Essays on Accounting Standards

The Financial Accounting Standards Board (FASB) is an independent body which was formed with the intent to develop and improve the generally accepted accounting principles in the United States (Financial, 2017). The financial accounting guidelines and reporting standards promulgated by this body are aimed at protecting the interest of the public, as per order by the Securities and Exchange Commission. The FASB has a role in protecting the public interest, thus it shares a collective mission with with the FAF and the Governmental Accounting Standards Board (GASB). These agencies have a mission “to establish and improve financial accounting and ...

Careers in Accounting

The first career option for the professional with the accounting education is the audit and assurance job. The main reason for the auditing job is that it is related to the accounting standards such as IAS, IFRS and US GAAP. The main responsibility of the auditor is to inspect and review the annual financial statements of the company. Therefore, due to the professionalism, integrity and the competence level of the accountants, the professionals with the accountancy knowledge can pursue as the professional accountant. (Mally, 2015) Another career option for the professionals with the accounting education is the asset manager ...

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 ...

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Accounting Standard Setting under the Australian Conceptual Framework and Application in Business Practices

Introduction A conceptual framework establishes the concepts and provides the guidelines that underlie financial reporting. As a coherent system of notions that flow from an objective, which in turn serve to identify the purpose of financial reporting, a conceptual framework also provides guidance on the identification of the boundaries of financial reporting. Its concepts further provide guidance on the selection of transactions, related events, and circumstances to be presented, and how such elements should be summarized and ultimately reported (Financial Accounting Standards Board [FASB], 2008). One such conceptual ...

Significant Areas Addressed by Management

Cedar addresses the compliance of the guidelines of Government Accounting Standards Board in the city accounting reports. Compliance to (GASB) regulations through the provision of an overview of its financial performance for the fiscal year Accounting Policies Utilized by the City The policies include Analysis of financial statements The policies of liabilities, assets, deposits and investments (Rodenbeck, 2013) Statistical Section The statistical section will cover the computational outcomes of the management decisions. For example Depreciation of capital assets over the respective annual ranges The effects of deposits and investments Determining the values of the net assets, and its liabilities ...

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 ...

Income Tax Accounting

Income Tax Accounting

According to IAS 12, deferred tax asset is used to describe an asset that will minimize the amount of tax that a firm wishes to pay in a future accounting period. In the future, it can be used as a write off element when the next tax period is projected to produce increased earnings. The IAS 12 offers that the difference in tax bases for an asset and deductible temporary difference is what creates a deferred tax asset. It implies that the future cash flows are significant. The taxes are usually plowed back into the business ...

Generally Accepted Accounting Principles (GAAP)

GAAP refer to accounting principles geared towards guiding firms in the preparation of financial statements through adherence to stipulated financial processes. GAAP incorporates authoritative standards, which are developed by numerous that facilitate the recording and reporting processes of financial accounting information (Barth et al., 2012: Kothari et al., 2010). The adoption of GAAP remains critical to firms as it promotes the efficiency of communicating financial information within the internal and external business environments. The process facilitates cross-examination and review of financial reporting among different companies in the market (Barth et al., 2012: Kothari et al., 2010). GAAP promotes the ...

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 ...

The economy is the major part of every country that is crucial for interpersonal and international relations. American capital markets are ones of the leading markets on an international scale, and their stability guarantees the further strengthening of American economic position. Under the conditions of the multi-party system and the possibility of the negative influence of politics on the country’s economy, it is important that American standard setting remains in the private sector. This paper aims to discuss the role of the concentration of accounting standard settings in the private sector in the issues related to the neutrality ...

Introduction

Multinational corporations across the world usually consolidate and present their operational results in financial and non-financial terms at the end of every term, usually a year. The financial aspect of reporting is supposed to comply with a clearly prescribed set of regulatory standards. The adoption of the International Financial Reporting Standards and GAAPs was meant to ensure that all compliant firms across the world produce financial statements that conform to the industry specific reporting frameworks and thus achieve a degree of uniformity in reporting. Different firms in operating in multiple locations operate under the strict guidelines of the specific ...

Article Reviews

The newly developed SASB allowed companies to take into consideration external events (Eccles, 2016) that cannot be controlled such as the effects of climate change. The reason for the accounting standard addition is that governments cannot ignore the effects on industrial markets and their investors (Eccles, 2016). The value of accounting standards is that it allows individuals, companies, and governments to generate wealth since it allows financial performance comparisons (Eccles, 2016). The problem is that there was no previous standard developed for nonfinancial performances (Eccles, 2016) especially on environmental and social activities.

Areas of Agreement

The advantage of the article is that ...

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 ...

Introduction.

The prudence concept has been an area of controversy, especially in accounting standards as there have been conflicting ideas on its relevancy and its desirability as a useful tool in the field of financial reporting. There has been a need to develop the prudence concept to suit financial reporting needs both in the contemporary context and in the future. A conceptual framework that incorporates the use of accounting practices that ensure consistency, coherence, acts as a guide to financial reporting and is easily understood by users is what is required for financial statement users.

