Essays on Accounting Standard

IAS37: CURRENT ISSUES IN FINANCIAL REPORTING

IAS37: Current Issues in Financial Reporting Introduction Since the publication of IAS 37, it provides explicit directions for companies to recognize provision, contingent liability and contingent assets. IAS 37 undermines the traditional accounting concepts of prudence hence leading to considerable volatility in companies earning reports. The IAS 37 helps in disclosing the transaction incurred in an organization that is associated with liabilities. In the IAS 37 standard, the word “probable” has been adversely used and hence providing options of creative accounting essential for companies to recognize its provision on balance sheet. Before the amendment of current IAS 37, the ...

An Overview of the Standard-Setting Industry And Its History

Introduction Accounting Standards have been in existence since the beginning of the recorded history. Some of these standards were set up by rulers or reigning kings. However, as the world developed, States started coming up with bodies aimed at controlling the quality and standards of products and services in the accounting sector. In the ancient world, the man used to come up with standards with a desire of harmonizing his activities with important changes in the environment. Some standards were also set in response to a rise in needs in the society. The standard setting body in America was ...

Accounting Standards and Regulations

Part a - AASB 15 Revenue from Contracts with Customers This accounting standard is addresses organisations’ concerns to recognise, measure and disclose revenue using a five step process. Applicable from January 01, 2014, this standard was issued in May 2014. As per this standard, which will replace AASB 111 and AASB 118, organisations can recognise revenue or income even though the products and services are not yet delivered to customers. In other words, companies can record the recognition of the payment (service income) even when the entity has not yet provided goods and services. As per this standard, revenue ...

Paper Outline

The objective with this paper is being written is to provide a comprehensive discussion for IAS 16-Plant, Property and Equipment and IAS 40-Investment Property. It is considerable that many a times, be it academicians or nascent professionals, appropriate accounting for property under the provision of IAS has always been the source of confusion. Therefore, this project will detail all the major provisions under IAS 16 and IAS 40 and how each of them differs from each other. As part of this paper, we will first individually detail both the accounting standards and will then illustrate the differences using appropriate ...

IFRS and US GAAP: Similarities and Differences (Financial Assets)

IFRS and US GAAP: Similarities and Differences (Financial Assets)

Introduction

The US GAAP (Generally Accepted Accounting Principles) is a set of accounting standards followed in the United States. With the emergence of internationalization, cross border flow of capital, people, cultures, and ideas became very common and the situation in turn contributed to the rapid growth of multinational corporations. Since different countries followed different accounting standards earlier, it was very difficult for MNCs to record their financial/accounting transactions in a unified manner. It persuaded regulators and businesses worldwide to think of a globally recognizable accounting standard leading to the development of ...

The ongoing internationalization process persuaded regulators and businesses worldwide to think of a common global accounting language for business affairs. This move led to the development of IFRS. International Financial Reporting Standards (IFRS), sometimes referred to as International Accounting Standards, is a globally recognized accounting framework for businesses worldwide. The major purpose of this accounting standard is to make company accounts understandable and comparable across international boundaries. Currently, over 110 countries are following the IFRS accounting system in order to address complexities relating to international business affairs. However, the United States has not adopted IFRS yet, and the country ...

Executive Summary

The Financial Accounting Standard Board (FASB) primary point is to build up new bookkeeping gauges and enhance past bookkeeping norms of monetary reporting and money related bookkeeping identified with nongovernmental elements, so they gives exact data to speculators and different clients of budgetary explanations. The paper portrays the FASB current venture identified with protection identified with focused enhancements to the representing long-span protection contracts. The fundamental point of this anticipate is create focused on upgrades to exposures necessities identified with long haul and brief length protection contracts.

Introduction

The Financial Accounting Standard Board (FASB) has been built up in 1973 ...

