Question 1

How does the application of the lower-of-cost-or-market rule differ between U.S.GAAP and IFRS?

Accepted Answer

Both U.S.GAAP and IFRS require use of the lower-of-cost-or-market rule to value inventories.However,the two sets of standards differ in two respects.First,U.S.GAAP defines market value as replacement cost,subject to a maximum and minimum amount.In contrast,IFRS use net realizable value as the measure of the market value of inventory,and no upper or lower limits are imposed.Second,under U.S.GAAP,if inventory is written down to a new,lower market value,this amount becomes the basis for that inventory.Future write-downs of the inventory use this new amount to compare with market value.However,under IFRS,write-downs of inventory can be reversed in later periods.That is,a gain is recognized when the value of the inventory goes back up.

Question 2

In countries,like Japan and much of Europe,fewer differences between the amount of income reported to stockholders and that reported to the taxing authorities exist than in the United States.

Accepted Answer

A) True 
 B)False  True

Question 3

IFRS are now mandatory in all member states of the economic and political organization known as the European Union.

Accepted Answer

A) True 
 B)False  True

Question 4

All of the following statements are true about inflation except

Accepted Answer

A)  U.S.companies no longer present financial information adjusted for the effects of inflation.
B)  in recent years,inflation has been more rampant in Latin America and South America than the rest of the world.
C)  the FASB developed rules for companies in the United States to use to adjust for inflation.
D)  the United States and Germany adjust their financial statements for inflation.

Question 5

Essentially,the entire statement of financial position is inverted compared to what is commonly seen in the United States.

Accepted Answer

A) True 
 B)False

Question 6

All of the following are among the most important reasons why accounting standards differ around the world except

Accepted Answer

A)  differences in the state of economic development.
B)  differences in taxation.
C)  differences in inflation.
D)  differences in code law in all countries around the world.

Question 7

Explain the meaning of the terms contingent liabilities and provisions as they relate to U.S.GAAP and IFRS?

Accepted Answer

The answer of Explain the meaning of the terms contingent...

Question 8

Which of the following is a commonly cited disadvantage of having a new unified set of accounting standards?

Accepted Answer

A)  Acquiring foreign companies would become a more confusing proposition.
B)  Corporations may find themselves more susceptible to lawsuits due to the principles-based system.
C)  Time and money would not be saved in accessing capital markets abroad.
D)  The SEC would be dissolved if international accounting standards were adopted.

Question 9

How would you describe the current role of the IASB in setting accounting standards?

Accepted Answer

The answer of How would you describe the current role...

Question 10

A single set of accounting standards could help a U.S.company save time and money in the acquisition of a German company.

Accepted Answer

A) True 
 B)False

Question 11

The International Accounting Standards Committee was established in 1973 to develop worldwide standards.Which group replaced it in 2001?

Accepted Answer

A)  FASB
B)  IFRS
C)  IIA
D)  IASB

Question 12

Which of the following statements is false regarding U.S.GAAP versus IFRS financial statement presentation?

Accepted Answer

A)  U.S.GAAP does not require the presentation of a classified balance sheet.
B)  IFRS require the classification of assets and liabilities as current and noncurrent.
C)  If a range of values is available for reporting an outcome in a loss contingency,U.S.GAAP requires a company to report the high end of the range as a probable outcome.
D)  If a range of values is available for reporting an outcome in a loss contingency,IFRS require a company to record the midpoint of the range as a probable outcome.

Question 13

The cost of Fulton's inventory at the end of the year was $145,000.Due to obsolescence,the cost to replace the inventory was only $90,000.Net realizable value-what the inventory could be sold for-is $102,000.?
Required
Determine the amount Fulton should report on its year-end balance sheet for inventory assuming the company follows (a)U.S.GAAP and (b)IFRS.

Accepted Answer

The answer of The cost of Fulton's inventory at the...

Question 14

What is the name for the balance sheet under international accounting standards?

Accepted Answer

A)  Assets and equity attributable to shareholders
B)  Statement of financial position
C)  Statement of balance
D)  The equitable claims statement

Question 15

When did the SEC drop its longstanding rule that required foreign companies that filed financial statements with it to adjust those statements to conform with U.S.GAAP and allow them to use IFRS?

Accepted Answer

A)  2001
B)  2007
C)  2009
D)  2016

Question 16

U.S.GAAP requires companies to present a balance sheet with classifications for current and long-term liabilities,while IFRS do not.

Accepted Answer

A) True 
 B)False

Question 17

While U.S.GAAP requires a complete set of financial statements,including a balance sheet,statement of stockholders' equity,income statement,and statement of cash flows,IFRS do not.

Accepted Answer

A) True 
 B)False

Question 18

In which of the following countries do significant differences exist between accounting income and taxable income?

Accepted Answer

A)  Japan
B)  United States
C)  Germany
D)  France

Question 19

Which of the following presents the proper ordering of assets,liabilities,and equities on the statement of financial position used by some countries that is different from the United States?

Accepted Answer

A)  Current assets,long-term assets,current liabilities
B)  Inventories,trade receivables,cash
C)  Assets,liabilities,equities
D)  Current liabilities,long-term liabilities,equities

Question 20

Which of the following statements regarding inflation and accounting is false?

Accepted Answer

A)  The SEC requires U.S.companies to present supplemental financial information adjusted for the effects of inflation.
B)  Instability of the measuring unit that is the currency occurs in countries with rampant inflation.
C)  In some Latin American and South American countries,companies have been required to adjust their financial statements to take into account the effects of inflation.
D)  The FASB developed rules for companies in the United States to use to adjust for inflation.

Exam 14: International Financial Reporting Standards

How does the application of the lower-of-cost-or-market rule differ between U.S.GAAP and IFRS?

In countries,like Japan and much of Europe,fewer differences between the amount of income reported to stockholders and that reported to the taxing authorities exist than in the United States.

IFRS are now mandatory in all member states of the economic and political organization known as the European Union.

All of the following statements are true about inflation except

Essentially,the entire statement of financial position is inverted compared to what is commonly seen in the United States.

All of the following are among the most important reasons why accounting standards differ around the world except

Explain the meaning of the terms contingent liabilities and provisions as they relate to U.S.GAAP and IFRS?

Which of the following is a commonly cited disadvantage of having a new unified set of accounting standards?

How would you describe the current role of the IASB in setting accounting standards?

A single set of accounting standards could help a U.S.company save time and money in the acquisition of a German company.

The International Accounting Standards Committee was established in 1973 to develop worldwide standards.Which group replaced it in 2001?

Which of the following statements is false regarding U.S.GAAP versus IFRS financial statement presentation?

What is the name for the balance sheet under international accounting standards?

When did the SEC drop its longstanding rule that required foreign companies that filed financial statements with it to adjust those statements to conform with U.S.GAAP and allow them to use IFRS?

U.S.GAAP requires companies to present a balance sheet with classifications for current and long-term liabilities,while IFRS do not.

While U.S.GAAP requires a complete set of financial statements,including a balance sheet,statement of stockholders' equity,income statement,and statement of cash flows,IFRS do not.

In which of the following countries do significant differences exist between accounting income and taxable income?

Which of the following presents the proper ordering of assets,liabilities,and equities on the statement of financial position used by some countries that is different from the United States?

Which of the following statements regarding inflation and accounting is false?