Question 1

The types of differences that exist between IFRS and U.S. GAAP would not generally include:

Accepted Answer

A)  Presentation differences. 
B)  Measurement differences. 
C)  Disclosure differences. 
D)  Comparability differences. 
E)  Recognition differences. 
A)  Presentation differences. 
B)  Measurement differences. 
C)  Disclosure differences. 
D)  Comparability differences. 
E)  Recognition differences.

Question 2

In countries of Latin America:

Accepted Answer

A)  accounting practice is designed to provide adequate information to investors and creditors. 
B)  accounting standards emphasize accounting for high inflation situations. 
C)  banks are the primary source of financing for companies. 
D)  accounting focuses are based on recent market economy reforms. 
E)  accounting information is prepared to meet the needs of governmental planners. 
A)  accounting practice is designed to provide adequate information to investors and creditors. 
B)  accounting standards emphasize accounting for high inflation situations. 
C)  banks are the primary source of financing for companies. 
D)  accounting focuses are based on recent market economy reforms. 
E)  accounting information is prepared to meet the needs of governmental planners.

Question 3

Foreign companies whose stock is listed on a U.S. stock exchange and using foreign GAAP other than IFRS must file their annual report with the SEC on:

Accepted Answer

A)  Form 8-A. 
B)  Form 10-A. 
C)  Form 16-K. 
D)  Form 20-F. 
E)  Form 20-K. 
A)  Form 8-A. 
B)  Form 10-A. 
C)  Form 16-K. 
D)  Form 20-F. 
E)  Form 20-K.

Question 4

The following information pertains to inventory held by a company on December 31, 2011. $$\begin{array} { l r } 
\text { Historical cost } & \$ 30,000 \
\text { Replacement cost } & \$ 20,000 \
\text { Net realizable value } & \$ 27,000 \
\text { Normal profit margin } & 20 \%
\end{array}$$
-What is the amount of inventory loss shown on the income statement under IFRS?

Accepted Answer

A)  $0. 
B)  $3,000. 
C)  $14,000. 
D)  $10,000. 
E)  $8,400. The amount of loss is the writedown of inventory from $30,000 to $27,000 or $3,000. 
A)  $0. 
B)  $3,000. 
C)  $14,000. 
D)  $10,000. 
E)  $8,400. The amount of loss is the writedown of inventory from $30,000 to $27,000 or $3,000.

Question 5

The following information pertains to inventory held by a company on December 31, 2011. $$\begin{array} { l r } 
\text { Historical cost } & \$ 30,000 \
\text { Replacement cost } & \$ 20,000 \
\text { Net realizable value } & \$ 27,000 \
\text { Normal profit margin } & 20 \%
\end{array}$$
-What is the amount of inventory loss shown on the income statement under U.S. GAAP?

Accepted Answer

A)  $0. 
B)  $3,000. 
C)  $14,000. 
D)  $10,000. 
E)  $8,400. The amount of loss is the writedown of inventory from $30,000 to $21,600 = $8,400. 
A)  $0. 
B)  $3,000. 
C)  $14,000. 
D)  $10,000. 
E)  $8,400. The amount of loss is the writedown of inventory from $30,000 to $21,600 = $8,400.

Question 6

Which two EU directives have helped harmonize accounting standards?

Accepted Answer

The fourth and seventh directives have h

Question 7

What international organization currently promulgates IFRS?

Accepted Answer

A)  IASB. 
B)  IASC. 
C)  IOSCO. 
D)  FASB. 
E)  EU. 
A)  IASB. 
B)  IASC. 
C)  IOSCO. 
D)  FASB. 
E)  EU.

Question 8

Which of the following is not an IFRS pronouncement originally issued by the IASB?

Accepted Answer

A)  Business Combinations. 
B)  First-Time Adoption of IFRS. 
C)  Financial Instruments: Disclosures. 
D)  Agriculture. 
E)  Operating Segments. 
A)  Business Combinations. 
B)  First-Time Adoption of IFRS. 
C)  Financial Instruments: Disclosures. 
D)  Agriculture. 
E)  Operating Segments.

Question 9

The following information pertains to inventory held by a company at December 31, 2011. $$\begin{array} { | l | r | } 
\hline \text { Historical cost } & \$ 25,000 \
\hline \text { Replacement cost } & \$ 20,000 \
\hline \text { Net realizable value } & \$ 21,000 \
\hline \text { Normal profit Margin } & 20 \% \
\hline
\end{array}$$
-As a result of inventory loss, what is the difference in income between reporting using U.S. GAAP and IFRS?

