Abstract
This case uses Ford Motor Company’s decision to separately report the performance of its electric vehicle (EV) business, Ford Model e, as a setting for exploring research and development (R&D) accounting under both U.S. GAAP and International Financial Reporting Standards (IFRS). Students are asked to analyze Ford’s approach to fully expensing R&D under U.S. GAAP in comparison to that of international competitors who capitalize development costs under IFRS, and to consider the implications of these different treatments. The case also touches on segment reporting by exploring the strategic considerations behind Ford’s decision to highlight its EV business.
Learning Objective
To surface an important difference between U.S. GAAP and IFRS: the treatment of development costs.
Appropriate for the Following Course(s)
financial accounting
Teaching Note and Supplemental Materials*
*TEACHING NOTES AND SUPPLEMENTAL MATERIALS ARE ONLY AVAILABLE TO EDUCATORS WHO HOLD TEACHING POSITIONS AT ACADEMIC INSTITUTIONS.