Air France, a French company, prepares its financial statements according to IFRS. AFs annual report for the year ended March 31, 2011, which includes financial statements and disclosure notes, provided with all new textbooks.

Required:

1) Read Notes 3.6 and 3.1. What do you think gave rise to total deferred income of 121 as of the end of fiscal 2011? Would transactions of this type be handled similarly under U. S. GAAP?

2) Is the threshold for recognizing a provision under IFRS different than it is under U.S. GAAP? Explain.

3)Note 29 lists provisions and retirement benefits.

A Do the beginning and ending balances of total provisions and retirement benefits shown in Note 29 for fiscal 2011 tie to the balance sheet? By how much has the total amount of AFs provisions and retirement benefits increased or decreased during fiscal 2011? (show work)

B Prepare JEs for the following changes in the litigation provision that occurred during fiscal 2011, assuming any amounts recorded on the income statement are recorded as provision expense, and any use of provisions is paid for in cash. In each case, provide a brief explanation of the event your JE is capturing.

I.New provision

II.Use of provision

III.Reversal of unnecessary provisions

C Is AFs treatment of litigation provision under IFRS similar to how it would be treated under U.S. GAAP?

4) Note 29.3 lists a number of contingent liabilities. Are amounts for those items recognized as a liability on AFs balance sheet? Explain.