Issue of prudence.

Over the years, there has ...

1.0 Abstract Stakeholders are of central importance to every business organization. The success of any business hinges on the relationship that it has with its stakeholders. Disclosure of quality financial reports is significant for the capacity of business organizations to build confidence with their key stakeholders. Corporate governance and the audit quality have attracted the interest of researchers to determine how they impact stakeholders. Additionally, the implementation of IFRS (International Financial Reporting Standards) has impacted the direction of business organizations especially with regards to corporate governance. The question of whether the quality and extent of disclosure of financial information ...

Response to an Audit Report Inquiry

Dear Dominique, I am writing this email in response to your request for clarification and explanation on the different types of audit reports. Generally, audit reports give an appraisal of a company or business’s financial performance and status during a specified period of time. These reports are usually completed by an independent accounting professional (internal or external), and cover the company’s assets and liabilities. Audit reports represent the auditor’s assessment of the company’s financial position and future status. In many countries, audit reports are required by law if the company is publicly traded or operates ...

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 ...

RESEARCH REPORT

INTRODUCTION The French accounting had a long way of establishment and development. More so as France was a country with many colonies throughout the whole world. Despite the fact that the metropolis did not really want to develop thee colonies, as only their resources interested the French government, the French accounting system still had an immense influence on the development of the accounting systems in these countries.

French accounting found its origins under the reign of Louis XIV. The first mention and example of an accounting attempt was undertaken when the French wrote an official document named “Ordonnance”. The ...

John Sunna

IFRS and GAAP are two most commonly used accounting standards. The differences between them complicate the comparability of financial statements of different companies. The accounting bodies understand the necessity of convergence of the two standards. Thus, the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) work on several joint projects to facilitate this process. This paper addresses the differences and similarities between IFRS and GAAP as regards accounting for financial instruments, long-term assets, and liabilities. IFRS 8-1: What are some steps taken by both the FASB and IASB to move to fair value measurement for financial ...

Executive Summary

The world experienced one of its worst recession which commenced in late 2007. One of the issues that emerged was criticism on the then accounting standards which prompted standard setters to respond. The G20 countries recommended the formation of financial crises advisory committee which developed various recommendations that led to the improvement of specific International financial reporting standards namely IFRS 10, 11, 7 and 9. Also, the recommendation led to the development of IFRS 12. These development were the key responses by the standard setters which are reviewed to demonstrate how they positively impacted the financial statements

Introduction

Towards the ...

What 2008 events gave rise to the need for this legislation?

The need for the Dodd-Frank Act (which complete name is the “Dodd–Frank Wall Street Reform and Consumer Protection Act”) was given rise by the financial crisis of 2007–08. This crisis triggered the Great Recession, an event many economists consider the worst crisis in the financial markets since the 1930’s (Dodd-Frank Financial Regulatory Reform Bill Definition, 2016). The United States had suffered a “housing bubble” – an unexpected and sharp increase in real estate prices, fueled by easy credit, that lasted over a decade – which had burst in 2004. Many traded financial instruments had their value directly or ...

There is a considerable and sizeable population of small business in the US economy. Statistically speaking there are over 28 million small business that occurs with small business specifically indicating businesses with fewer than 500 employees. Over 22, million individuals are self-employed without any additional payrolls or having employed other persons. Of the working population, a considerable percentage of over 50% that translates to 120 million individuals work in the small business (US statistics and data, 2016). Small business on average have modest turnovers that attract income taxes on the cash generated. Business entities are relevant in the generation ...

In the current century, the accounting and finance field have witnessed increased efforts to converge accounting standards to globally accepted universal standards. The fact owes to the dire need of increasing comparability of the financial statements of different firms in the various countries. Undoubtedly, there exist key areas of departure in different accounting standards applied in different countries. Of more interest, is the difference that exists between the two dominant accounting systems used by various corporations around the globe. That is the U.S. Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS). It is, however, worth ...

Part one

U.S president purchases a Mercedes Benz C230 Mercedes is made in Germany therefore it will have to be imported to the United States. This is a debit in the balance of payment account. Importing the Mercedes is a transfer of good meaning the current account will be the one to be affected.

U.S resident purchases Chevrolet Impala

Chevrolet is a U.S based firm. Therefore, this is a no entry to the country’s balance of payment statement.

Foreigner purchases GE dryer

GE is a company based in U.S. The country has to export GE dryer to the foreigner leading to a credit entry in the balance of payment. ...

Introduction

In the world of business, accounting is the spoken language that is used in different parts of the world. As such, there are two different spoken languages in financial accounting. The two sets of language dictate the financial reporting standards that are used. The major economies of the world use either the International Financial Reporting Standards (IFRS) or the United States Generally Accepted Principles (US GAAP) (Erchinger & Melcher, 2007). The two standards are regulated by two bodies that are (1) the Federal Accounting Standards Board (FASB) responsible for the GAAP and the International Accounting Standards Board (IASB) for the ...