The Financial Accounting and Standard Board (FASB) and the International Accounting Standard Board (IASB) apply to the AT&T Mobility because both are proposing changes in global accounting. Moreover, their rule provides more incentives for companies particularly in changing the terms of the contract in corporations to speed up revenues to achieve quarterly targets. Additionally, the treatment of revenues in AT&T Mobility, the proposal for the changes, may drive the inconsistent allocation of income in particular between its products and payable resources as well as the separation of hosting arrangements. Consequently, AT&T have changed its GAAP accounting to redefine the ...

Should operational leases be involved in the accounting statements or should they be excluded; case study of an airline industry.

Introduction to research topic and main research question Significant restructuring of airline industries (such as Air China and Emirates) has brought along desirable increase in acquisition of aircrafts and other assets through leasing. The challenge at hand is whether the lease ought to be treated as an operating lease, a finance lease or should be excluded in the accounting all together. Throughout the airline industry internationally, the airlines comprehensively use operating leases for engines, aircraft, fly facilities and airport facilities. Operating leases is a form of off-balance sheet financing because traditionally the accounting standards did not require entities to ...

Both FASB and AASB have developed the principle based accounting standard, where, the studies have argued that the principle based accounting standard impacts earning management negatively in terms of reduction in its practices (Van Beest, 2009). The study has argued that the flexibility in the standards of accounting reporting from the standard setters can lead to achieve the earning management. The accounting standards and their elaboration discourage the use of various methods of accounting for earning management (Babalyan, 2004). The findings above show that the standard setters and regulators can impact on the earning management as they require more ...

The responsibility of the external auditor is to provide reasonable assurance on the financial statements and to make sure that the material areas of the business are following the accounting standards such as IFRS, IAS or GAAP. In the current scenario of AMC Company, the amount or valuation of the plant assets is 60% of the overall assets of the organization. Therefore, the plant assets are the material area of the business and the external auditor must increase the sampling size of plant asset account’s transactions at the planning stage of the audit. (Stuart, 2012) The treatment of ...

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a) The “due process” procedure includes consultations from financial analysts, accountants, stock exchanges, FASB members and other users. Thereafter, the Board issues an Exposure Draft based upon the meetings and consultations held earlier. The Board calls for public recommendations and discussions on the Draft, after analysis of which the final standard is issued. b) In an accounting standard-setting, “economic consequences” signify the adverse impact on the economy and on businesses of imposing an accounting standard without proper deliberation with concerned users. Accounting standards define how a business works and functions ...

Introduction

The law mandates accurate reporting of financial statements as a way for companies to provide correct information to its stakeholders. The accountants and auditing firm need to be knowledgeable and cautious in presenting financial reports. However, it is sometimes inevitable to encounter issues that may affect the financial report in the process of its preparation. The Emerging Issues Task Force (EITF) is an entity established in 1984 tasked to assist the Financial Accounting Standard Board (FASB) in identifying, deliberating, and settling accounting issues to help FASB become more efficient in addressing issues on implementation and others through the guidance ...

Abstract

This paper presents the ideal purpose of adopting a unitary global set of accounting standards to be applied across the globe. It presents the major characteristics of both the dominant accounting standards used worldwide, the IFRS and the US GAAP. It examines whether the IFRS or US GAAP works best for the present and the future needs of a global finance system. The various differences of these two accounting standards were shown. The major applications of the IFRS as the leading accounting standards and principles were also highlighted in the paper. It also provided various guidelines in this seemingly ...

Accounting Standard followed by the company:

i) General Mills Inc:

General Mills Inc, for the purpose of its financial reporting, follows Generally Accepted Accounting Principle(GAAP).

ii) Meiji Holdings: The company, for the purpose of the financial reporting and also for its subsidiaries, follows Generally Accepted Accounting Principle(GAAP). The company declares that the accounting standards are different from International Financial Reporting Standard(IFRS).

Accounting Standard followed by the auditors:

i)General Mills Inc: The financial statements of the company are audited by KPMG LLP, which are the external auditors of the company. The external auditors have used standards of Public Company Accounting Oversight Board(United States). The standards obligates the auditors to ensure that all the financial statements of the company are free from any material ...

