Professor’s Critique of DENNISWRIGHT’s submission: Excel worksheet: The column headers do not make sense.  You should be comparing quarter, to quarter, to quarter.  There are no formulas.  The total is just a hard coded number.  The point of an Excel file is to provide appropriate formulas.  The Balance Sheet is not in the correct order.  Current Assets come before Long Term Assets.  The next section should be current liabilities and then long term liabilities.  The equity section of the balance sheet should be last.  Your text has many examples.  The numbers in each cell are strange.  For example  "40 752".  There should not be a space in between 40 and  752.  There should either be a comma or the numbers should be close together.  This is a formatting issue.  Word Document: The first issue is that your paper has a 60% match to other material.  That means you used someone else's words.  The process used to appraise if segments need to be reported separately are the revenue test, the profit test, and the asset test.  Your text explains this criteria. The "Condensed Balance Sheet" chart in your paper is not necessary and is not needed.  It does not apply to any of the critical elements.  You provide some calculations that describe translation but the requirement was to provide and Excel file that actually translates financial statements.  There are examples in your text.  APA Format - your paper is not in APA format.  It must be double spaced, Times New Roman, 12 point font.  The paper should not be in an outline or bullet point form.  This is an academic paper.  You must provide 3 references and cite those references in the body of your paper indicating where you retrieved the information.  There are thousands of examples of APA papers on the internet.   Sheet1EARTHWAY ADInterim Financial Statements30 June 2016Interim Balance SheetNotes to the Interim Financial StatementsNotes30 June31 December30 June201620152015$’000$’000$’000AssetsNon-current assetsProperty, plant and equipment 28 96421 83819 101Investment property 1 1301 1701 214Investments in subsidiaries 388 693340 387185 909Investments in associates 45 67018 76718 052Intangible assets123247371Long-term financial assets 1 24519 51017 699Long-term receivables due from related parties 81 05272 465-Long-term receivables 13 49523 16812 674 560 372497 552255 020Current assetsInventories143155296Short-term receivables due from related parties 34 47622 74163 472Short-term financial assets 5 39411 7422 517Advance payments for purchase of financial instruments - 61 289-Loans granted 113 06276 1915 107Trade receivables 3 4604 1792 824Other receivables 24 02811 28316 104Cash and cash equivalents 85 65392 84530 455 266 216280 425120 775Total assets 826 588777 977375 795EquityShare capital150 000150 000130 000Share premium232 343232 34332 925Other reser.

1. Professor’s Critique of DENNISWRIGHT’s submission:
Excel worksheet:
The column headers do not make sense. You should be
comparing quarter, to quarter, to quarter. There are no
formulas. The total is just a hard coded number. The point of
an Excel file is to provide appropriate formulas. The Balance
Sheet is not in the correct order. Current Assets come before
Long Term Assets. The next section should be current
liabilities and then long term liabilities. The equity section of
the balance sheet should be last. Your text has many examples.
The numbers in each cell are strange. For example "40 752".
There should not be a space in between 40 and 752. There
should either be a comma or the numbers should be close
together. This is a formatting issue.
Word Document:
The first issue is that your paper has a 60% match to other
material. That means you used someone else's words. The
process used to appraise if segments need to be reported
separately are the revenue test, the profit test, and the asset test.
Your text explains this criteria. The "Condensed Balance
Sheet" chart in your paper is not necessary and is not needed. It
does not apply to any of the critical elements. You provide
some calculations that describe translation but the requirement
was to provide and Excel file that actually translates financial
statements. There are examples in your text.
APA Format - your paper is not in APA format. It must be
double spaced, Times New Roman, 12 point font. The paper
should not be in an outline or bullet point form. This is an
academic paper. You must provide 3 references and cite those
references in the body of your paper indicating where you
retrieved the information. There are thousands of examples of

2. APA papers on the internet.
Sheet1EARTHWAY ADInterim Financial Statements30 June
2016Interim Balance SheetNotes to the Interim Financial
StatementsNotes30 June31 December30
June201620152015$’000$’000$’000AssetsNon-current
assetsProperty, plant and equipment 28 96421 83819
101Investment property 1 1301 1701 214Investments in
subsidiaries 388 693340 387185 909Investments in
associates 45 67018 76718 052Intangible
assets123247371Long-term financial assets 1 24519
51017 699Long-term receivables due from related parties
81 05272 465-Long-term receivables 13 49523 16812 674
560 372497 552255 020Current
assetsInventories143155296Short-term receivables due from
related parties 34 47622 74163 472Short-term financial
assets 5 39411 7422 517Advance payments for purchase
of financial instruments - 61 289-Loans granted
113 06276 1915 107Trade receivables 3 4604 1792
824Other receivables 24 02811 28316 104Cash and cash
equivalents 85 65392 84530 455 266 216280 425120
775Total assets 826 588777 977375 795EquityShare
capital150 000150 000130 000Share premium232 343232 34332
925Other reserves6 7356 8347 119Retained earnings148 70866
22565 945Net profit for the period43 34682 48341 307Total
equity581 132537 885277 296LiabilitiesNon-current
liabilitiesLong-term trade liabilities-8642 470Long-term bank
loans--1 788Finance lease liabilities2 6993 7455 772Long-term
payables due to related parties177 295178 59727 235Deferred
tax liabilities--539179 994183 20637 804Current
liabilitiesShort-term payables due to related parties40 75212
40535 548Short-term bank loans3 63624 6809 137Loans
received4 3324 962-Trade payables7 8468 3673 102Finance
lease liabilities1 4881 6202 477Tax liabilities1
9485676Payables to employees and social security

