Axe Corp.’s Balance Sheets Specificities

Subject: Case Studies
Pages: 1
Words: 276
Reading time:
2 min
Study level: College


AXE Corp (symbol AXEC) produces and sells electrical light bulbs in global retail markets. AXEC is a publically traded New York Stock Exchange (symbol NYSE) company founded in 1976 with headquarters in Denver, Colorado. The controller compiled two Balance Sheets, one made with the GAAP and the other with IFRS. The controller found some differences in key metrics. Consequently, the senior management requested a memo to explain the reasons for adjustments and the driver for the differences between the two Balance Sheets.

The accounting issue

The accounting issue involves multiple drivers. One is the difference in year beginning and end dates in LIFO Reserve. GAAP has stricter accounting rules for asset impairment. IFRS puts the FX gain/loss into the income/loss item category. Accounting standards have different meanings for the term probable in loss contingency. There are no extraordinary gains/losses in IRFS. One should look for numbers in the non-operating income (loss) and tax losses categories.

Reasons for adjustments

IFRS is an international accounting method. It is the future universal language of financial communication and reporting. Many countries already adopted the IFRS system. AXEC also needs to implement these standards to strengthen and advance in global markets.


Drivers of the accounting issue between the two Balances are several conceptual differences. These include the difference in year beginning and end dates in LIFO Reserve, accounting rules regarding asset impairment, FX gain/loss in IFRS, the concept of probable in GAAP and IFRS, and lack of extraordinary gains/losses in the latter. The adjustments are necessary to meet international standards and strengthen the company’s position in global markets. The controller would like to receive feedback from the senior management.

Work Cited

Harris, Peter, and Liz Washington Arnold. “US GAAP Conversion To IFRS: A Case Study Of The Balance Sheet.Journal of Business Case Studies (JBCS), vol. 9, no. 2, 2013. Web.