Comparing Walmart Financial Statements under IFRS and GAAP

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Question
Prior to beginning work on this discussion forum, read Topic 6 International Accounting Standards in Appendix A in the course textbook, Using Financial Accounting. Next, review the Walmart Case Study.
Compare and contrast the differences in the Walmart financial statements if the company were to use International Financial Reporting Standards (IFRS) rather than Generally Accepted Accounting Principles (GAAP). Be sure to discuss specific accounting differences between the two.
Debate the pros and cons this would create for Walmart. Be sure to be specific and support any opinions.
Describe any legal or ethical challenges this convergence may create using the country you selected in prior courses.

Answer
1. Introduction
Globalisation is happening in the world, and the movement toward IFRS might seem like a natural evolution of U.S. accounting standards. However, IFRS is more principle-based while U.S. GAAP and has developed rules over time. IFRS is also more detailed and precise than IAS. The movement of IFRS might sound good for the global economy, but people do not like changes. It is evident that the U.S. will resist IFRS convergence until it has seen that the development of IFRS is successful and will benefit the U.S. economy. Until full convergence, there will be a long period where both standards are used domestically and internationally (Mala, 2010). This issue is important because Walmart operates globally, and will also affect accounting students, since most accounting students study U.S. GAAP and IFRS is not a main course yet.
Walmart is a US public multinational corporation, which operates a chain of discount department stores and warehouse stores. Walmart was incorporated in 1969 and trades publicly on the New York Stock Exchange. Walmart is the second largest public corporation according to the Fortune Global 500 list in 2013, the world’s largest give store retailer with over 2 million employees worldwide, and is the biggest private employer in the world. Walmart is a family-owned business and is the biggest grocery retailer in the United States. It has stores in more than 50 countries under 69 different banner names (Farfan, 2012).
1.1. Background information
After the accounting scandals in the early 2000s, the International Accounting Standards Board and the Financial Accounting Standards Board have attempted to work towards a unified set of accounting standards between the IAS/IFRS and the US GAAP. It is believed that one set of accounting standards will provide a greater degree of transparency of a company’s position. Throughout this paper, the accounting policies of Walmart are reviewed and the effects of the IFRS convergence on these are highlighted. I’ll also take a look at their financial statements taking note of any defined effects through changes in accounting policy or errors with relation to the Restatements provided. Walmart has faced continual issues over the years in regards to producing reliable financial statements. Between misrepresented amounts to errors in classes of inventory, Walmart has undergone several restatements of their financial statements communicated the need for a change in accounting policies to better represent them accurately. It has taken Walmart several restatements to understand the effect of changes in inventory levels. With the mistakes made it is clear that another guideline and/or standard would have helped Walmart in understanding and representing the effects of changes in inventory with relation to LIFO liquidations. This can be clearly seen with the changes in inventory levels from 2009 to 2010. By moving their operation towards Canada from the US, Walmart showed a drastic reduction in levels of inventory by over $1 billion. This had no effect on cost of sales when represented, when in actuality it must have been assumed that all inventory under previous acquisition cost was sold in Canada.