3. institutions6158554Other liabilities5 3994 2279 87165 46256
88660 695Total liabilities245 456240 09298 499Total equity
and liabilities826 588777 977375 795Executive
director:__________________Date:
____________________General InformationEARTHWAY AD
was registered as a joint-stock company at NewYork city court
on 28 January 1999.The main activity of the Company includes
as follows:Acquisition, management and sale of shares in
Bulgarian and foreign companies;Financing of companies in
which interest is held;Banking services, finance, insurance and
life insurance, pension and health insurance;
&A
Page &P
1
Running Head: Milestone Two 4
Running Head: Milestone Two 1
Milestone Two
Name
Professor
ACC
November 28, 2016

4. B. Interim financial reports are prescribed in AS 25 and its
objective is to describe the minimal requirements of interim
financial reports and the principles of measurement and
recognition. Interim financial reports must include the notes to
accounting policies used, cash flow statements, profit and loss
statement and the company's balance sheet as well as an
additional explanatory materials of interest. In the notes to
interim reports, the following information should be included as
long as it has not been disclosed anywhere else:
· material events subsequent to the end interim period
· explanatory statements about the seasonality of interim
operations
· Issuances, repayments, buybacks and restructuring of equity,
debt and any potential equity shares.
· The nature and the amount of items that affect assets and the
liabilities of the company as well as the net income and cash
flow statements.
· In addition, it should disclose the material changes in the
contingent liabilities since the last time balance sheet date.
Interim financial statements stipulated guidance under GAAP
and IFRS
· The interim report is required to be fulfilled by an officer of
the company.

5. · The report committee should consist of up to six members,
directors of the company's
· Financial statements should be in compliance with the IFRS if
the complete set of financial statements is published in the
interim report
· If the financial statements were consolidated, the statements
should be Group financial statements.
· Interim report must have the most recent annual financial
statements
C. Hypothetical financial statement
Shown on the excel
D) Differences between the IFRS and the GAAP
GAAP
GAAP views interim periods as integral part of the annual
report period. The financial costs occurred in one accounting
interim period and affect other accounting periods can be
allocated between the affected accounting periods. GAAP
requires that accounting entities should use the world wide tax
rates when estimating taxes in preparing these reports.
IFRS
The guidance related interim reports under IFRS views each
interim period as discrete in reporting with the exception of
income taxes.
In IFRS, if there are costs shared by more than one period, the
regulations require that such costs should be defined at the end
of the reporting period and deferred the subsequent reporting
periods. It’s a cost, it would meet the basic definition of an
asset while if liabilities, they should be able to represent current
liability at the end of each reporting period.
The regulations requires that tax rates used should be unique for
each jurisdiction
E)
1. Companies identifies the segments which can be reported
after examining their structure and the systems of reporting
which they employ. Segmentation is usually based on the

6. products and services offered by the company or the location of
its assets. The reports prepared for the company's CEO and CFO
should be used as a basis for determining how segmentation
would be carried out.
2. Interim financial reports are supposed to reflect transparency
in presenting the financial position of the company.
Stakeholders must access complete financial information in
order to be able to evaluate the financial position of the
company and also monitor the performance of the company's
management. The main objective of standards of GAAP and
IFRS is to ensure that companies and other entities which are
accountable to the public are able to present the fair position of
the company's financial position for investors and other
stakeholders to make informed decisions. In this regard, the
regulations stipulates that organizations with different segments
must present the financial statements for each segment separate.
This is because the performance of each different business is
affected by unique factors. Hence, such financial reports which
segregate each segment present fair financial information can
enable the users of financial reports to predict the future
performance of the company accurately.
3. Corporates which have diversified interests must provide the
financial information for each segment so as to enable the
investors to make accurate and sound investments decisions
based on the financial performance of the company as a whole.
1. Foreign exchange rates effects
Basically, the performance of the company is affected in the
following ways:
· Exports: When a firm exports products and the sales proceeds
are to be realized at a specified date in the future, increase in
rates may increase the amount of proceeds while decrease would
lead to lower than agreed proceeds being received. Company's
tend to lock their loses through financial markets by entering
into futures contracts
· Exports: The prices of imports is affected significantly where

