BRITISH AIRWAYS
C1. BA has an account entitled “sales in advance of carriage.” Explain the purpose of that account. Would transactions of this type be handled similarly under U.S. GAAP? What is the amount of “sales in advance of carriage,” as of December 31? How did the amount change from the prior year? Would transactions of this type be handled similarly under U.S. GAAP?

Passenger and cargo revenue is recognized when the transportation service is provided. Passenger tickets net of discounts are recorded as current liabilities in the ‘sales in advance of carriage’ account until recognized as revenue. Yes, this would be handled similarly under U.S. GAAP.

Amount 2013: 853 million euros 2012: 750 million euros

Yes, transactions would be similar under U.S. GAAP.

C2. Read the note for “provisions for liabilities and charges.”

a. Do the beginning and ending balances of total liabilities and charges shown in the note for the fiscal year tie to the balance sheet? By how much has the total amount of the BA’s “provisions for liabilities and charges” increased or decreased during the fiscal year? Is the threshold for recognizing a liability associated with these items any different under IFRS than it is under U.S. GAAP? Explain.

The balances do not match when you look at the note and balance sheet. It appears that the balance has increased. On the balance sheet there are three different types of provisions. Provisions for deferred tax for 721 and other provisions for 244. These are non-current liabilities. There are also short-term provisions for 292 under current liabilities. The total for all three of these provisions totals 1257. Also there is Employee benefit obligations for 238 under non-current liabilities. Under US GAAP these liabilities would be expense. However, under IFRS these are liabilities. b. Write journal entries for the