Questions and Answers of Comparative International Accounting

Prepare a balanced scorecard for HSBC Bank (http://www.hsbc.com).
Prepare a balanced scorecard for Médecins Sans Frontières (http://doctorswithoutborders.org).
Starting with Table 23.3, prepare Talca Fruta’s sales budget and variance report for 2010. Assume that Talca Fruta plans that its 2010 results (prices in A and volume) in Europe will mirror those
Which factors could have been used at the beginning of the 1990s to predict the direction in which Chinese accounting would develop?
Give examples of accounting topics on which there are major differences between two national accounting systems or between a national system and IFRS.Are the arguments for differential reporting
Compare the composition and the roles of the ASB in the UK and the ANC in France.
Why has the ASB in the UK decided to converge (partially but not completely) UK standards for individual companies with IFRS?
One of the original aims of the Seventh Directive was to assist with the supervision of multinational enterprises by their host countries. Examine and discuss arguments for and against such a desire
The United States and United Kingdom are reasonably similar with respect to the causes and nature of differences in financial reporting. Identify and discuss factors that may account for the existing
Using the reconciliations of this chapter and the information in Chapter 2, comment on the adjustments necessary when moving from German or UK accounting to US or IFRS accounting.Chapter 2 Table 5.8
To what extent do global management accounting practices exist regardless of national boundaries?
Give examples of options allowed in IFRS and how they might be chosen differently in different countries.
To what extent are the reasons for different European accounting systems still relevant as reasons for different European IFRS practices?
In the United Kingdom, different types of individual company have different accounting rules.Why is the distinction between types of company not based solely on whether the company is public or
Sony Corporation, headquartered in Tokyo, Japan, is one of the largest multinational companies in the world. While Sony’s financial reporting currency is the Japanese yen, the company’s foreign
Ontario Trust Corporation (OTC) purchased 5,000 shares of Lilly Company for $25 per share on November 1, Year 1. As allowed under IFRS 9, OTC chose to classify its investment in Lilly’s equity as
In a referendum on June 23, 2016, the UK electorate voted to leave the European Union (EU). On March 29, 2017, the British government invoked Article 50 of the Treaty on the EU. The UK is planning to
Given its experience, Garnier Corporation expects that it will sell goods to a foreign customer at a price of 1 million lire on March 15, Year 2. To hedge this forecasted transaction, a three-month
What happened in the United Kingdom in June 2016 and why is the event important for the accounting items covered in this chapter?
How are foreign currency derivatives such as forward contracts and options reported on the balance sheet?
What was the net impact on Keefer Company’s Year 2 income as a result of this fair value hedge of a firm commitment? a. $0. b. An $839.40 decrease in income. c. A $74,160.60 increase
Assuming no forward contract was entered into, how much foreign exchange gain or loss should Reiter report on its Year 1 income statement with regard to this transaction? a. A $5,000
Which of the following correctly describes the manner in which Tackett Company will report the forward contract on its December 31, Year 1, balance sheet? a. As an asset in the amount of
Portofino Company made purchases on account from three foreign suppliers on December 15, 2017, with payment made on January 15, 2018. Information related to these purchases is as
Indicate whether each of the following describes an accounting treatment that is acceptable under IFRS, U.S. GAAP, both, or neither by checking the appropriate box. Acceptable Under IFRS U.S.
On January 1, Year 1, Autonomous Systems Ltd. (ASL) signed a contract to lease computer equipment from Lenovo for three years. The lease agreement requires ASL to pay $30,000 at the end of each year
The Midwest Bank Corporation (MBC) made a five-year $10 million loan to Mattress Mart. The loan carries an annual interest rate of 6 percent. MBC accounts for the loan using the amortized cost
Manitoba Insurance Ltd. (MIL) purchased $10 million of bonds on January 1, Year 1. The bonds were to mature at the end of Year 2 and pay interest equal to 5 percent of their face value at the end of
Huang Industries, Ltd. (HIL) is based in Singapore and manufactures tools used in Asian auto factories. Shanghai Automotive Industry Corporation (SAIC) purchased $60 million worth of tools from HIL
KLB Inc. makes satellite phones for the military that incorporate complex software. The company’s most recent annual report included the following statement about its revenue recognition policy:
How is a major customer-defined?
