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Exam 15: International Financial Reporting Standards

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Question 21

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Would a company be more likely to report a contingent liability under U.S.GAAP or IFRS?

A) U.S.GAAP.
B) IFRS.
C) Equally likely.
D) Contingent liabilities are not reported under IFRS.

E) B) and C)
F) A) and B)

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Question 22

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Below are seven reasons for differences in accounting practices among countries.For each reason,at least two options are provided.For each reason,select the option that best describes Germany.

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Question 23

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When a country establishes financial reporting rules that closely resemble tax reporting rules,reported accounting profits tend to be:

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?

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

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.

Convergence of accounting practices is expected to increase the flow of resources across borders.

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

Over 115 jurisdictions,including Hong Kong,Australia,and all of the countries in the European Union (EU),either require or permit the use of IFRS.

Under IFRS,inventory write-downs due to using the lower-of-cost-or-market rule are allowed to be reversed in a future year if the market value subsequently increases.

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

The Norwalk Agreement:

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?

Countries that have different rules for financial accounting and tax accounting,rely more on equity financing,and have historical political and economic ties with Great Britain are referred to as what types of countries?

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?

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

IFRS stands for:

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

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

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