Case 4-1 Jaguar Land Rover PLC Jaguar Land Rover Automotive PLC (JLR) is a maker of luxury autos based in Coventry, United Kingdom. JLR uses IFRS and has a fiscal year-end of March 31. You have been asked to use your knowledge of IFRS to convert key metrics for the company to a U.S. GAAP basis. For simplicity, you may assume that the only material differences between JLRs as-reported numbers and those it would report under U.S. GAAP are traceable to its policy of capitalizing development costs.

What percentage of R&D expenditures was capitalized during the fiscal year ending March 31, 2017? How does this percentage compare with the capitalization ratios of the German automakers profiled in Exhibit 4.4? Estimate the average useful life of product development costs by dividing average capitalized product development costs by the amortization expense for fiscal 20162017. Compute average capitalized product development costs as simple average balances at the beginning and end of each fiscal year. Does your estimate fall within the range of the useful lives for development costs disclosed in the accounting policy footnote? The table below contains metrics as reported in JLRs three primary financial statements. Convert these metrics to a U.S. GAAP basis. Where necessary assume that JLRs tax rate is 21.1 percent, a rate disclosed in Footnote 14, Taxation.