1.2. Purpose of the comparison
The purpose of this comparison is to assess the financial statements under IFRS and U.S. GAAP to determine whether there are economic consequences from reporting to investors, creditors, or other stakeholders. A high quality financial reporting system can build a basis for a capital market in a country and attract international capital to flow into that country, which in turn has a significant impact on the economic growth in that country. A major development in the world of financial reporting is the convergence of IFRS and U.S. GAAP. In 2001, the IASB and FASB agreed to work together, in mutual respect and in the best interest of investors and others, as a way to bring the two sets of standards closer. In February 2006, the IASB and FASB set forth a plan for convergence where projects would be undertaken but a revised standard in order for IFRS and U.S. GAAP to align, and potentially result in elimination of difference between the two standards for particular issues. This plan included many phases and continual assessment and monitoring from both boards. Although this was the case, in 2012, the SEC made an announcement that it would no longer provide a statement that indicates whether or not IFRS would be incorporated into U.S. capital markets. This was due to a number of reasons that include separate discussions on future reporting standards for US domestic issuers and the oversight and infrastructure funding of IFRS. A decision has yet to be made, however, the standard setting environment continues to evolve along with potential global acceptance of IFRS. For these reasons, Walmart was chosen as a company to compare financial statements. With many countries still having their own, in some cases unique set of accounting standards, companies engaging in international business or investments are faced with having to convert their financial statements into various standards. This can be an extremely complex process, inhibiting comparison of financial statements and in some cases misinterpretation due to language barriers and lack of understanding of a particular standard. As of the company’s 2011 annual report, Walmart has retail outlets in 15 different countries, each faced with a separate local standard and the potential for varying global acceptance of IFRS. It would be in these companies’ best interests to follow the developments in the standards environment and prepare for the potential adoption of IFRS. For this reason, these comparisons may, in fact, provide an understanding of what future changes may affect the way in which Walmart reports its financial position and performance.
2. Overview of International Financial Reporting Standards (IFRS)
2.1. Explanation of IFRS
2.2. Key principles of IFRS
3. Overview of Generally Accepted Accounting Principles (GAAP)
3.1. Explanation of GAAP
3.2. Key principles of GAAP
4. Comparison of Walmart Financial Statements under IFRS and GAAP
4.1. Income statement differences
4.1.1. Revenue recognition
4.1.2. Expense recognition
4.2. Balance sheet differences
4.2.1. Valuation of assets and liabilities
4.2.2. Treatment of intangible assets
4.3. Cash flow statement differences
4.3.1. Classification of cash flows
4.3.2. Treatment of interest and dividends
5. Pros of Walmart adopting IFRS
5.1. Enhanced comparability with global companies
5.2. Simplified financial reporting for multinational operations
5.3. Access to international capital markets
6. Cons of Walmart adopting IFRS
6.1. Costs of transitioning to IFRS
6.2. Potential loss of industry-specific guidance
6.3. Increased complexity in financial reporting
7. Legal challenges of convergence in the selected country
7.1. Impact on local laws and regulations
7.2. Compliance with international standards
7.3. Potential conflicts between IFRS and local laws

