1) The IASB and FASB are working on a joint convergence project on fair value
measurement and disclosure and are in general agreement on what fair value means and
how to measure it.
2) Under IFRS, past service cost related to vested employees is recognized immediately
as part of pension expense.
3) The net realizable value of accounts receivable is decreased when a bad debt is
written off.
4) To facilitate global capital flows, balance sheet format and terminology used in most
other countries is the same as that used under U.S. GAAP.
5) Most companies try to develop customer loyalty while controlling costs.
6) The audit committee and the company’s internal audit staff provide the first-line
defense against accounting errors/irregularities.
7) A related party transaction occurs when a company enters into a transaction with
individuals or other companies that are connected in some way with it or its
management.
8) Transitory items are disclosed separately on the income statement so that statement
users can place less weight on these earnings components when forecasting future
profitability.
9) Operating leases are financial statement examples of off -balance sheet financing.
10) Trend income statements recast each statement item as a percent of sales.