Accepted Answer

A)  U.S. GAAP income is $1,000 higher. 
B)  U.S. GAAP income is $2,000 lower. 
C)  IFRS income is $1,000 higher. 
D)  IFRS income is $1,000 lower. 
E)  IFRS income is $5,000 higher. U.S. GAAP loss is $5,000 and IFRS loss is $4,000 which results in IFRS income being $1,000 higher. 
A)  U.S. GAAP income is $1,000 higher. 
B)  U.S. GAAP income is $2,000 lower. 
C)  IFRS income is $1,000 higher. 
D)  IFRS income is $1,000 lower. 
E)  IFRS income is $5,000 higher. U.S. GAAP loss is $5,000 and IFRS loss is $4,000 which results in IFRS income being $1,000 higher.

Question 10

The following information pertains to inventory held by a company at December 31, 2011. $$\begin{array} { | l | r | } 
\hline \text { Historical cost } & \$ 25,000 \
\hline \text { Replacement cost } & \$ 20,000 \
\hline \text { Net realizable value } & \$ 21,000 \
\hline \text { Normal profit Margin } & 20 \% \
\hline
\end{array}$$
-What is the amount of inventory loss shown on the income statement under IFRS?

Accepted Answer

A)  $1,000. 
B)  $2,000. 
C)  $4,000. 
D)  $5,000. 
E)  $6,000. The amount of loss is the writedown of inventory from $25,000 to $21,000 = $4,000. 
A)  $1,000. 
B)  $2,000. 
C)  $4,000. 
D)  $5,000. 
E)  $6,000. The amount of loss is the writedown of inventory from $25,000 to $21,000 = $4,000.

Question 11

Principal Company is a U.S.-based company that prepares its consolidated financial statements in accordance with U.S. GAAP. Principal reported net income of $ 2,600,000 in 2011 and stockholders' equity of $12,000,000 at December 31, 2011. Principal wants to determine the reporting impact of switching to IFRS. The following three items would create differences in financial reporting:
1) At December 31, 2011, inventory had a historical cost of $850,000, a replacement cost of $700,000, and a net realizable value of $800,000. The normal profit margin was 10%.
2) Principal acquired a building at the beginning of 2009 at a cost of $5,000,000. The building has an estimated useful life of 20 years, an estimated residual value of $1,000,000, and is being depreciated on a straight-line basis. On January 1, 2011, the building has a fair value of $5,500,000. There is no change in the estimated useful life or residual value. In a switch to IFRS, Principal would use the revaluation model in IAS 16 to determine the carrying value of property, plant, and equipment subsequent to acquisition.
3) In 2011, Principal incurred $800,000 of research and development for a new product, of which 35% relates to development activities subsequent to the point at which criteria indicating the creation of an intangible asset had been met. As of the end of 2011, development of the new product had not been completed.
Required:
1) Prepare a schedule reconciling net income under U.S. GAAP to net income under IFRS for the year ended December 31, 2011.
2) Prepare a schedule reconciling stockholders' equity under U.S. GAAP to stockholders' equity under IFRS at December 31, 2011.

Accepted Answer

The answer of Principal Company is a U.S.-based company that...

Question 12

The following information pertains to inventory held by a company at December 31, 2011. $$\begin{array} { | l | r | } 
\hline \text { Historical cost } & \$ 25,000 \
\hline \text { Replacement cost } & \$ 20,000 \
\hline \text { Net realizable value } & \$ 21,000 \
\hline \text { Normal profit Margin } & 20 \% \
\hline
\end{array}$$
-What is the amount of inventory loss shown on the income statement under U.S. GAAP?

Accepted Answer

A)  $1,000. 
B)  $2,000. 
C)  $4,000. 
D)  $5,000. 
E)  $8,200. The amount of loss is the writedown of inventory from $25,000 to $20,000 or $5,000. 
A)  $1,000. 
B)  $2,000. 
C)  $4,000. 
D)  $5,000. 
E)  $8,200. The amount of loss is the writedown of inventory from $25,000 to $20,000 or $5,000.

Question 13

A U.S. company has many foreign subsidiaries and wants to convert its consolidated financial statements from U.S. GAAP to IFRS. Which of the following items is not one of the likely accounting issues to resolve for the opening IFRS balance sheet?

Accepted Answer

A)  Measuring asset impairment. 
B)  Classifying extraordinary items. 
C)  Sale and leaseback gain recognition. 
D)  Measuring salaries expense. 
E)  Prior service cost recognition for pension amendments. 
A)  Measuring asset impairment. 
B)  Classifying extraordinary items. 
C)  Sale and leaseback gain recognition. 
D)  Measuring salaries expense. 
E)  Prior service cost recognition for pension amendments.

Question 14

The major providers of financing in some countries are stockholders, while other countries predominantly use banks as the main financing source. What difference does it make to accounting disclosures in comparing a company from one of each of those countries?

