Over the last five years the fasb has worked jointly

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maintaining the highest quality accounting standards in the United States.” Over the last five years, the FASB has worked jointly with the IASB on issuing new standards and converging accounting standards. 11 - 1
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7. The FASB outlined the following four points: a. The FASB has a leadership role to play in the evolution of the international accounting system. b. The FASB is willing to commit the required resources needed to ensure high quality standards while increasing the convergence and quality of standards used in different nations until the ideal outcome is achieved. c. The FASB will participate in establishing a quality international accounting standard-setting structure and process. d. The FASB recognizes that structural and procedural changes to the FASB may result, as well as potential changes in its national role. 8. Some of the major differences between U.S. GAAP and IFRS are: a. LIFO is acceptable in the U.S. but not allowed under IFRS. b. IFRS requires that the parent and subsidiaries use the same accounting methods, while in the U.S. they can use alternative methods. c. R&D is expensed in the U.S. while only research is expensed under IFRS and development costs are capitalized and amortized over future years. Business Ethics Business ethics solutions are merely suggestions of points to address. The objective is to raise the students' awareness of the topics, and to invite discussion. In most cases, there is clear room for disagreement or conflicting viewpoints. 1. The separation of duties is an important feature of maintaining adequate internal controls. In this case, the individual submitting invoices should not be the same individual that approves the invoices. It is appropriate for high level management to approve departures from normal procedures, but it is still necessary to have controls to address this case. 2. Unfortunately there are instances where ethics and compliance programs are designed for mid- and lower-level employees. This should not lead anyone to believe that upper-level managers are always ethical. 3. This is a very difficult issue for companies to balance. On one hand, the managers of these companies do not want stockholders and other users of the financial statements to have a mistaken belief concerning the issues at hand. If the information is not reliably disclosed, there might be an adverse impact on the firm’s stock price. But at the same time, they don’t want to appear to be hiding information. In this case, the users might believe that more significant issues are being withheld, and a negative stock price reaction might occur regardless. 11 - 2
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EXERCISE 11-1  Component Depreciation  LO2 The following entries would be recorded assuming either U.S. GAAP or IFRS is used. U.S. GAAP Asset 100,000 Cash 100,000 IFRS Building – electrical systems 12,000 Building – roof 15,000 Building – Other 73,000 Bank/Liability 100,000 The entry to record depreciation expense would be: Part A : Depreciation expense U.S. GAAP Depreciation ($100,000/40) 2,500 Accumulated Depreciation 2,500 Part B: Depreciation expense IFRS Depreciation Building – electrical systems (12,000/20) 600 Depreciation Building – roof (15,000/15) 1,000 Depreciation Building – Other (73,000/40) 1,825 Accumulated Depreciation – building 3,425 11 - 3
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EXERCISE 11-2
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