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Which of the following is a true statement about international financial reporting​ standards?

a. They are not being applied anywhere in the world​ yet, but soon they will be.

b. They are converging gradually with U.S. standards.  

c. They are more exact​ (contain more​ rules) than U.S. generally accepted accounting principles.

d. They considered to be the single strongest set of accounting standards in the world

 

 

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Hubert Koch
Hubert KochLv2
20 May 2020
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Discuss the Differences Between GAAP and IFRS

Important Note:All elements of the Week 2Discussion must be completed by Day 7of Week 2.

Accountants are responsible for following standards,conventions, and rules in order to ensure ethical accounting intheir day-to-day practices. However, the rules in the United Statesvary from those followed in other countries. The United States useswhat is called U.S. GAAP. “GAAP” stands for GenerallyAccepted Accounting Principles. Most of the rest of the worlduses what is called International Financial ReportingStandards known simply as “IFRS.” The United States is in theprocess of either converting or converging U.S. GAAP with IFRS.

To complete this Discussion:

Using your preferred search engine (such as Google), enter oneor more of the following keywords:

IFRS

U.S. GAAP conversion

U.S. GAAP convergence

U.S. GAAP v. IFRS

Using what you’ve learned in the interactive course contentalong with the results of your Internet keyword search, focus onand deeply explore the differences between GAAP and IFRS. Considernot only written articles, but also video lecture search results,which you can find by doing your keyword search on YouTube.com. Besure to critically evaluate the sources that you encounter in yourInternet search. Are they reliable? Are they current?

Post an initial response along with responses to others’ posts,following the directions shown below.

Post a response of at least 150 words in which you discuss thedifferences between GAAP and IFRS. As you write your post, considerthe following:

What are implications of the differences in these two differentfinancial reporting systems?

What are two benefits and two challenges with each?

TRUE OR FALSE

____ 2. The materiality of an amount can be adequately assessed through the use of quantitative thresholds.

____3. The calculation of proforma earnings typically involves a departure from generally accepted accounting principles.

____4. The Securities and Exchange Commission provides recommendations to investors regarding which companies represent the safest investments.

____5. Adoption of a principles-based accounting standard setting system in the United Statescould make it more difficult for financial statement preparers and auditors to defend themselves in lawsuits related to financial statements.

____6.. Managers subject to an earnings-based bonus plan typically manage earnings downward if the reported earnings are substantially in excess of the maximum bonus level.

____7. Company earnings are considered to be of higher quality when management chooses accounting measurement rules that recognize revenues sooner rather than later, but that delay the recognition of expenses.

____8. Most managers of publicly traded companies prefer an earnings trend line that rises very steeply.

____9. The Financial Accounting Standards Board currently has no rules governing the recognition of large restructuring charges.

____10. A company with a large number of diverse operating units is well suited to earnings management.

1 Which of the following is an advantage of having a single set of accounting standards used worldwide?

A. Reduced accounting costs for multinational corporations

B. Increased power of the FASB

C. Reduced number of multinational corporations on the NYSE

D. Increased diversity of accounting methods used by multinational corporations

2 The accounting standards in code law countries tend to be:

A. very detailed.

B. formulated by organizations such as the FASB.

C. stated generally without much guidance on accounting procedures.

D. very conservative.

3 What is the likely result when accounting rules are left up to professional associations

rather than being legislated by governmental bodies?

A. Very general accounting rules are created, as in code law countries.

B. Very detailed rules for practice are created, as in common law countries.

C. Very general accounting rules are created, as in common law countries.

D. Very detailed rules for practice are created, as in code law countries.

4Historical cost is the primary basis for asset valuation under U.S. GAAP.

Why is historical cost NOT as important in the accounting systems of Latin America as in the U.S.?

A. Historical costs are too difficult to calculate in the currencies used in Central and South America.

B. The countries of Latin America have experienced very high rates of inflation,

which would make historical costs meaningless to readers of financial statements.

C. There is very little foreign direct investment in the countries of Latin America,

so few assets need to be accounted for.

D. In Latin America, asset prices are very stable, making historical costs ,

so it doesn't matter which valuation basis is used.

5Which of the following statements is true about accounting convergence?

A. Convergence is a synonym for harmonization.

B. Convergence is the opposite of standardization.

C. Convergence, unlike harmonization, takes place over a period of time.

D. Convergence means developing high-quality standards in partnership with national standards.

6 Which of the following statements is believed to be true about accounting convergence

by proponents of convergence?

A. Convergence would not affect the feelings of nationalism.

B. Convergence is desirable because there is very little difference among capital markets

in different countries.

C. Convergence would help to raise the quality of accounting practices internationally.

D. None of the above statements is true.

7Why does the IASB believe that a principles-based approach to standard setting

is superior to a rules-based approach?

A. Detailed guidance or rules encourage accountants to look for ways around the rules

rather than trying to provide useful information.

B. Principles-based standard setting is less costly to undertake than rules

-based standard formulation.

C. It is desirable to have all corporations in all countries using the same accounting practice.

D. A conceptual framework for standard setting has demonstrated to encourage

the greatest economic development.

8 If a company chooses the revaluation model permitted in IAS 16 for fixed asset measurement:

A. annual revaluations must be performed on each class of assets.

B. it must update the valuation so that the balance sheet represents fair value

on the balance sheet date.

C. appraisals must be performed by an official of the IASB.

D. the depreciated replacement cost must be used as the fair value of the fixed asset.

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