John McCurdy has recently joined a consultant group that provides investment advice to the managers of a
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Question:
John has been following the fortunes of Ajax Communications Corporation for a number of years. Ajax is a Canadian company listed on the TSX. At the beginning of this past year, Ajax acquired 60% of the shares of Waqaas Inc., a U.S. company, which was and continues to be listed on the NYSE. Ajax must decide whether to prepare Financial Statements for Waqaas in accordance with IFRS or U.S. GAAP for reporting to the SEC.
As a starting point, John asked for and received the following comparison of financial statement information under U.S. GAAP and IFRS from the controller at Waqaas (in millions of dollars):
Working with this list, John's next step will be to determine why there is such a difference in the numbers.
Required:
(a) As John McCurdy, outline the initial approach that you will take in order to determine the reasons for the differences in the numbers.
(b) List some of the obvious items that need resolution, and indicate some of the possible causes of the discrepancies.
(c) In your opinion, which GAAP best reflects economic reality? Briefly explain.
Related Book For
Accounting
ISBN: 978-1118608227
9th edition
Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett
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