- Introduction

1.1 Background developments

Traditionally, accounting standards have been developed by different countries on the basis of local legal, economical and cultural institutions frameworks (Elliott and Elliott, 2009, p. 158). As a result, the standard setting was very country specific. With the globalization process at work for the last 3-4 decades and increasing mobility of capital internationally accepted accounting standards have become necessary to facilitate cross border transactions and make financial reporting comparable between countries and companies thereby leading to a greater transparency for investors (Nobes, 2004). IASB has been set up as a private international standard setter with a mandate to create high quality accounting standards ...

IAS 39 Financial Instruments, comprising of recognition and Measurement is an accounting standard used internationally for financial instruments. It was released by International Accounting Standards Board (IASB). Its main purpose is to outline requirements that were needed for the recognition and measuring of financial; assets, liabilities and contracts that are used in the buying or selling of items that are non-financial. The instruments become recognized when the entity becomes a party. IAS 39 came into use on December 2003 and applied to the annual periods that begun on and after 1st January 2005.

It would be swapped and interchanged ...

Introduction

Convergence of Accounting Standards is the prospective goal of the two accounting standard boards, FASB and IASB, to produce a single set of accounting standards that can be used globally. Important to note, at present, the world of accounting is divided in two parts, one part of the accounting world use the US GAAP standards set by FASB; while the other part use the IFRS accounting standards set by IASB. However, each of the accounting standards(GAAP and IFRS) has their own rules and provision, hence, it becomes difficult and time consuming to compare the financial statements prepared under different ...

This Paper was prepared for_________ taught by___________

Introduction. Interpreting financial statements (FS) requires a thorough understanding of basic principles of accounting and reporting. This paper discusses such concepts as accounting equation and basic formats of FS, role of international financial reporting standards (IFRS), US Generally Accepted Accounting Principles (US GAAP) and The U.S.Securities and Exchange Comission (SEC) in the reporting process. Principal financial concepts. US GAAP are a set of accounting standards used by US companies for financial reporting. They are introduced by the Financial Accounting Standards Board (FASB) in compliance with SEC regulations and FASB mission of setting and improving principles of accounting and reporting which ...

IFRS 9 and IAS 39

Introduction Laws and Regulations prevail in almost every field, and it is very important for the organizations to comply with these regulations and standards for their competitiveness and sustainability. Apart from the traditional regulations of managing and maintaining a company, there are certain regulations that specifically associated with the financial management. Entities are required to manage their financial transactions according to the prescribed methods and techniques covered and initiated by International Financial Reporting Standards (IFRS) (Iasplus.com, p.45). IFRS are designed specifically to serve as a common global language for all the business affairs. Generally, it is used to compare and ...

Accounting Standard followed by the company

i) General Mills Inc:

Referring to Note 1 of the financial statement, we notice that General Mills Inc follows Generally Accepted Accounting Principle(GAAP).

ii) Meiji Holdings: Referring to the Note 1 of the consolidated financial statements, we find that Meiji Holdings are following Generally Accepted Accounting Principle(GAAP) in Japan. In addition, the company specifically declares that the consolidated financial statements of the company are not prepared in accordance with GAAP standards prevalent in countries or jurisdictions other than Japan.

Accounting Standard followed by the auditors

i)General Mills Inc: Referring to the report of external auditors, we find that the consolidated financial statements of the company have been audited by KPMG LLP using standards of Public Company Accounting Oversight Board(United States). The ...

International Financial Accounting Standard 13

International Financial Accounting Standard 13

Abstract

It is without a doubt that the fair value accounting faces numerous reproaches resulting to the never ending debate about its applicability as well as effectiveness. Although un-common, the issue of fair value accounting has been taken over by the political observers, as well as politicians themselves, business front-runners, and the professional associates. Such a move would be attributed to its significance in the current market of recent times. Because of the notion that the knowledge of the market plays a significant role in the success or failure of a company, it was imperative for each and every ...

