SUPERVALU INC., a large US retail grocer, had $36.1 billion in sales for its fiscal year ended February 25, 2011. SUPERVALU currently reports using US GAAP. The controller of SUPERVALU INC. has expressed an interest in understanding the differences between US GAAP and IFRS and the possible impact of converting to IFRS as it relates to revenue recognition.

The approach the controller recommended is to compare SUPERVALU's revenue recognition accounting policies to three similar companies, one reporting under US GAAP (Safeway) and two reporting under IFRS (Ahold and Loblaw Companies). Safeway, based in the US, had sales of $43.6 billion during fiscal year ending December 31, 2011. Ahold, based in the Netherlands, operates retail food stores and had sales of €30.3 billion for its fiscal year ended January 1, 2012 (its 2011 fiscal year). Loblaw Companies Ltd. is Canada's largest food distributor and a leading provider of drugstore, general merchandise and financial products and services. Loblaw had sales of $31.3 billion Cdn. for the 52 weeks ended December 31, 2011.

Additionally, knowing that major changes to US GAAP are coming soon, the controller is also worried about the impact that the proposed revenue recognition and leasing standards will have on its financial reporting.

Required

• For each of the 4 companies, obtain and review the accounting policies and disclosures for the following areas from the SEC filings and annual reports:
• Revenue recognition
• Properties (including disclosures outside of the financial reports) and leases

1. The filings and annual reports are attached.
2. Please answer the following questions to help the SUPERVALU controller in his analysis.

QUESTION 1

Compare the US GAAP revenue recognition policies and disclosures contained in the SUPERVALU and Safeway financial statements. Identify similarities and differences in revenue recognition policies, disclosure content, and style.

QUESTION 2

Compare the IFRS revenue recognition policies and disclosures contained in the Ahold and Loblaw Companies Group financial statements. Identify similarities and differences in revenue recognition policies, disclosure content, and style.  

QUESTION 3

Compare the US GAAP policies and disclosures to the IFRS policies and disclosures. Identify similarities and differences in revenue recognition policies, disclosure content, and style.  

QUESTION 4

Identify a list of matters for consideration that may result in changes in SUPERVALU's accounting policies under the existing revenue recognition guidance if they switch to IFRS. Discuss any potential challenges of adopting IFRS for revenue recognition.

QUESTION 5

Overall, what are some of the issues that SUPERVALU will need to consider regarding the proposed revenue recognition standard. Do you expect that the new standard will have a significant effect on the amounts and timing of SUPERVALU's revenue recognition? Given the business model of each of the 4 grocery chains, would you expect that the effects would differ across the 4 companies?

QUESTION 6

What are some of the issues that SUPERVALU will need to consider regarding the proposed leasing standard? Do you expect that the new standard will have a significant effect on SUPERVALU's financial reporting? Do you expect that the new standard will have a significant effect on SUPERVALU's property management strategy? Given the way each of the individual grocery chains structures its property holdings and leases, would you expect that the effects would differ across the 4 companies?