Exam 15: International Financial Reporting Standards

When preparing a statement of cash flows,IFRS allows companies to report cash inflows from interest and dividends as either operating or investing cash flows,while U.S.GAAP requires these inflows to be reported as only operating activities.

Some countries are more secretive (Brazil and Switzerland),leading to fewer financial disclosures.

Suppose a severe storm floods a company's headquarters,causing damages to the building of $300,000 and destruction of inventory of $200,000.Because of the unusual nature of this event,the company had no flood insurance to cover these losses.Under U.S.GAAP,how much would the company report as an extraordinary loss in the current year's income statement?

One motivation for reducing differences in accounting practices across countries is to:

The FIFO inventory method is not allowed under IFRS.

Suppose a severe storm floods a company's headquarters,causing damages to the building of $300,000 and destruction of inventory of $200,000.Because of the unusual nature of this event,the company had no flood insurance to cover these losses.Under IFRS,how much would the company report as an extraordinary loss in the current year's income statement?

Which inventory cost flow assumption is allowed under U.S.GAAP but not under IFRS? Explain why some U.S.companies will lobby strongly to keep this method as an allowable alternative.

Under U.S.GAAP,development expenditures are capitalized,while under IFRS,these expenditures must be expensed immediately.

How is preferred stock reported differently under U.S.GAAP and IFRS? Do you think preferred stock is a liability or an equity item? Why?

Which of the following is not a reason why accounting differs across countries?

The body primarily responsible for establishing a single set of global accounting standards is the:

IFRS stands for:

For which of the following topics is accounting under both U.S.GAAP and IFRS essentially the same?

Suppose a company pays interest of $10,000 for the year on borrowed amounts due in two years.Under IFRS,what is the most the company can report as cash outflows from financing activities?

Why are some U.S.companies opposed to elimination of the LIFO inventory method?

The Norwalk Agreement:

In countries where debt financing is more common (Japan)compared to equity financing,there is greater emphasis on reporting the ability of the company to earn profits for its investors rather than the ability to repay debt.

Compared to that in the U.S,the cost to companies in other countries of documenting effective internal controls is:

Suppose a company has research costs of $100,000 and development costs of $200,000 for the year.Under IFRS,what amount would be reported as an expense in the current year's income statement?

Which inventory cost flow assumption is allowed under U.S.GAAP but not under IFRS?