Exercise 4 (LO 7) Differences between U.S. and non-U.S. GAAP. The SEC allows foreign registrants to file financial statements prepared on the basis of either U.S. GAAP, International Accounting Standards (IASs), or their own national GAAP. However, if U.S. GAAP is not employed, companies must provide reconciliation to U.S. GAAP.

1. Discuss how accounting for marketable securities differs among the United States, International Accounting Standards, and Mexico.

2. Given the financial excerpts in Exhibit 9-2, explain the differences in accounting for development costs and how these differences affected the pretax income of Nokia Corporation.

3. Using a financial disclosure database such as the SEC’s EDGAR system, identify a company with a Form 20–F reconciliation from non-U.S. to U.S. GAAP, and explain the nature of the major reconciling differences and the effect such items had on reported net income.

4. Access the Web site of the IASC , and for a given country, identify the standard-setting body and determine whether IASs are adhered to.