Concert Report: Instrument Era Genre Artists Composers and Personal Reflections

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Question
Write a 15 to 20-sentence report for the concert, focusing on the instrument, era, genre, artists, composers, and personal reflections.
Classic Rock:

Concert Details:
   – Instrument: Identify the primary instrument(s) featured in the concert.
   – Era: Determine the historical era or period the music represents.
   – Genre: Categorize the music into a specific genre (e.g., baroque, classical, jazz, pop, rock).
   – Artists: Note the names of performers, bands, or orchestras involved.
   – Composers: Identify the composers of the pieces performed.
Personal Reflections (20 sentences):
   – Initial Impressions: Describe your expectations before attending the concert.
   – Instrumental Mastery: Reflect on the technical skill of the performers and their mastery of the chosen instruments.
   – Emotional Impact: Discuss how the music made you feel emotionally. Did it evoke specific emotions or memories?
   – Historical Context: Explore any historical or cultural context relevant to the era or genre of the concert.
   – Favorite Moments: Highlight specific moments or pieces that stood out to you.

Answer
1. Instrument
The bassoon is one of the most unique and amusing looking instruments because of its long and thin shape. It may be played multiple ways, either being held horizontally or vertically, but there is no difference in sound or technique. It is a two-part instrument and is made of heavy wood. It’s probably the heaviest of all woodwind instruments. The bassoon is played with a double reed, so it is similar to the oboe but much more difficult to control. The double reed refers to two reeds tied together to form the instrument. This is supposedly a reference to a time when the bassoon was crafted from a single piece of wood and the player had to use their own double reed to make music. It has a wide range of sound and is used to play many different kinds of styles of music. Due to its complexity and difficulty, it has a very low chance of being played by a non-professional or a beginner musician. The instrument’s cost is average for an instrument, but it is still very expensive due to the maintenance of replacing and ordering reeds or any other replacement parts.
1.1. Key features of the instrument
The marimba is played with wooden, rubber, or yarn-wrapped mallets. The performer strikes the wooden keys, creating a bright, metallic sound that fades quickly. Other keyboard instruments (piano, celesta, harpsichord) share some similarities with the marimba, but none of these instruments’ mechanisms and materials produces the characteristically warm and percussive attack and sustain of the marimba. Keyboard percussion instruments are now more isolated in this category of sound generation. This idea is important to understand because it links the marimba to other keyboard percussion instruments, providing a future basis for marimba concerti and ensemble pieces. The marimba would not evolve into the exciting solo and ensemble instrument that it now is had its design and sound production not kept it largely isolated from the family of keyboard instruments.
1.2. Historical significance of the instrument
The historical significance of the harpsichord is mainly due to it being the main keyboard instrument in the Baroque period. It has been said that the sound of the harpsichord is the sound of the Baroque era. It evolved over a period of 150 years in response to changes in musical style and to the musical needs of composers. By the end of the Renaissance, the harpsichord had attained the shape in which it was to persist for about 200 years. Both France and Italy have played a large role in the history of the harpsichord. It is widely accepted that in the 15th century, the harpsichord had spread to many countries in Europe. Reaching a peak during the 17th century, especially in France, the harpsichord developed in terms of visual design, mechanical action, and sound quality. In France, two schools of construction exist: the Ruckers school and the Blanchet school. The Ruckers school produced intricate instruments featuring paintings or intricate inlay materials. However, such instruments may not play well from a musical perspective. Despite this intricacy, many Ruckers harpsichords were later converted into the plainer Blanchet design, demonstrating a musical emphasis during the later part of this period. In Italy, the harpsichord underwent mainly mechanical improvements. The most significant of the Italian builders were the Grimaldis, who developed an action which made it quick to play in contrast with the heavier sound of the French instrument. The harpsichord did not develop with the same success in England and Germany, both countries preferring the Clavichord and the Virginals. The harpsichord eventually became outdated in the late 18th century, being succeeded by the piano, although it has had a modern revival with interest in historically informed performance.
1.3. Notable performers of the instrument
Notable performers of the piano: It is far too difficult to encapsulate all of the world’s most famous pianists within one small list, given the monumental influence of the instrument. Many of the greatest composers themselves were pianists, so we have excluded them based on principal instrument to the composer’s title, i.e. F. Liszt would not be included as a pianist. We are left with no shortage of names no less. The Russian School of pianists has long been heralded as one of the most influential in history. From the incomparable audiences in artistry such as Sofronitsky and Richter, to the legendary teaching lineage from Goldenweiser to Neuhaus and Zak, pianists of Russian pedigree have wielded formidable prominence for close to a century. It is difficult to speak of great pianists without venerating Claudio Arrau, whose concert career spanned over eighty years. His recording of Beethoven’s ‘Hammerklavier’ sonata is still considered one of the most distinguished ever captured. Other notable pianists relevant to particular aspects of Beethoven interpretation include D’Albert, notable for his role in the Austro-German tradition and Schnabel whose recordings are seen as essential in appreciating the composer.
2. Era
2.1. Overview of the era
2.2. Key characteristics of the era’s music
2.3. Influential composers of the era
3. Genre
3.1. Definition and characteristics of the genre
3.2. Evolution of the genre over time
3.3. Notable works within the genre
4. Artists
4.1. Biographies of the performing artists
4.2. Previous notable performances by the artists
4.3. Awards and recognition received by the artists
5. Composers
5.1. Background information on the composers
5.2. Major works composed by the composers
5.3. Influence of the composers on the music industry
6. Personal Reflections
6.1. Overall impression of the concert
6.2. Emotional impact of the music performed
6.3. Memorable moments or performances during the concert