Air France-KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards.

AF's financial statements and disclosure notes for the year ended December 31, 2017, are available in Connect. This material is also available

under the Finance link at the company's website (www.airfranceklm.com).

Required:

1. Read Notes 4.6 and the Consolidated Balance Sheet. What do you think gave rise to deferred revenue on ticket sales of 2,889 as of the end

of fiscal 2017? Would transactions of this type be handled similarly under U.S. GAAP?

2. Is the threshold for recognizing a provision under IFS different than it is under U.S. GAP? Explain.

3. Note 31 lists "other provisions.

a. Do the beginning and ending balances of other provisions shown in Note 31 for fiscal 2017 tie to the balance sheet? By how much has

the total amount of the AF's "other provisions" increased or decreased during fiscal 2017?

b. Prepare journal entries for the following changes in the litigation provision that occurred during fiscal 2017, assuming any amounts

recorded on the income statement are recorded as "provision expense, and any use of provision is paid for in cash. In each case, provide

a brief explanation of the event your journal entry is capturing.

i. New provision

il. Use of provision

c. Is AF's treatment of its litigation provision under IFS similar to how it would be treated under U.S. GAAP?

5.8.1 Income statement and balance sheet Income statement Notes 2017 2016 3 40 31 4 (40) (39) 5 (4) (2) (1) (1) (45) (42) Year ending December 31, On millions Operating income External expenses Salaries and related costs Other expenses Total operating expenses Income from current operations Financial income Financial expenses Net financial income Earnings before tax and non-recurring items Non-recurring income Non-recurring expenses Non-recurring income/(loss) (5) (11) 75 33 (136) (195) 6 (61) (162) (66) (173) 30 74 (30) (73) 7 1 8 00 36 11 Income tax Not Income/class) (50) (161)