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D-1
APPENDIX C
INTERNATIONAL FINANCIAL REPORTING STANDARDS
DISCUSSION QUESTIONS
1. In recent years, the removal of trade barriers and
the growth in cross-border equity and debt issu-
ances have led to a dramatic increase in interna-
tional commerce. As a result, companies are of-
ten reporting financial results to users outside of
the United States. Historically, accounting stan-
accounting standards can reduce cross-country
differences in accounting standards, making it
easier for users to compare and use financial
statement information.
Since 2005, all 27 countries in the European
Union (EU) require public companies to pre-
3. The International Accounting Standards Board
(IASB) is the body charged with developing In-
ternational Financial Reporting Standards. Like
the FASB, the IASB is an independent entity
4. a. Convergence is the alignment of IFRS and
U.S. GAAP one topic at a time, slowly merg-
ing IFRS and U.S. GAAP into two broadly
uniform sets of accounting standards. The
adopt IFRS as the accounting standard
framework for U.S. GAAP. Only the SEC has
the authority to adopt IFRS as GAAP for U.S.
public companies.
5. a. U.S. GAAP is considered to be a “rules-
based” approach to accounting standard
b. IFRS is a “principles-based” approach that
must be broad enough to capture cross-
country legal and cultural differences, while
still presenting comparable financial state-
ments. This approach provides greater op-
6. Under IFRS, a company may select between
U.S. GAAP requires the use of historical
cost. If the asset is impaired, the impairment
loss may NOT be reversed in future periods.
7. IFRS prohibits the use of LIFO. U.S. GAAP