La Panaderia del Sol (LPS), a Mexican bakery, sold a gift card to a customer for 1,000 pesos on December 1, Year 1. At the time of the sale, LPS debited cash and credited an unearned revenue
How much revenue must be generated by a company’s reportable segments?
Segment-level operating results are reviewed by which corporate officer?
A cement manufacturer has cement plants around the world and decides to sell one of the plants within the next 12 months. Would this cement plant be classified as a discontinued operation in the
Belmond Manufacturing Inc., a U.S.-based company, operates in three countries in addition to the United States. The following table reports the company’s pretax income and the applicable tax rate
By what cut-off date should an entity adjust its financial statements for events occurring after the reporting period?
What is the primary difference between IFRS 16 and the new U.S. lease accounting standard, ASC 842?
Which types of equity investments are excluded from the scope of IFRS 9?
What is the primary difference between how IFRS and U.S. GAAP account for equity investments?
How are convertible bonds measured initially on the balance sheet?
What are the three categories of financial assets and which is the residual category?
What is breakage revenue?
What is variable consideration and how is it measured?
What two performance obligations are generally part of a software sales agreement?
What are the five steps that entities take to recognize revenue under IFRS 15?
How are deferred taxes classified on the balance sheet?
Monterrey Properties enters into a 3-year lease for an automobile to be used by its CEO. The agreement obligates the company to make lease payments of $600 at the end of every month of the lease
A $3 million loan paying annual interest at a 5 percent rate has been classified as Stage 3 by the lender. Expected credit losses over the next 12 months are $80,000. However, expected credit losses
What are the rules related to the recognition of a deferred tax asset?
Siam Financial Corp. (SFC) actively trades bonds but chooses not to hedge any of its open positions. At the beginning of the year, SFC purchased 50 million baht of Thai government bonds paying 4
How does an entity account for a choice-of-settlement sharebased payment transaction?
Which of the following is a criterion that must be met to recognize revenue from the sale of goods? a. The receipt of consideration to which the entity is entitled under the contract must be
In accounting for post-employment benefits, when are past service costs and actuarial gains and losses recognized in income?
On April 20, 2010, an explosion at BP PLC’s Macondo well in the Gulf of Mexico caused the largest oil spill and one of the worst environmental disasters in U.S. history. Because the incident
Louis Vuitton Moët Hennessy (LVMH), the well-known French luxury goods company, bought from the Bulgari family a controlling 66 percent interest in Bulgari SpA, the Italian jewelry maker. The value
Prime Publishing, Inc., purchased 100 percent of the outstanding common stock of Select Media, Inc., on January 1, 2014, for $3,000,000. The following schedule outlines how the purchase price was
The global equities team at your bank is considering investing in Remy Corporation. Remy uses IFRS and capitalizes product development costs when they meet the criteria laid out in IAS 38. You have
Honda Motor Company converted from U.S. GAAP to IFRS at the beginning of fiscal 2015. At that time, Honda began capitalizing new development costs. It also applied the capitalization rules of IAS 38
On January 1, Year 1, Holzer Company hired a general contractor to begin construction of a new office building. Holzer negotiated a $900,000, 5-year, 10 percent loan on January 1, Year 1, to finance
QualCore Company began operations on January 1, Year 1, and uses IFRS to prepare its financial statements. QualCore reported net income of $1 million in Year 5 and had stockholders’ equity of $5
What is effective control and how is it determined when a parent company does not own a majority of the voting stock of a subsidiary?
Which intangible assets are subject to annual impairment testing?
This is a continuation of problem 15. At December 31, Year 2, Beech Corporation still had the same three different products in its inventory. The following table provides updated information for the
In the fourth quarter of Year 1, Beech Corporation produced three products (related to different product lines) that it still has in inventory at December 31, the end of its fiscal year. The
When a previously recognized impairment loss is subsequently reversed, what is the maximum amount at which the affected asset may be carried on the balance sheet?