7. the company's base currency is not to be used in transactions. If
its value of base currency decreases compared to the value of
currency which would be used in making settlement, the
company gains while strengthening of the base currency against
the foreign currency leads to higher payments that agreed being
made by the company.
· In addition, expenses incurred by the company which have to
be settled in foreign currencies are affected in a similar manner.
· Investment risk: This may occur as a result of errors made in
forecasting the future technological changes and costs related to
foreign investments
· Default /Credit: The risk inherent to the company which may
occur as a result of decreased credit ratings of entities in which
the firm holds portfolio or to investors who hold portfolio in
foreign entities which suffer lower credit ratings and are in high
risk of default
· Financial risk: This is risk inherent due to uncertainties
associated with foreign currency exchange rates, liquidity
positions, credit ratings and interest rates which have an impact
on the financial performance of the firm.
· Interest rate risk: This is the risk inherent to a company as a
result of changes in interest rates. Increase in interest rates
would affected the performance negatively while decrease in
interest rates would have positive impact on the performance of
the company.
· Political risk: This is risk inherent to a company which may
occur as a result of political turbulence in foreign owned
segments. For instance, government revolutions and coup d’état.
· Foreign exchange rates risk: This is risk of losses due to
adverse movements in foreign exchange rates for all financial
instruments held in foreign currencies.
· Market risk: It refers to the daily fluctuations of the stock
market prices which are influenced by many factors pointing to
the performance of the firm as perceived by investors.
2. Translation methods
· Currency rate method

8. This method is used when the local currency is being translated
is the same as the foreign currency
· Temporal rate method
It is used when there the local currency is different from the
foreign currency.
3.
Hypothetical example: Suppose that Walmart has a subsidiary in
South Africa. Walmart is an American chain stores firm and its
subsidiary store in South Africa reported the following balance
sheet numbers: Numbers are reported in Local currency (South
African Rand)
Current assets 500,000.
Fixed assets = 3100000
Total assets = 3600000
Current liabilities = 200000
Long term debt = 1400000
Equity = 2000000
Total liability and equity = 3600000
Here, the USD/Rand is used to translate the items in the
balance sheet to USD using the current exchange rate which is 1
South Africa rand = $0.07. However, the equity items are
translated using the rates which are applicable during the time
the equity was issued. Assuming at the issuance date the
exchange rates were 1South African Rand = $0.06, the
cumulative balances will be shown as the cumulative
translation adjustment.
Now, the balance sheet items in USD will be shown as:
So, current assets in USD will be 500,000*0.07 = $35,000.
Fixed assets = 3,100,000*0.07 = $217,000.
Total assets = $252,000.
Current liability 200,000*0.07 = $14,000.
Long term debt = 1,400,000*0.07 = $98,000.
Equity 2000, 000*0.06 = $120,000.
Total liability and equity = $232,000
Difference = 252,000 - 232,000
= $20,000 (assets – liabilities) is the CTA and it’s shown as

9. such in the balance sheet
Temporal rate of translation
When using this method, the exchange rates at the time of
acquisition of assets and liabilities are used.
The exchange rate used is the current exchange rates for the
current assets, while for fixed assets, the historical exchange
rates are used. The exchange rate at the time when equity was
issued is used.
References
Doran, D. (2012). Financial reporting standards (1st ed.). [New
York, N.Y.] (222 East 46th Street, New York, NY 10017):
Business Expert Press.
FASB/IASB Joint Transition Resource Group for Revenue
Recognition. (2016). Fasb.org. Retrieved 2 December 2016,
from
http://www.fasb.org/jsp/FASB/Page/LandingPage&cid=1176164
065747
IAS 25
Interim Financial Reporting. (2016). Iasplus.com. Retrieved 2
December 2016, from
http://www.iasplus.com/en/standards/ias/ias34
IFRS and US GAAP: similarities and differences — 2016
edition. (2016). PwC. Retrieved 2 December 2016, from

10. http://www.pwc.com/us/en/cfodirect/publications/accounting-
guides/ifrs-and-us-gaap-similarities-and-differences.html
Saudagaran, S. (2001). International accounting (1st ed.).
Cincinnati, Ohio: South-Western College Pub.
.
Prompt: In Milestone Two, you will submit a report as well as
the necessary spreadsheets for Section II (Parts B–F) of the
final project. You will discuss interim reporting requirements
under generally accepted accounting principles (GAAP) and
international financial reporting standards (IFRS), as well as
provide an example financial statement illustrating what the
interim report should entail. You will also discuss reporting
requirements for business segments and discuss transparency in
financial reporting. Lastly, you will consider the company’s
potential international business deals, such as the impact of
foreign exchange rates and the methods for translating financial
statements. You will also create a hypothetical example
demonstrating the translation process, using the two methods, to
submit with your paper.
Specifically, the following critical elements must be addressed:
II. Corporation: The company is also considering structuring its
business as a corporation, but is aware that there are a lot of
complex issues to consider when accounting for an incorporated
entity. The company is concerned about the following key areas:
B. What interim reporting requirements would the company
have as a corporation? Describe the guidance related to interim
financial statements under GAAP and IFRS.
C. Generate a hypothetical financial statement illustrating what