International Financial Reporting Standards (IFRS) are now the most widely used accounting standard around the world now with over 12000 companies in 113 countries adopting the IFRS standards in their financial reporting. However, despite of enhanced reach of IFRS standards now, the United States is still following their conventional GAAP standards and now there is a growing demand in the nation to adopt the IFRS standards.The paper will analyze the benefits and costs associated with the adoption of IFRS standards in the United States:

Benefits of adoption of IFRS in the United States:

a) Global Comparability and Better access to foreign capital markets and investments: The first and the ...

Financial Accounting and Reporting:

Financial accounting refers to the process of recording, summarizing and reporting of the accounting transactions. The objective of financial accounting and reporting is to provide an accurate image of a company’s financial standing to the users of the financial statements. Important to note, that, all the financial reports made under the financial accounting process are as per relevant accounting standards as US GAAP or IFRS.

Financial reporting is the by-product of the process of financial accounting and includes the following:

- Preparation of the financial statements which includes; Balance Sheet, Income Statement and Cash Flow Statement - Notes to the financial statements - Press Releases and Conference Calls for declaration of quarterly ...

Post the Globalization era, the financial scandal of Enron and then the global economic and financial meltdown has raised the issue of convergence of the accounting standards. This is because both of the prevailing accounting standard, IFRS and GAAP, have different rules in their accounting standards, it has caused quite a complexity in the accounting world which is disclosed below: - It causes difficulty and complexity in comparison on financial statements. For instance, if an investor is analyzing an Australian Company and an American company in the same industry, where the Australian company is using IFRS Standards while US ...

Introduction

The main perspective of this assignment is to make a comparison between two different accounting standards which particularly are International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP). It is required to analyze both the accounting framework from four different angles that will be executed after analytical framework.

Analytical Framework

IFRS is the most widely chosen accounting standards that are taken into practice by many of the companies. The term IFRS is generally referred as “International Financial Reporting Standards” that is formulated to bring all business issues based on a platform of global identical language that helps to understand the company’ ...

Lease Accounting

Lease is an agreement between two parties whereby the owner of the asset, known as Lessor, allows the lessee to use his asset for contractual time period in return of fixed periodic payments.

In terms of accounting treatment; Leases are of two types:

- Finance Lease - Operating Lease A Finance lease is generally executed with an equal borrowing amount for purchase of an asset. Thus, since the asset is borrowed with a debt, an equal amount is added on asset and liability side of company’s balance sheet. Over the years, for the asset recorded in the balance sheet, company charges depreciation expenses on the asset and ...

[Author’s name] Accounting and finance are two different things and both of the provisions are important for an organization. Accounting is the name of recorded and maintain the data accordingly while finance is the name of utilizing the funds of an organization at a place from where the likelihood of earning would be on a higher place. Both of the departments are important for an organization because both of these organization deals entirely with the financial based competitiveness of an organization as a whole. The real productivity of an organization does not relate only with the selling of services ...

Introduction

The US General Accepted Accounting Principles (GAAP) refers to the accounting standard that is being used in the United States, while the International Financial Reporting Standards (IFRS) refers to the accounting standard that is being used in more than one-hundred and ten countries around the globe. One of the main differences between the above two accounting standards is that GAAP accounting system is considered to be more “rules-based”, while IFRS is considered to be more “principles-based”. IFRS is better as compared to GAAP and this is the reason why the US. Securities and Exchange and Commission are hoping ...

assignment

Answer 1)

i)Basis of Presentation and Principles of Consolidation: The financial statements of the company are consolidated and are prepared in accordance to US GAAP and as per rules of Security Exchange Commission. The consolidated Statements consists of the accounts of Panera Bread Company and its wholly owned subsidiaries both direct and indirect. ii)Fiscal Year:

The fiscal year of the company is reported to be last tuesday of every december.

iii)Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the ...

Financial Reporting

Customer Inserts Tutor’s Name (30, 09, 2013) Deferred tax asset is an asset reported on the Statement of Financial Position of a company that will be used in paying taxes for subsequent accounting periods. From financial point of view, deferred tax assets actually reduce the income tax expense for the upcoming periods. On the contrary, the deferred tax liability is an account on the balance sheet which appears because of the temporary differences arises as a result of difference between the profit calculated for accounting purposes and profit computation for the purpose of taxation. In the year end ...

