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28 Nov 2019

What is the impact of some businesses using International Financial Reporting Standards (IFRS) instead of generally accepted accounting principles (GAAP)? In your opinion, should there be a worldwide convergence of accounting standards? Why or why not? Explain.

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Deanna Hettinger
Deanna HettingerLv2
25 Jan 2019
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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

 

 

"Consolidation of Financial Information" Please respondto the following:

-Per the FASB, there is a presumption that consolidatedfinancial statements are more meaningful (e.g., provide the mostrelevant information) than separate financial statements for theend users. Take a position on whether you agree or disagree withthis presumption. Provide support for your rationale.

-Analyze the main differences in the definition of controlbetween U.S. Generally Accepted Accounting Principles (GAAP)prepared consolidated financial statements and InternationalFinancial Reporting Standards (IFRS) prepared financial statements.Determine which definition of control provides the most usefulinformation to the end users. Provide support for yourrationale.

The SEC has made formal statements announcing its intention ofadopting IFRS (International Financial Reporting Standards) withinthe near future. Currently, a final decision on this matter isslated for 2011, and the timeline for adoption is for Americancompanies to begin using IFRS by 2014, with some companiespotentially adopting as early as 2010.

The approach FASB is taking to prepare for this change is one ofconvergence. In other words, FASB and the IASB (InternationalAccounting Standards Board) are currently updating US GAAP and IFRSto reflect and complement each other. Recent changes to US GAAPunder this convergence approach have been made to areas such asnon-monetary asset exchanges, recognition of expenses associatedwith stock options, and consolidations. More such changes arecurrent being discussed, and are slated for future adoption.

Although convergence is generally seen as a good thing in the US,many accountants in other countries are unhappy with the level ofresources the IASB is devoting to IFRS/US GAAP convergence. Thesegroups are of the opinion that these resources would be betterspent improving and refining current IFRS standards, for thebenefit of countries who have already adopted IFRS. While suchgrumblings in and of themselves are unlikely to prevent US adoptionof IFRS, this is an important reminder that as Americanaccountants, we are joining a global community, and we need tounderstand that these new IFRS standards apply to all countries,and not simply our own.

I have provided several resource links for your convenience. Youmay use additional resources to conduct your research to answer thefollowing questions:

In your opinion, what are the benefits of switching to IFRS?

What are the possible negatives?

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