Intermediate Accounting

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22 Accounting in a Global Market Overview Presently there is a dramatic shift toward the acceptance and use of International Accounting Standards Board (IASB) accounting standards. The standards of the IASB are called International Financial and Reporting Standards (IFRS). In 2007 the Securities and Exchange Commission (SEC) approved the use of IASB standards for the financial reports of non U.S. companies with shares traded on U.S. stock exchanges. This change, which took effect on March 4, 2008, allows non-U.S. companies to use IFRS instead of U.S. GAAP in their financial statement filings with the SEC. Before March 4, 2008, foreign companies who wished to have their shares traded in the United States had to have their financial statements reconciled to U.S. GAAP. The purpose of this reconciliation process was to increase the comparability of financial information produced by non-U.S. companies to financial information produced by U.S. companies whose financial statements were produced in conformance to U.S. GAAP. This reconciliation of foreign income into U.S. GAAP income was accomplished on the SEC’s Form 20-F . Finally, U.S. companies frequently have foreign operations which generate their own financial statements. These foreign financial statements are frequently stated in the local currencies of the foreign operations. These statements are translated back into U.S. dollars (and U.S. GAAP) for consolidated financial accounting purposes. You will likely encounter more of the details involved in foreign currency translation issues in an advanced accounting course and/or textbook. Learning Objectives Refer to the Review of Learning Objectives at the end of the chapter. It is crucial that this section of the chapter is second nature to you before you attempt the homework, a quiz, or exam. This important piece of the chapter serves as your CliffsNotes or “cheat sheet” to the basic concepts and principles that must be mastered.
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22-2 Chapter 22 If after reading this section of the chapter you still don’t feel comfortable with all of the Learning Objectives covered, you will need to spend additional time and effort reviewing those concepts that you are struggling with. The following “Tips, Hints, and Things to Remember” are organized according to the Learning Objectives (LOs) in the chapter and should be gone over after reading each of the LOs in the textbook. Tips, Hints, and Things to Remember
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032459237X_177440 - 22 Accounting in a Global Market...

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