Accepted Answer

When banks dominate financing, there is

Question 15

Why does each country have its own unique set of financial reporting practices?

Accepted Answer

A survey identified five commonly accept

Question 16

What are the four different ways IFRS can be used by a country?

Accepted Answer

IFRSs can be used by a country by (1) ad

Question 17

A company acquired a new piece of equipment on January 1, 2009 at a cost of $200,000. The equipment is expected to have a useful life of 10 years, a residual value of $20,000 and is depreciated on a straight-line basis. On January 1, 2011, the equipment was appraised and determined to have a fair value of $190,000 and a residual value of $25,000 and a remaining useful life of 10 years.
-At what amount should the equipment be reported on the December 31, 2011 balance sheet under the IFRS revaluation model?

Accepted Answer

A)  $190,000 
B)  $173,500 
C)  $165,000 
D)  $136,000 
E)  $110,000 Under the IFRS IAS 16 revaluation model, on January 1, 2011 the equipment would be revalued to $190,000 fair value. The new depreciation would be (190,000-25,000)/10 years or $16,500 per year. The equipment would be reported at $190,000-$16,500 = $173,500. 
A)  $190,000 
B)  $173,500 
C)  $165,000 
D)  $136,000 
E)  $110,000 Under the IFRS IAS 16 revaluation model, on January 1, 2011 the equipment would be revalued to $190,000 fair value. The new depreciation would be (190,000-25,000)/10 years or $16,500 per year. The equipment would be reported at $190,000-$16,500 = $173,500.

Question 18

A U.S. company has many foreign subsidiaries and wants to convert its consolidated financial statements from U.S. GAAP to IFRS. Which of the following items is not one of the likely accounting issues to resolve for the opening IFRS balance sheet?

Accepted Answer

A)  Inventory valuation. 
B)  Capitalizing development costs. 
C)  Classifying deferred taxes as current or noncurrent. 
D)  Acquisition value for a subsidiary. 
E)  Liability for restructuring charges. 
A)  Inventory valuation. 
B)  Capitalizing development costs. 
C)  Classifying deferred taxes as current or noncurrent. 
D)  Acquisition value for a subsidiary. 
E)  Liability for restructuring charges.

Question 19

Convergence of accounting standards would not occur by:

Accepted Answer

A)  FASB adopting an existing IASB standard. 
B)  IASB adopting an existing FASB standard. 
C)  IASB issuing a new standard. 
D)  IASB and FASB jointly developing a new standard. 
E)  IASB and FASB each issuing a similar but not identical standard. 
A)  FASB adopting an existing IASB standard. 
B)  IASB adopting an existing FASB standard. 
C)  IASB issuing a new standard. 
D)  IASB and FASB jointly developing a new standard. 
E)  IASB and FASB each issuing a similar but not identical standard.

Question 20

In the United States, foreign companies filing annual reports with the SEC that are not prepared in accordance with U.S. GAAP must:

Accepted Answer

A)  present financial statements that comply with international GAAP. 
B)  conform with U.S. GAAP or present a reconciliation to U.S. GAAP. 
C)  have a demonstrated need for capital to be used for operations in the U.S. 
D)  use the U.S. dollar as their reporting currency. 
E)  use IFRS, or use foreign GAAP and provide a reconciliation to U.S. GAAP. 
A)  present financial statements that comply with international GAAP. 
B)  conform with U.S. GAAP or present a reconciliation to U.S. GAAP. 
C)  have a demonstrated need for capital to be used for operations in the U.S. 
D)  use the U.S. dollar as their reporting currency. 
E)  use IFRS, or use foreign GAAP and provide a reconciliation to U.S. GAAP.

The types of differences that exist between IFRS and U.S. GAAP would not generally include:

In countries of Latin America:

Foreign companies whose stock is listed on a U.S. stock exchange and using foreign GAAP other than IFRS must file their annual report with the SEC on:

The following information pertains to inventory held by a company on December 31, 2011. Historical cost \ 30,000 Replacement cost \ 20,000 Net realizable value \ 27,000 Normal profit margin 20\% -What is the amount of inventory loss shown on the income statement under IFRS?

The following information pertains to inventory held by a company on December 31, 2011. Historical cost \ 30,000 Replacement cost \ 20,000 Net realizable value \ 27,000 Normal profit margin 20\% -What is the amount of inventory loss shown on the income statement under U.S. GAAP?

Which two EU directives have helped harmonize accounting standards?

What international organization currently promulgates IFRS?

Which of the following is not an IFRS pronouncement originally issued by the IASB?

The following information pertains to inventory held by a company at December 31, 2011. Historical cost \ 25,000 Replacement cost \ 20,000 Net realizable value \ 21,000 Normal profit Margin 20\% -What is the amount of inventory loss shown on the income statement under IFRS?

