British Airways Case

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Group A WS3 British Airways Case Clarence Allen, Beverly Baldazo, Bobby Cates, Robert Daniel, Brittany O’sullivan Indiana Wesleyan University Core Group BSA068 ACC-312 Interm Financial Accounting II Jennifer Gaddy: Instructor December 1, 2011 We have read and understand the plagiarism policy as outlined in the syllabus and the sections in the Student Bulletin relating to the IWU Honesty/Cheating Policy. By affixing this statement to the title page of my paper, we certify that we have not cheated or plagiarized in the process of completing this assignment. If it is found that cheating and/or plagiarism did take place in the writing of this paper, we understand the possible consequences of the act/s, which could include expulsion from Indiana Wesleyan University Requirement 1 Per Note 2, this is an unearned revenue account, and treated as a current liability. This treatment is consistent with U.S. GAAP, as it captures circumstances where BA has sold a ticket but not yet delivered it. Per note 26, BA has £769 million of “sales in advance of carriage” as of March 31, 2009. Requirement 2 Under both U.S. GAAP and IFRS, liabilities associated with a past event are recorded when the obligation is probable and the amount of the obligation can be reliably estimated. However, IFRS defines “probable” as “more likely than not,” which is a lower threshold than is typically applied under U.S. GAAP, so BA is more likely to recognize a liability under IFRS than it would under U.S. GAAP. Also, under IFRS BA is more likely to discount the liability (recording it at present value) than it would under U.S. GAAP, so, given that a liability is recognized, the amount of liability that is recognized may be lower under IFRS than under U.S. GAAP. Per note 30, the total amount of “provisions for liabilities and charges” increased from £380 million to £438

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