EBK FINANCIAL ACCOUNTING THEORY AND ANA
12th Edition
ISBN: 9781119299646
Author: CATHEY
Publisher: JOHN WILEY+SONS,INC.-CONSIGNMENT
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Question
Chapter 1, Problem 1.2C
a.
To determine
Introduction: Financial Accounting Standard Board (FASB) is the board which is responsible for setting accounting standards that are published as GAAP. The GAPP helps the
The ethical issues, if involved.
b.
To determine
Introduction: Financial Accounting Standard Board (FASB) is the board which is responsible for setting accounting standards that are published as GAAP. The GAPP helps the financial managers in preparation and reporting of financial information.
Whether the financial vice president’s act is improper or immoral.
c.
To determine
Introduction: Financial Accounting Standard Board (FASB) is the board which is responsible for setting accounting standards that are published as GAAP. The GAPP helps the financial managers in preparation and reporting of financial information.
To discuss: The reason behind the eagerness of early implementation of new standards shown by Person H.
d.
To determine
Introduction: Financial Accounting Standard Board (FASB) is the board which is responsible for setting accounting standards that are published as GAAP. The GAPP helps the financial managers in preparation and reporting of financial information.
The persons who will be affected by non early implementation of the new standards.
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ETHICS (Rule-Making Issues) When the FASB issues new pronouncements, the implementation date is usually12 months from date of issuance, with early implementation encouraged. Karen Weller, controller, discusses with her financialvice president the need for early implementation of a rule that would result in a fairer presentation of the company’s financialcondition and earnings. When the financial vice president determines that early implementation of the rule will adversely affectthe reported net income for the year, he discourages Weller from implementing the rule until it is required.
InstructionsAnswer the following questions.(a) What, if any, is the ethical issue involved in this case?(b) Is the financial vice president acting improperly or immorally?(c) What does Weller have to gain by advocacy of early implementation?(d) Which stakeholders might be affected by the decision against early implementation?
A company’s management has uncovered events that indicate that substantial doubt exists that the company can pay its debts as they come due over the following year. Management studies the plans created to address this risk. How can the company avoid disclosing that this substantial doubt exists?
a. The plans must be reviewed by the chief financial officer.
b. It must be probable that the plans will be implemented and it must be probable that the plans will mitigate the conditions that raised substantial doubt.
c. Disclosure of the substantial doubt is required regardless of the availability of the plans.
d. The plans must have been tested before the end of the financial year.
Economic consequences of accounting standard-setting means:
a. standard-setters must give first priority to ensuring that companies do not suffer any adverse effect as a result of a new standard.
b. standard-setters must ensure that no new costs are incurred when a new standard is issued.
c. the objective of financial reporting should be politically motivated to ensure acceptance by the general public.
d. accounting standards can have detrimental impacts on the wealth levels of the providers of financial information.
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EBK FINANCIAL ACCOUNTING THEORY AND ANA
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