U.S. GAAP versus IFRS.

ABSTRACT

There are notable differences between the International Accounting Standard Boards and the Financial Accounting Standard Boards models of accounting for income tax. Efforts to harmonize the two standards through the Exposure Draft were dropped in 2009 and have not been reviewed thereafter. In 2012, SEC staff provided a final IFRS framework that outlined its efforts and findings but did not provide any conclusions or recommendations for any actions. The difference between IFRS and US GAAP remain significantly felt in many areas and are of major interests to users of financial statements. The main areas of comparison ...

Paper Outline

Introduction 3 How to Follow/Maintain Ethical Standards in Accounting 3 How to deal with Unethical Situation in accounting 4 Conclusion 5

References 6

Introduction Ethical standards in accounting entails rules and procedures that professional accountant must follow whenever preparing financials statements in order to disclose the true states of affaires as represented on the ground. Incase such financial statement are audited by an independent body, the body should come up with the same findings arrived by a professional accountant. The professional accounting standard board requires all accountants to observe code of ethics when preparing financial statement to avoid ...

CHAPTER ONE

1.0 Introduction This chapter provides the background to the study. It details the problem statement, research objectives and research questions. 1.1: Background of the Study As businesses grow out of the start-up period and expand their capital and operation, size and product or service offerings, their accounting based informational needs some changes (Bodnar, 2010). Most small business start-ups begin with an off-the-rack accounting based package for instance Peachtree or QuickBooks and run the basic accounting reports from them. However, there comes a time when the environment, government, accounting rules and standard and other technological based factors force ...

Introduction

The quality of accounting standards influences the efficiency in the functioning of the economy. This is because the decisions regarding the allocation of resources to different sectors are heavily reliant on understandable and credible information. The accounting profession in addition to those that produce and utilize financial statements is facing challenging and difficult practical and conceptual issues. Deep-seated differences exist between contrasting regulatory philosophies and established rational approaches. Over time, the looming question has been the degrees of detail required in setting standards for the profession. Another looming question has been whether the standards established should attempt to describe ...

Accounting and economic development.

Economic development entails increases in production, consumption, savings and investments. The foundations of accounting theory lie on pricing and profit maximization strategies with reduced levels of risk in both management and production process. The consumer model relies heavily on profit and pricing strategies put forward by accounting theory. Development of accounting in an economy implies adherence to professional accounting, FASB, IASB and GAAP standards. Implementation of these standards imply that resources are put to their maximum use, distributed evenly according to felt needs, profit maximization with consideration of consumption behavioral trends, and reduced risks incurred in running businesses. ...

Amongst the various sources of finance, like sale of financial instruments, or even borrowing loans from banks and other financial institutions, a very popular method is lease or lease financing, that is defined by the Leases Exposure Draft of the International Accounting Standards Board (IASB) & Financial Accounting Standards Board (FASB) as “a contract in which the right to control the use of a specified asset (the underlying asset) is conveyed to a customer, for a period of time (throughout the lease term), in exchange for some consideration (periodic rental payments), if the customer has the ability to direct the use, and receive benefit ...

Accounting concepts define the manner in which organizations and businesses report financial position of the organization and therefore it is a succinct analysis of the general operation of a business. Thus, different accounting model would define the same business in different perspective. One model may provide a view that the business is on solid standing reporting impressive profits and sound financial backing. Other models may find the same business in poor financial standing. Internationally, there abound inherent difference in financial reporting and this difference has not been thoroughly evaluated. However, some nations such as the United States and the United Kingdom have ...

Introduction

Financial instrument can be defined as any form of contract leading to a financial asset rise on one entity and a subsequent financial liability on another entity or an equity instrument. Financial assets means things like cash, other entities equity instruments, contractual rights to obtain cash or other form of financial asset of other entities, and rights for exchanging financial assets or liabilities with favorable conditions for the entity. On the other hand, financial liabilities involve things like contractual obligation to send cash or other financial assets to other entities, and under the obligation for exchanging financial assets under unfavorable terms ...