Codification Exercise Essay

Custom Student Mr. Teacher ENG 1001-04 2 June 2016

Codification Exercise

In this code the FASB explains the criteria for the treatment as Stock Dividend or stock split as other forms that will be explained further.

Stock Dividend in Form: Section 25-2 explains that the number of additional shares issued as stock dividend may impact the the market price. So the company will make a stock Split.

When the company dividends does not pass 20 or 25 percent of the number of previously outstanding shares would call for treatment as stock dividend.

he corporation’s representations to its shareholders as to the nature of the issuance is one of the principal considerations in determining whether it shall be recorded as a stock dividend or a stock split. Nevertheless, the issuance of new shares in ratios of less than 20 or 25 percent of the previously outstanding shares, or the frequent recurrence of issuances of shares, would destroy the presumption that transactions represented to be stock splits shall be recorded as stock splits.

Retrived From:

A/ASC 908-360-25 Airframe Modifications

As for this code FASB explains that plant and equipment as airframe modifications in aircrafts that enhance the use of the aircraft should be capitalized. It also explains overhaul cost and how air carriers shall adopt accounting methods that will help them recognize overhaul expenses in the appropriate period.

Accounting methods permitted:

1-Direct expensing method
2-The built in averhaul method
3-The deferral method

This code is for 908 Airlines, 360 Property, Plant and Equipment, 25 Recognition

Exercise 11

11. The financial reporting issues facing Mexico are different in some respects from those of other countries covered in this chapter.

Provide two main reasons to support the above statement.

A/ Mexico has some different accounting issues because I think that when US bail out Mexico from their debt they adopted a more reliable accounting method. They had to open their financials and become more transparent with their financials.

We can also see how there is a difference in the definition of an associate from both a IFRS and Mexican GAAP point of view. This can make American investor take careful measures when thinking in investment in that country.

Preoperating and setup cost also make a big difference because irfs indicates you have to charge the expenses when incurred and the Mexican Gaap lets you capitalize them.

Differences in financial reporting:

Exercise 14

14. The NAFTA agreement has had a major impact on accounting and financial reporting by Mexican companies.

Discuss the nature of the impact referred to in the preceding statement.

Mexico is part of the NAFTA and is a very important player for because 80 percent of mexico is to the united states. It very clear that with a low cost of labor and the proximity to the US, we should build manufacturing plants rather that outsourcing to China.

But this created a clear interrogation for international investors. Even though that mexico has its own Mexican gaap, and that they are part of the NAFTA. They are still very conservative by the way they raise capital. In mexico the culture still has predominance in the way business raise capital. Normally they prefer debt rather that equity thru investors.

As we know mexico realize 80 percent of their exports to USA making this a crucial issue for the companies in both countries.

The NBSC is the most important federal agency that oversees information dis- closure by publicly owned companies in Mexico. It is a semi-independent entity within the Ministry of Finance that administers Mexico’s securities law and regu- lates the operation of securities markets. The current Mexican Securities Law was enacted in 1975, with some amendments introduced in 1993, mainly to accommo- date the foreign investment requirements under NAFTA

Retrieved from:

Perera, D. &. (2012). International Accounting [VitalSouce bookshelf version]. Retrieved from

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  • Date: 2 June 2016

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