The following information pertains to inventory held by a company at December 31, 2011. Historical cost \ 25,000 Replacement cost \ 20,000 Net realizable value \ 21,000 Normal profit Margin 20\% -What is the amount of inventory loss shown on the income statement under U.S. GAAP?

A U.S. company has many foreign subsidiaries and wants to convert its consolidated financial statements from U.S. GAAP to IFRS. Which of the following items is not one of the likely accounting issues to resolve for the opening IFRS balance sheet?

The major providers of financing in some countries are stockholders, while other countries predominantly use banks as the main financing source. What difference does it make to accounting disclosures in comparing a company from one of each of those countries?

Why does each country have its own unique set of financial reporting practices?

What are the four different ways IFRS can be used by a country?

A U.S. company has many foreign subsidiaries and wants to convert its consolidated financial statements from U.S. GAAP to IFRS. Which of the following items is not one of the likely accounting issues to resolve for the opening IFRS balance sheet?

Convergence of accounting standards would not occur by:

In the United States, foreign companies filing annual reports with the SEC that are not prepared in accordance with U.S. GAAP must:

The Equity Method of Accounting for Investments

Consolidation of Financial Information

Consolidations-Subsequent to the Date of Acquisition

Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements - Intra-Entity Asset Transactions

Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flo

Consolidated Financial Statements - Ownership Patterns and Income

Segment and Interim Reporting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Financial Reporting and the Securities and Exchange Commission

Accounting for Legal Reorganizations and Liquidations

Partnerships: Formation and Operations

Partnerships: Termination and Liquidation

Accounting for State and Local Governments

Accounting for State and Local Governments

Accounting and Reporting for Private Not-For-Profit Organizations

Accounting for Estates and Trusts

Filters

Exam 11: Worldwide Accounting Diversity and International Standards

The types of differences that exist between IFRS and U.S. GAAP would not generally include:

In countries of Latin America:

Foreign companies whose stock is listed on a U.S. stock exchange and using foreign GAAP other than IFRS must file their annual report with the SEC on:

The following information pertains to inventory held by a company on December 31, 2011. Historical cost \ 30,000 Replacement cost \ 20,000 Net realizable value \ 27,000 Normal profit margin 20\% -What is the amount of inventory loss shown on the income statement under IFRS?

The following information pertains to inventory held by a company on December 31, 2011. Historical cost \ 30,000 Replacement cost \ 20,000 Net realizable value \ 27,000 Normal profit margin 20\% -What is the amount of inventory loss shown on the income statement under U.S. GAAP?

Which two EU directives have helped harmonize accounting standards?

What international organization currently promulgates IFRS?

Which of the following is not an IFRS pronouncement originally issued by the IASB?

The following information pertains to inventory held by a company at December 31, 2011. Historical cost \ 25,000 Replacement cost \ 20,000 Net realizable value \ 21,000 Normal profit Margin 20\% -What is the amount of inventory loss shown on the income statement under IFRS?

The following information pertains to inventory held by a company at December 31, 2011. Historical cost \ 25,000 Replacement cost \ 20,000 Net realizable value \ 21,000 Normal profit Margin 20\% -What is the amount of inventory loss shown on the income statement under U.S. GAAP?

A U.S. company has many foreign subsidiaries and wants to convert its consolidated financial statements from U.S. GAAP to IFRS. Which of the following items is not one of the likely accounting issues to resolve for the opening IFRS balance sheet?

The major providers of financing in some countries are stockholders, while other countries predominantly use banks as the main financing source. What difference does it make to accounting disclosures in comparing a company from one of each of those countries?

Why does each country have its own unique set of financial reporting practices?

What are the four different ways IFRS can be used by a country?

A U.S. company has many foreign subsidiaries and wants to convert its consolidated financial statements from U.S. GAAP to IFRS. Which of the following items is not one of the likely accounting issues to resolve for the opening IFRS balance sheet?

Convergence of accounting standards would not occur by:

In the United States, foreign companies filing annual reports with the SEC that are not prepared in accordance with U.S. GAAP must:

The Equity Method of Accounting for Investments

Consolidation of Financial Information

Consolidations-Subsequent to the Date of Acquisition

Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements - Intra-Entity Asset Transactions

Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flo

Consolidated Financial Statements - Ownership Patterns and Income

Segment and Interim Reporting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Financial Reporting and the Securities and Exchange Commission

Accounting for Legal Reorganizations and Liquidations

Partnerships: Formation and Operations

Partnerships: Termination and Liquidation

Accounting for State and Local Governments

Accounting for State and Local Governments

Accounting and Reporting for Private Not-For-Profit Organizations

Accounting for Estates and Trusts

Filters