IASB Accounting Standards - Wiley

Question 1

What is the highest level of international generally accepted accounting principles (GAAP)?

Answer 1

The International Financial Reporting Standards

Question 2

Under International Financial Reporting Standards (IFRS), if no standards exist on an accounting issue, what should companies use?

Answer 2

The definitions, recognition criteria, and measurement concepts for assets, liabilities, income, and expenses in the Framework

Question 3

Are International Financial Reporting Standards (IFRS) more rules based or principle based?

Answer 3

Principle based

Question 4

What is simplified for small and medium-sized entities (SMEs) in International Financial Reporting Standards (IFRS)?

Answer 4

1. Topics that are irrelevant are eliminated.
2. Recognition and measurement aspects are simplified.
3. Disclosures reduced to 10% of those in regular IFRS.

Question 5

When can revisions happen for small and medium-sized entities (SMEs) in International Financial Reporting Standards (IFRS)?

Answer 5

Revisions for SMEs standards happen every three years at most

Question 6

What are some omitted topics for small and medium-sized Entities (SMEs) in International Financial Reporting Standards (IFRS)?

Answer 6

1. Earnings per share
2. Interim financial reporting
3. Segment reporting

Question 7

List some examples of simplified recognition and measurement for small and medium-sized entities (SMEs) in International Financial Reporting Standards (IFRS).

Answer 7

1. Goodwill is amortized.
2. All research and development is expensed.
3. Categories of investments are reduced.
4. Less prior-year data is required for first-time adoption.

Question 8

List the steps of developing International Accounting Standards.

Answer 8

1. Add the item to the agenda.
2. Discuss the issue.
3. Publish a discussion paper if the topic is difficult.
4. Prepare and vote on the exposure draft.
5. Issue the exposure draft.
6. Analyze comments on the exposure draft.
7. Debate the issue at hand.

Question 9

What did the Securities and Exchange Commission (SEC) eliminate for foreign companies listed in the United States?

Answer 9

A reconciliation of earnings and equity to U.S. generally accepted accounting principles (Form 20-F) in their financial statements.

Question 10

Does the International Accounting Standards Board (IASB) framework include losses for the term “expense”?

Answer 10

Yes, it includes such losses.

Question 11

What elements of the Financial Accounting Standards Board (FASB) framework are not included in the International Accounting Standards Board (IASB) framework?

Answer 11

1. Investments by owners
2. Distributions to owners
3. Comprehensive income
4. Gains
5. Losses

Question 12

What elements are considered income under the Financial Accounting Standards Board (FASB) framework?

Answer 12

“Revenue” and “gains” as separate elements

Question 13

What will be the underlying conceptual support for future principles-based accounting standards?

Answer 13

Developing a common framework

Question 14

When do you recognize an element in the International Accounting Standards Board (IASB) framework?

Answer 14

When it is probable that there is a future economic benefit and the item has a cost or value that can be measured with reliability

Question 15

What are the underlying assumptions of the International Accounting Standards Board (IASB) framework?

Answer 15

The financial statements are prepared on the accrual basis.

The entity is a going concern.

Question 16

What is meant by a “reliable measurement”?

Answer 16

It is a measurement in which a reasonable estimate is made.

Question 17

True or False: Income may be realized or unrealized.

Answer 17

True.

Question 18

True or False: The International Accounting Standards Board (IASB) framework should apply only to public companies, not private corporations.

Answer 18

False. The IASB framework should apply to both public and private companies.

Question 19

What are some of the purposes of the International Accounting Standards Board (IASB) framework?

Answer 19

1. Assist the board to develop new International Accounting Standards (IASs)
2. Promote harmonization of standards
3. Assist and provide information to interested parties

Question 20

What are the five elements in the International Accounting Standards Board (IASB) framework?

Answer 20

Assets
Liabilities
Equity
Income
Expenses

Question 21

What comprises income under the International Accounting Standards Board (IASB) framework?

Answer 21

It includes both revenues and gains.

Question 22

What are the various types of generally accepted accounting principles which may be used by a U.S. entity?

Answer 22

Depending on the entity, the following types of generally accepted accounting principles may be used:

1. U.S. Generally Accepted Accounting Principles (GAAP);
2. U.S. Other Comprehensive Basis of Accounting (OCBOA);
3. International Financial Reporting Standards (IFRS);
4. IFRS for Small and Medium-sized Entities (SMEs).

Question 23

Identify the types of entities that are not eligible to use IFRS for SMEs.

Answer 23

1. Entities that are required to file financial statements with a regulatory body (e.g., SEC) for the purpose of issuing securities in a public market; or
2. Entities that hold assets in a fiduciary capacity for a broad group of outsiders (e.g., banks, insurance companies, pension funds, etc.).

Question 24

Identify some of the possible advantages of using IFRS for SMEs, instead of U.S. GAAP, by eligible entities.

Answer 24

1. More relevant standards;
2. Less complicated and voluminous standards;
3. Less costly standards to implement;
4. Less frequent changes in standards.

Question 25

What should financial statements do according to International Financial Reporting Standards (IFRS)?

Answer 25

Fairly present the underlying financial position and financial performance of the entity by faithfully representing the underlying economic reality the firm faced during the period

Question 26

What is the overall objective of financial statements under International Financial Reporting Standards (IFRS)?

Answer 26

To provide information about the financial position, financial performance, and cash flows of an entity that is useful to a wide range of users in making economic decisions

Question 27

What type of balance sheet is required under International Financial Reporting Standards (IFRS)?

Answer 27

Statement of financial position items must be classified as current and noncurrent.

Question 28

Do International Financial Reporting Standards (IFRS) allow the term “reserve” on the balance sheet?

Answer 28

Yes, the term “reserve” is allowed.

Question 29

What two formats are accepted under International Financial Reporting Standards (IFRS) for income statement presentation?

Answer 29

1. Single-step statements

2. Multiple-step income statements

Question 30

Is a separate statement of other comprehensive income one of the formats permitted under International Financial Reporting Standards (IFRS)?

Answer 30

Yes, this is one of the formats permitted under IFRS.

Question 31

Do International Financial Reporting Standards (IFRS) have a required minimum list of items to be reported on the income statement?

Answer 31

Yes, the standards have a minimum list of items.

Question 32

Are extraordinary items allowed in International Financial Reporting Standards (IFRS)?

Answer 32

No, extraordinary items are not allowed.

Question 33

How are expenses classified under International Financial Reporting Standards (IFRS)?

Answer 33

They are classified by business function or nature of the expense.

Question 34

Do International Financial Reporting Standards (IFRS) allow revaluation of plant assets and intangibles to fair value as a other comprehensive income item?

Answer 34

Yes, the standards allow this.