Accounting Chapter 9 Homework However The Case The Other Two Purchases

subject Type Homework Help
subject Pages 4
subject Words 1770
subject Authors Paul M. Fischer, Rita H. Cheng, William J. Tayler

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1. Aside from the operational issues associated
with parent and subsidiary relationships, sever-
al accounting issues become apparent. First,
assume that the accounting principles the sub-
sidiary uses may differ in certain respects from
accounting principles reinforces the goal of
developing a single set of international prin-
ciples. Even after the subsidiary’s transactions
are remeasured into U.S. GAAP, their state-
ments are still measured in terms of the FC.
example, if the subsidiary conducts its transac-
2. The objectives of the International Accounting
Standards Committee Foundation are:
(a) to develop, in the public interest, a single
set of high-quality, understandable, and
(b) to promote the use and rigorous applica-
tion of those standards;
(c) in fulfilling the objectives associated with
(a) and (b), to take account of, as appro-
priate, the special needs of small and
The FASB supports the objectives of the
Foundation primarily through its commitment
to the convergence project. The FASB signed,
and subsequently reaffirmed, its memorandum
of understanding with the IASB formalizing its
3. U.S. GAAP differs from IFRS in a number or at
ard/standard.htm and then compare the stan-
dard to that in the United States. Another site of
interest may be the comparisons between U.S.
Ch. 9—Exercises 9–2
1. A company might incur several costs in connection with converging to International Accounting
Standards. Certainly, accounting staff will have to be educated regarding the new standards, which,
in some cases, may differ significantly from U.S. GAAP. Accounting systems and software will also
2. Although the client currently operates only in the central United States, it should be positioning itself
to expand its operations in such a way that international vendors, customers, and lenders become
part of its environment. For example, if materials are purchased from a foreign vendor, that vendor
If a purchase from a foreign vendor is both denominated and measured in terms of the U.S. dollar,
there is no exposure to exchange rate risk. Therefore, changes in the exchange rates will have no im-
1. Several advantages to investors result from the harmonization of accounting standards. First and
foremost, investors will have information that is more comparable. This will result from financial
statements that are prepared using the same accounting principles used by entities in other coun-
2. American businesses may be at a disadvantage due to differences in accounting standards
between nations for several reasons. First, to the extent that U.S. GAAP requires more disclosure
than other nations’ standards, the U.S. company may have to disclose information that could be
used by its competitors in a harmful way. For example, if a U.S. company is required to report both
3. The U.S. accounting profession as represented by the Financial Accounting Standards Board is
committed to the convergence of U.S. GAAP and International Accounting Standards. The FASB
1. The IASB is under the umbrella of the International Accounting Standards Committee Foundation
and is responsible for carrying out the objectives of the Foundation. The Foundation appoints
2. The SEC recognizes the importance of the convergence project and has affirmed its desire to keep
moving toward the adoption of International Financial Reporting Standards (IFRS). Actions taken by
the SEC to date include allowing foreign registrants to report per IFRS rather than having to report

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