This is a continuation of problem 12. In which of the five scenarios described below might Changsha Corporation record a gain on the asset in its income statement? (You may select more than
Changsha Corporation purchased an asset during the fourth quarter of the current fiscal year. It is now the end of the fiscal year, and the asset’s fair value exceeds its historical cost. In
How does accounting for bearer plants differ from that for other biological assets?
Saratoga Corporation owns significant amounts of the common stock in three Japanese corporations. The following table describes these investments: Representation on the boards of directors of
What are the similarities and differences between the fair value models applied to investment properties and biological assets?
Pearl Corporation bought Noodle Bowl Limited at the end of the fiscal year. While negotiating the purchase price, Pearl?s management team referred to the following three recent appraisals from
Where in the food products value chain are biological assets generally located, and which types of businesses are likely to use IAS 41?
What types of businesses are likely to own investment property and thus use IAS 40?
In what way does the fair value model for an investment property differs from the revaluation model for PPE?
Under IFRS, an entity that acquires an intangible asset may use the revaluation model for subsequent measurement only ifa. The useful life of the intangible asset can be reliably determined. b.
An asset is considered to be impaired when its carrying amount is greater than its a. Net selling price. b. Value in use. c. Undiscounted future cash flows. d. Recoverable amount.
When an entity chooses the revaluation model as its accounting policy for measuring PPE, which of the following statements is correct? a. When an asset is revalued, the entire class of PPE to
How are the estimated costs of removing and dismantling an asset handled upon initial recognition of the asset?
Telco Ltd. is a Danish telecom company that prepares consolidated financial statements in full compliance with IFRS 10. The company has expanded dramatically in Central Asia in recent years by
A company determined the following values for its inventory as of the end of its fiscal year: Historical................... $50,000Current replacement cost...........$35,000Net realizable
How do IFRS and U.S. GAAP differ in their approach to allowing reversals of inventory write-downs?
Jaguar Land Rover Automotive PLC (JLR) is a maker of luxury autos based in Coventry, United Kingdom. JLR uses IFRS and has a fiscal yearend of March 31. You have been asked to use your knowledge of
What is the current status of convergence between the FASB and the IASB?
What is the main difference between the two approaches to accounting standard-setting taken by the FASB and the IASB?
To what extent have IFRS been adopted by countries around the world?
The appendix to this chapter describes what is commonly referred to as Anglo-Saxon accounting. Required: Explain why Anglo-Saxon accounting might be of interest to Chinese accounting
The professional accounting bodies in many countries have taken, or are taking, steps to adopt IFRS.Required:Go to the website of a professional accounting body of your choice and outline the steps
The SEC has lifted its requirement that foreign companies, which have used IFRS as the basis for preparing their financial statements, must reconcile their financial statements using U.S. GAAP in
What are the conditions to be satisfied if a firm wants to claim that its financial statements have been prepared in accordance with IFRS?
IFRS 10 introduced a model for an investor to have control over an investee. Required: Explain the control model introduced by IFRS 10.
As expressed in IAS 1, what is the overriding principle that should be followed in preparing IFRS-based financial statements?
Recently the IASB revised IFRS 1. Required: What is the main reason for this revision?
The Financial Times, on Tuesday, April 13, 2004, made the following comment in its editorial, “Parmalat: Perennial Lessons of European Scandal: Urgent need for better enforcement and investor
In its 2003 annual report, Honda Motor Company LTD states (p. 59) that its manufacturing operations are principally conducted in 25 separate factories, including 5 in Japan; the Japanese factories
Why was IOSCO’s endorsement of IAS so important to the IASC’s efforts?
Today several countries still do not permit domestic-listed companies to use IFRS. Required: Identify three countries from this group that is likely to have different reasons for not
The Jardine Matheson Group is a major conglomerate within the Asian region. Its business interests include large companies, which are market leaders in many fields, including engineering and
What are the different ways in which financial statements might differ across countries?
In what way does Nobes’s simplified model of accounting diversity appear to explain accounting developments that have occurred in Europe over the past three decades?

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