11. that interim reporting entails. Ensure all information is entered
accurately.
D. Determine if the interim reporting requirements are the same
under GAAP and IFRS. Provide an example to support your
response.
E. The company also heard that they may have to report some of
their business segments separately if they opt to incorporate.
1. Appraise one of the processes used to identify which
segments would have to be reported separately. Provide
examples to support your response.
2. How is this process effective in supporting transparency in
financial reporting? Defend your response.
3. Provide suggestions to improve this process in an effort to
sustain transparency. Defend your rationale. F. When
incorporating, it is important to consider whether or not the
company’s business deals internationally.
1. Summarize the impact of foreign exchange rates on the
company’s financial statements. What risks do foreign exchange
rates pose?
2. What are the two methods used to translate financial
statements and how does the functional currency play a role in
determining which method is used?
3. Compose a hypothetical example to demonstrate the
translation process using thetwo methods. Ensure all
information is entered accurately.
Guidelines for Submission: Your report must be submitted as a
2- to 3-page Microsoft Word document with double spacing, 12-
point Times New Roman font, one-inch margins, and at least
two sources (in addition to your textbook) cited in APA format.
Your accompanying spreadsheets must be submitted as
Microsoft Excel files.
Critical Elements

12. Proficient (100%)
Needs Improvement (75%)
Not Evident (0%)
Value
Corporation: Interim Reporting
Describes the interim reporting requirements the company
would have as a corporation and the guidance related to interim
financial statements under GAAP and IFRS
Describes the interim reporting requirements the company
would have as a corporation but does not describe the guidance
related to interim financial statements under GAAP and IFRS,
or description is cursory or has inaccuracies
Does not describe the interim reporting requirements
10
Corporation:
Financial
Statement
Generates a hypothetical financial statement illustrating what
the interim reporting entails and ensures all information is
entered accurately
Generates a hypothetical financial statement illustrating what
the interim reporting entails, but there are inaccuracies
Does not generate a hypothetical financial statement
10
Corporation: GAAP and IFRS
Determines if the interim reporting requirements are the same
under GAAP and IFRS and provides an example to support
response
Determines if the interim reporting requirements are the same
under GAAP and IFRS but example provided does not support
response, or does not provide an example
Does not determine if the interim reporting requirements are the
same under GAAP and IFRS
10
Corporation: Segments
Appraises one of the processes used to identify which segments

13. would have to be reported separately and provides examples to
support response
Appraises one of the processes used to identify which segments
would have to be reported separately but does not provide
examples to support response, or appraisal
is cursory or has inaccuracies
Does not appraise one of the processes
10
Corporation: Transparency
Evaluates the effectiveness of the process in supporting
transparency in financial reporting and defends response
Evaluates the effectiveness of the process in supporting
transparency in financial reporting but does not defend
response, or defense is weak or illogical
Does not evaluate the effectiveness of the process in supporting
transparency in financial reporting
10
Corporation:
Suggestions to Improve
Provides suggestions to improve the process and defends
rationale
Provides suggestions to improve the process but does not defend
rationale, or
defense is weak or illogical
Does not provide suggestions to improve the process
10
Corporation: Impact
Summarizes the impact of foreign exchange rates on the
financial statements and determines the risks they pose
Summarizes the impact of foreign exchange rates on the
financial statements but does not determine the risks they pose,
or summary is cursory or has inaccuracies
Does not summarize the impact of foreign exchange rates on the
financial statements
10
Corporation: Two Methods

14. Describes the two methods used to translate financial statements
and how the functional currency plays a role in determining
which is used
Describes the two methods used to translate financial statements
but does not describe how the functional currency plays a role
in determining which is used, or description is cursory or has
inaccuracies
Does not describe the two methods of translation
10
Corporation: Translation Process
Composes a hypothetical example demonstrating the translation
process using the two methods and ensures all information is
entered accurately
Composes a hypothetical example demonstrating the translation
process using the two methods but example contains
inaccuracies
Does not compose a hypothetical example
10
Articulation of Response
Submission has no major errors related to citations, grammar,
spelling, syntax, or organization
Submission has major errors related to citations, grammar,
spelling, syntax, or organization that negatively impact
readability and articulation of main ideas
Submission has critical errors related to citations, grammar,
spelling, syntax, or organization that prevent understanding of
ideas
10
Total
100%