In the accounting practice, the recognition of a deferred tax asset or liability takes into account the forecasted future effects of the tax associated with the short period differences. Under the current accounting principles, there is the differentiation of the deferred tax assets and liabilities into current and non-current amounts in the classified statement of financial position. The difference is based on how the particular assets or liabilities are classified for purposes of financial reporting. For those assets and liabilities for which there is no close association, the deferred tax is based on the anticipated date of reversal of ...

The FASB's direction on the utilization of limited assets is another territory of distinction and is taken as a standout amongst the most questionable steps that the FASB has brought concerning net revenue driven associations. The FASB orders the primary dollar discharge technique. Under first dollar discharge, confinements are discharged if unhindered assets are utilized for a reason for which limited assets are accessible. Albeit inward bookkeeping and reporting may not be influenced, the utilization of first dollar discharge changes over beforehand confined assets into unhindered assets essentially in light of the fact that they could have been used. ...

As per your request, I have prepared guidance on how to account for R&D costs related to the development of Achuin in accordance with the U.S. GAAP. The cost items discussed in the memo include; R&D expenses, purchase of patent, purchase of centrifuge, and the legal fees associated with the patent approval. R&D costs and the costs of purchasing the patent should be expensed while the costs of the centrifuge and the legal fees of applying for the patent should be capitalized. As a rule, R&D costs are expensed in the period they occur because at the time R&D ...

Q1. Accounting standards play a significant role in the financial statements preparation process. The main international standard-setting organization is the International Accounting Standards Board (IASB) headquartered in London. It issues International Financial Reporting Standards (IFRS) which are used in more than 115 countries and is gaining acceptance in other states as well. These standards are also used on most foreign exchanges. Moreover, the IASB also issues framework for financial reporting and international financial reporting interpretations. Besides, the International Organization of Securities Commissions (IOSCO) also plays a significant role in the international standard-setting process. It doesn’t develop accounting standards, ...

As requested, I have come up with an exclusive analysis on how Dylar Pharmaceutical Company (Dylar) should account for all research and development costs related to Achuin that also abides by the generally acceptable accounting principles. The company should highly comply with the principles in reporting of expenses and costs incurred via capitalization, or expensing of R&D costs are expensed. It is then clear that all expenditures incurred during a research and development process should be expensed, and all purchased intangibles with alternative future uses are capitalized. The expenses incurred during a research and development process should be expensed. ...

The creation of cash flow statement was done by the FASB so that the stakeholders of the business including creditors, owners, and managers can receive a higher amount of information about the receipts and expenditures of cash. Though there is the provision of showing the cash balances in the balance sheet at the end of every period, there is no further information given on the balance sheet, statement of owner’s equity or income statement. The creation of a cash flow statement solves this problem without fail. The basic purpose of a cash flow statement is the provision of ...

Introduction

Studying accounting has been one of my interests since I was a child. Being in accounting classes was really enjoyable from the start. However, although studying the concept in class was interesting, I found it more thrilling to put to work some of the skills that I had learned. I was privileged to get an internship at PWC, one of the big four auditing firm, which I started on January 4th the year 2016. Through this internship, I was exposed to real-life accounting and auditing experiences which I had spent the last several years preparing. As such, this report ...

Identify different users of accounting information and discuss the varying information needs of these users.

Users of accounting information are both - internal & external to the company in question. Internal users are the primary users of accounting information. They are company managers, employees and proprietors. Managers make use of the accounting information for analysis purpose regarding the company’s output and ranking so that suitable measures could be taken for bettering company performance. Next-in-line internal stakeholders are company employees. Their information needs are different from that of company managers. They use company information for measuring the earnings made by the company and deriving results thereof for relating with their future income and job safety; ...

As per the requirement of the FASB, No. 116 of the SFAS should address the Accounting for Contributions Made and Received. On the other hand, No. 117 should address the Financial Statement of non-profit making organizations. The above statements illustrate how non-profit making companies should make reports on their contributions. Furthermore, it indicates how the contribution of such companies is presented in the financial statements. Therefore, this paper will assess the requirements of the Statement of Financial Accounting Standards (SFAS 116 and 117) and how they influence the financial statements. Statement No. 116 establishes the standards of accounting for ...

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 ...

GOODWILL CASE

Despite the fact that, a business venture may claim to own numerous intangible assets, not all of its intangible assets qualify to appear on the balance sheet. Intangible assets will only appear on the balance sheet based on the following criteria of restrictions; intangible assets will qualify to appear on the balance sheet only if; the business venture acquired the assets i.e. if the intangible assets are not developed within the business enterprise. Also intangible assets can only appear on the balance sheet if they can be identified in terms of value and have a useful timeline and therefore ...