IFRS: An Introduction (3nd ed.)
By Needles & Powers
Solutions to Assignments
(The authors appreciate receiving suggestions for improvements in these
solutions)
CHAPTER 1
1. What international organization began the movement toward international
accounting standards and when and how did the United States become
involved?
The establishment of the International Accounting Standards Committee (IASC) in 1973
began the movement toward international accounting standards.
2. What is the IASB; when was it formed; and why is its structure important?
The initiative of the G4 + 1 led eventually to formation of the IASB in 2001.
3. Briefly, what is the process followed by the IASB for issuing an IFRS?
4. Why is each of the following important and how does each relate to the
concepts of convergence and adoption?
a. Memorandum of Understanding (MOU) between the FASB and the
IASB
b. The SEC Roadmap
a. MOU in 2002 laid out the joint commitment of cooperation between FASB and
b. The SEC Roadmap is set up for the adoption of IFRS. The Roadmap is published
5. What conditions must the IASB meet in order for adoption of IFRS by the
United States in 2011? List the two conditions that will be the most difficult to
accomplish.
6. In your opinion, what are the two most important arguments in favor of allowing
IFRS for U.S. public companies?
1. Enhances transparency and comparability among companies globally: IFRS
2. Lowers costs: IFRS present opportunities for global U.S. companies to lower costs
3. Improves liquidity, valuation, and cost of capital: Research appears to show that
7. In your opinion, what are the two most important arguments against allowing
IFRS for public U.S. companies?
(1) U.S. GAAP have a longer history and is more comprehensive than IFRS.
(3) IASB needs strengthening as an independent, global standard setter
8. Exercise: State the name of each of the organizations represented by the
importance to IFRS:
a. IASC d. IASCF
b. IAS e. IFRIC
c. IFAC f. SAC
a. IASC: International Accounting Standard Committee, IASC work with FASB to found
9. Class or group discussion: Should the SEC require U.S. public companies to use
IFRS?
10. Case: Off-Shore Jewelry, Inc. is a relatively small, but fast-growing U.S. based
private company. It designs, manufacturers, and distributes fine jewelry in
the United States. To reduce costs, it has manufacturing facilities in several
countries including Malaysia and Mexico. Off-Shore Jewelry, Inc. also
maintains relations with global banks and has considered a merger with a
large jewelry company in Europe. A member of the Audit Committee of the
to
report to board on whether the company should adopt IFRS. Develop a
recommendation to the board, including reasons to support your
recommendation, and discuss possible downsides.
Figure 1 1: Structure and Oversight of the IASB
Figure 1 2: Due Process