Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Question
Chapter 1, Problem 6C
To determine
Prepare a memo to the friend explaining about the confusion in usage of US GAAP and IFRS in financial reporting.
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One of your clients has recently read about the goal of converging to International Accounting Standards and they are concerned about what impact it may have on their company. 1. Discuss some of the costs that a company might incur as part of its converging with International Accounting Standards. 2. Discuss why it might be important to your client to adopt International Accounting Standards even though they are currently only operating domestically throughout the central part of the United States.
International Financial Reporting Standards are gaining support around the globe. In 2007, the
SEC eliminated the requirement for foreign companies that issue stock in the United States to
include in their financial statements a reconciliation of IFRS to U.S. GAAP. There also is serious
discussion of allowing U.S. companies to choose whether to prepare their financial statements
according to U.S. GAAP or IFRS.
Required:
Do you think U.S. companies should be allowed the choice of reporting under either U.S. GAAP
or IFRS? Provide arguments both for and against this idea.
Ding plc are looking to expand the business and plan
to purchase subsidiaries in several different countries
including France, the USA and China. The finance
director is aware that in some parts of the world IFRS
is not permitted for use and has asked you to provide
a clearer understanding of how the regulatory
framework for financial reporting operates around the
world and the significance of international accounting
harmonisation.
Required
Prepare a briefing document for the finance director
of Ding plc outlining how IFRS are used around the
world and covering the ongoing debates around
standardisation and harmonisation. Your report should
include the advantages and disadvantages of
standardisation and
harmonisation.
Chapter 1 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 1 - Prob. 1GICh. 1 - Prob. 2GICh. 1 - Prob. 3GICh. 1 - Prob. 4GICh. 1 - Prob. 5GICh. 1 - Prob. 6GICh. 1 - Prob. 7GICh. 1 - What are the two primary forces determining the...Ch. 1 - Prob. 9GICh. 1 - Prob. 10GI
Ch. 1 - Prob. 11GICh. 1 - Prob. 12GICh. 1 - Prob. 13GICh. 1 - Prob. 14GICh. 1 - Prob. 15GICh. 1 - Prob. 16GICh. 1 - Prob. 17GICh. 1 - Prob. 18GICh. 1 - Prob. 19GICh. 1 - Prob. 20GICh. 1 - Prob. 21GICh. 1 - Prob. 22GICh. 1 - Prob. 23GICh. 1 - Why do accountants have to be ethical in their...Ch. 1 - Prob. 25GICh. 1 - Prob. 1ECh. 1 - Prob. 1CCh. 1 - Prob. 2CCh. 1 - Prob. 3CCh. 1 - Prob. 4CCh. 1 - One of your friends remarks, I understand that...Ch. 1 - Prob. 6CCh. 1 - Prob. 7CCh. 1 - Prob. 8CCh. 1 - Prob. 9CCh. 1 - Prob. 12CCh. 1 - Prob. 13CCh. 1 - Codification Situation You are conducting an...
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Similar questions
- Why is it important for U.S. accountants to be familiar with IFRS?arrow_forwardHarmonization of accounting standards through a private standard-setting process will have both advantages and disadvantages to American investors and businesses. 1. Discuss the advantages of harmonization to American investors. 2. Discuss why differences in accounting principles and disclosure requirements may place American businesses at a competitive disadvantage. 3. Discuss how the U.S. accounting profession can influence the process of harmonization.arrow_forwardBy using Hofstede's cultural dimension index in Exercise 4 of Chapter 2 and Gray's accounting values in Chapter 2 to discuss implications for American internal auditors who have to audit subsidiaries of a U.S. parent in Sweden, Korea and Brazil.Discuss:(1) the impact of Hofstede's cultural dimensions on relevant accounting values (conservatism, secrecy and level of disclosure) of accountants in these three countries, and(2) what American parent company and their internal auditors should do to cope with the impact of these accounting values on financial reporting of these subsidiaries.arrow_forward
- What are some of the differences between International Financial Reporting Standards (IFRS) and U.S. Generally Accepted Accounting Principles (GAAP)? What are some advantages and disadvantages of adopting IFRS in the US?arrow_forwardWhich of the following is a true statement about International Financial ReportingStandards?a. They are considered to be the single strongest set of accounting standards in the world.b. They are more exact (contain more rules) than U.S. generally accepted accountingprinciples.c. They are converging gradually with U.S. standards.d. They are not being applied anywhere in the world yet, but soon they will bearrow_forwardWhich of the following is not a reason for establishing international accounting standards?a. Some countries do not have the resources to develop accounting standards on their own.b. Comparability of financial reporting is needed between companies operating in different areas of the world.c. It would simplify the preparation of consolidated financial statements by multinational corporations.d. Demand in the United States is heavy for an alternative to U.S. generally accepted accounting principles.arrow_forward
- Do all transactions by U.S. companies with foreign parties require special accounting procedures by the U.S. companies? Explain.arrow_forward2.Explain the environmental factors that lead to national differences in accounting. 3.What are the two main legal systems operating worldwide? How might these affect accounting? Countries that rely on capital markets for finance, as opposed to banks and governments, are likely to expect greater levels of public disclosure in their accounting systems. Evaluate this argument and provide examples. 5.Outline and discuss three cultural aspects that can differ across countries. How do these cultural differences relate to differences in accounting systems? 6.What does accounting harmonisation mean? Differentiate harmonisation from convergence or adoption. 7.Explain the benefits of global adoption of IFRSs. 8. Outline the key challenges of US GAAP and IFRS convergence.arrow_forwardWhat is the so-called Norwalk Agreement?a. An agreement between the FASB and SEC to allow foreign companies to use IFRS in their filing of financial statements with the SEC.b. An agreement between the U.S. FASB and the U.K. Accounting Standards Board to converge their respective accounting standards as soon as practicable.c. An agreement between the SEC chairman and the EU Internal Market commissioner to allow EU companies to list securities in the United States without providing a U.S. GAAP reconciliation.d. An agreement between the FASB and the IASB to make their existing standards compatible as soon as practicable and to work together to ensure compatibility in the future.arrow_forward
- Autocar is a public listed company currently based in Japan. The company is engaged in the automobile industry. Autocar is currently using local Accounting Standards for its financial reporting. The company has plan to involve in extensive trading activities with many international companies and to acquire at least one foreign partner as a subsidiary in the near future for the expansion of its trading activities. Autocar board of directors is considering the adoption of International Financial Reporting Standards (IFRS). Discuss the implications of adopting IFRS by Autocar for its financial reporting purposes.arrow_forwardWhich of the following is not a reason for establishing international accounting standards? Choose the correct.a. Some countries do not have the resources to develop accounting standards on their own.b. Comparability of financial reporting is needed between companies operating in different areas of the world.c. It would simplify the preparation of consolidated financial statements by multinational corporations.d. Demand in the United States is heavy for an alternative to U.S. generally accepted accounting principles.arrow_forwardWhich of the following events caused international accounting standards to become more widely adopted? A. The creation of the International Accounting Standards Committee in 1973. B. The announcement by the European Union (EU) that listed companies within EU countries would have to adopt international reporting standards.' C. The creation of the International Accounting Standards Board in 2001. D. the U.S. Securities and Exchange Commission acceptance of international reporting standards for companies listed on the U.S. securities exchanges.arrow_forward
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