Issues and solutions for the retail and consumer goods industries

Approximately 120 countries currently permit or require IFRS for domestic-listed companies; 90 have fully conformed with IFRS. As momentum for a global standard gathers speed, it's more important than ever for retail and consumer goods companies to be familiar with the sometimes significant differences between IFRS and US GAAP.

This report discusses 46 accounting topics common to retail and consumer companies. Issues covered range from those related to R&D all the way through to sales to the end customer. Each discussion provides background, accounting guidance, a solution and a comparison between US GAAP and IFRS.

Some of the issues covered include:

  • Development costs
  • Up-front fees
  • Coupons
  • Trade loading
  • Impairment of stores to be closed
  • Discount coupons
  • Customer loyalty programmes

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This section covers the issues, relevant guidance and solutions related to development costs, brands and CGUs, useful life of brands, up-front fees, sales to a franchisee and franchise arrangements.

This section covers issues, relevant guidance and solutions related to advertising costs, point-of-sale advertising, coupons and marketing expenses at interim periods.

This section covers issues, relevant guidance and solutions related to trade loading, buy one get one free, close-out fees, pallet allowances, integrated value partner agreement, co-advertising services, retail markdown compensation, scan deals, provision for returns from wholesalers/resellers, slotting and listing fees and excise tax.

This section covers issues, relevant guidance and solutions related to shrinkage and warehouse costs.

This section covers issues, relevant guidance and solutions related to rent-free periods, treatment of lease advance payments, key money, contingent rental payments, impairment of stores to be closed, determining CGUs for multi-site retailers, flagship stores, cash flows relating to Internet-based sales, allocation of rebates to CGUs, pre-opening costs, make-good provisions, properties with mixed use-sub-letting of retail space, and favourable and unfavourable lease contracts in a business combination.

This section covers issues, relevant guidance and solutions related to distributor acting as an agent, right of return in exchange for cash, discount coupons, revenue from sale of gift vouchers, customer loyalty programmes, exceptions to point-of-sale advertising, extended warranties and credit card fees.

This section covers issues, relevant guidance and solutions related to retail inventory method and accounting for inventories in a business combination.


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