheet - PPE:

Balance Sheet - PPE Componentization (IAS 16) Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately Also known as component depreciation Example – Building Significant Components Air-conditioning system Electrical system Roof

Balance Sheet - PPE:

Balance Sheet - PPE Group together and depreciate if: Components of the same item have similar lives in usage patterns The remaining parts Grouping process and useful life expectations Based on professional judgment

Balance Sheet - IP:

Balance Sheet - IP Investment Property IFRS (IAS 40) Land or building or part of a building or both, held by the owner or lessee under a finance lease to earn rentals, capital appreciation, or both Examples Land held for capital gain Land held for undetermined future use Building leased out under operating lease U.S. GAAP Does not exist

Balance Sheet - IP:

Balance Sheet - IP Investment Property IFRS Property held by a lessee under the operating lease may be classified as investment property Use fair value model for asset recognition U.S. GAAP Accounted under net property Separate operating lease category

Balance Sheet:

Balance Sheet Audi (IFRS) Ford (GAAP)

Balance Sheet:

Balance Sheet IFRS More detailed classifications More comprehensive definitions More sophisticated calculation More professional judgment Fair value accounting

Inventory:

Inventory IFRS Account on balance sheet is 4,377,000,000 euros Valued at lower of cost or net realizable value according to IAS 2 Has an impairment loss of 65-million euros U.S. GAAP Account on balance sheet is $ 5,900,000,000 Valued at lower of cost or market according to FAS 151 32% is valued with LIFO basis while the remaining amount was determined by a FIFO basis

Deferred Tax Asset:

Deferred Tax Asset IFRS 1,800,000,000 euro account on balance sheet Only recognized if it is considered more likely than not that the company will have sufficient taxable profits to utilize the temporary differences or unused tax losses No valuation allowance allowed under IAS 12 U.S. GAAP $ 14 billion in deferred tax assets for its 2011 balance sheet According to FAS 96, deferred tax assets are recognized in full in the year occurred Can be reduced by a valuation allowance for the amount that will not be realized

Actuarial Loss:

Actuarial Loss IFRS Loss of 143-million euros on its Statement of Recognized Income and Expense Under IAS 19, gains and losses from actuaries may be recognized immediately in profit or loss, recognized on a smooth basis in profit or loss, or recognized immediately in the statement of recognized income and expense U.S. GAAP Loss of over $2.8 billion FAS 158 dictates that it is to be amortized to pension expense over the expected term of plan participants to the extent that defined corridor is exceeded

Development Costs:

Development Costs IFRS Capitalization resulting in over 600-million euros Under IAS 38, development costs may be capitalized if tests are met U.S. GAAP Research and development costs of $5.3 million GAAP believes that the future economic benefits of these costs are uncertain

Differences in regulations:

Differences in regulations

Responsibility Statement of Audi:

Responsibility Statement of Audi Acknowledges the fair presentation of the financial statements Signed by the seven member board of management Directly conveys assurance and confidence to investors Absent in Ford’s annual report

Risk Management of Audi:

Risk Management of Audi

Risk Management of Ford:

Risk Management of Ford Internal control Management is responsible under Exchange Act Rule 13a-15(f) Effectiveness Brief and concise Quantitative and qualitative disclosures Market risk One-dimensional

Auditor’s Report:

Auditor’s Report

Compliance Report of Audi:

Compliance Report of Audi Informs investors about the significance of compliance Tasks of compliance officers Priorities of the company Investors would gain confidence

Our preference:

Our preference

References:

References —Audi: Annual report 2011. (2011). Retrieved from http://www.audi.com/etc/medialib/ngw/company/investor_relations/pdf/finanzberichte/geschaeftsberichte5.Par.0015.File.pdf/jahresfinanzbericht.pdf COSO ( n.d .). aboutus . Committee of Sponsoring Organizations . Retrieved December 25, 2012, from http://www.coso.org/aboutus.htm Doost , R. K. ( n.d .). Business Readings. Cengage Learning . Retrieved December 28, 2012, from http://college.cengage.com/accounting/resources/students/readings/38-doost.html —Ford Motors Company: Annual report 2011. (2011). Retrieved from http://corporate.ford.com/doc/2011_annual_report.pdf —

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