CHAPTER 5
1. What is the Blue Ribbon Panel, what were its recommendations, and what is
The Blue Ribbon Panel was charged with recommending to the FAF an approach to
standard setting for private companies in the U.S. The panel determined that
2. What are IFRS for SMEs and what need are they meant to serve?
3. What are the two criteria for determining an SME?
4. Why would U.S. private companies be interested in IFRS for SMEs?
The impact of IFRS for SMEs on private entities globally and in the U.S. is
5. What U.S. companies are most likely to be earlier adopters of IFRS for
SMEs?
6. What are some examples of topics not required under IFRS for SMEs?
Topics includ
7. What are some options that have been eliminated under IFRS for SMEs?
There are also some options from the full IFRS that have been eliminated for
SMEs:
For investment property, measurement is driven by circumstances rather
8. What are some simplifications from full IFRS by IFRS for SMEs?
Recognition and measurement principles for financial instruments are simplified
for the SMEs in the following ways:
If certain criteria are met, measure securities at cost or amortized cost. All
9. Referring to Exhibit 5-1, what do you think are five of the most important
differences between full IFRS and IFRS for SMEs?
Full IFRS IFRS for SMEs
Property, Plant and Equipment
(PPE) may be carried at historical
Property, Plant and Equipment
(PPE) must be carried at historical
10. Discussion or group question: Do you think U.S. private companies will
embrace IFRS for SMEs? Why or why not?
(1) IFRS for SMEs simplify its rules to fit into more companies in U.S
(3) IFRS for SMEs are expected to reduce the cost of compliance
11. Case: Private, Inc. is a growing U.S. manufacturing company of solar water
processing equipment that exports 50 percent of its product. The CEO has
commissioned a feasibility study for adoption of IFRS for SMEs. She has heard
financial reporting. She has asked you, as CFO, to investigate the differences
between IFRS for SMEs and full IFRS and indicate the differences that you
think would have the most impact of your company. Refer to Exhibit 5-1 in
developing your answer and be sure to take into account the type of business in
which Private, Inc. is engaged.
(1) It is important for the companies to accept IFRS for SMEs because 50% of
(2) Private Inc. also aims to go public in the future. The adoption of IFRS for