Ifrs Mattel V Lego – Basic
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Introduction
Mattel Incorporated is a toy company that is headquartered in El Segundo, California in the United States. Some of its popular products include Barbie, Hot Wheels, and Fisher Price. Although it is a domestic company, it has subsidiaries in South America, Europe, and Asia. One of its major competitors is The LEGO Group. This family-owned company is headquartered in Billund, Denmark. Its popular products are the LEGO branded toys, which are small plastic construction bricks that can be made to any persons imagination. Both companies are in the toy industry, however they report their financial statements with different standards. For this paper, the 2010 annual reports of Mattel Inc., and LEGO will be used.

Accounting Principles
As a domestic and publicly traded company on the NASDAQ (MAT), Mattel Inc. reports its financial statements in accordance with United States Generally Accepted Accounting Principles (US GAAP). However, the private company, LEGO, reports its financial statements in accordance with International Financial Reporting Standards (IFRS). Mattel Inc. reports in the US dollar currency, whereas LEGO reports in its functional currency of the Danish kroner (DKK). Another principle that both companies differ on is the treatment of intangible assets. For Mattel Inc., it tests its nonamortizable intangible assets on an annual basis in the third quarter, and the fair value of these assets reflect the savings realized by owning these intangible assets. For LEGO, its acquired licenses, patents, and other rights are amortized on the basis of costs incurred. In addition, US GAAP does not allow Mattel Inc. to recognize gains and losses on noncurrent assets, but IFRS does allow LEGO to recognize these gains and losses, according to IAS 16. Finally, Mattel Inc. and LEGO differ in the treatment of developmental costs. Mattel Inc. must expense this cost, whereas LEGO can capitalize it if these costs are defined, identifiable, and will generate future economic profit.

Although there are these differences, it does share similarities as well. One example is that both companies treat its plant, property, and equipment (PPE) the same; they are both measured at cost. If LEGO had wanted to, it could measure its PPE at a revalued amount, according to IAS 16.

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Ifrs Mattel V Lego And Annual Reports Of Mattel Inc.. (July 21, 2021). Retrieved from https://www.freeessays.education/ifrs-mattel-v-lego-and-annual-reports-of-mattel-inc-essay/