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CHAPTER 1 k
Financial Reporting and Accounting Standards
k k k k
ASSIGNMENTkCLASSIFICATIONkTABLE
Topics Questions Cases
1. Globalkmarkets. 1
2. Environmentk ofk accounting. 2,k3,k4 4,k5,k7
3. Objectivek ofk financialk reporting. 5,k6,k7,k8,k9,k10 2
4. Standard-settingk organizations. 11,k12,k13,k14, 1,k3,k6
15,k16,k17,k18
5. Financialk reportingk challenges. 19,k20,k21,k22, 8,k9,k10
23,k24,k25
6. Ethicalkissues. 26 11,k12,k16
*7. Authoritativek U.S.k pronouncements 27,k28,k29,k30,k31, 13,k14,k15
andk policy-settingk bodies. 32,k33,k34,k35,k36,
37,k38
*Thesekquestionskandkcaseskaddresskmaterialkinkthekappendixktokthekchapter.
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ASSIGNMENTkCHARACTERISTICSkTABLE
Levelkofk Timek(minute
Item Description Difficulty s)
CA1-1 IFRSk andk standard-setting. Simple 5–10
CA1-2 IFRSk andk standard-setting. Simple 5–10
CA1-3 Financialk reportingk andk accountingk standards. Simple 15–20
CA1-4 Financialk accounting. Simple 15–20
CA1-5 NeedkforkIASB. Simple 15–20
CA1-6 IASBkrolekinkstandard-setting. Simple 15–20
CA1-7 Accountingk numbersk andk thek environment. Simple 10–15
CA1-8 Politicalizationk ofk IFRS. Complex 15–20
CA1-9 ModelskforksettingkIFRS. Simple 10–15
CA1-10 Economick consequences. Moderate 25–35
CA1-11 Rule-makingk Issues. Complex 20–25
CA1-12 Financialk reportingk pressures. Moderate 25–35
*CA1-13 GAAPk terminology. Moderate 20–30
*CA1-14 Accountingk organizationsk andk documentsk issued. Simple 3–5
*CA1-15 Accountingk pronouncements. Simple 5–7
CA1-16 GAAPk andk economick consequences. Moderate 25–35
1-2 Copyrightk©k2011kJohnkWileyk&kSons,kIn Kieso,kIFRS,k1/e,kSolutionskManua (ForkInstructorkUsekOnly
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ANSWERS TO QUESTIONS k k
1. Worldkmarketskarekbecomingkincreasinglykintertwined.kThektremendouskvarietykandkvolumekofkboth
kexported k andk imported k goodsk indicatesk thek extensivek involvementk in k international k trade.k Ask
akresult,kthekmovektowardskadoptionkofkinternationalkfinancialkreportingkstandardskhaskandkwillkcontin
uekinkthekfuture.
2. Financialkaccounting kmeasures,kclassifies,kandksummarizeskinkreportkformkthosekactivitieskandkthat
kinformationk whichk relate k tok thek enterprisek ask ak wholek fork usek byk partiesk bothk internal k and k extern
alktokakbusinesskenterprise.kManagerialkaccountingkalsokmeasures,kclassifies,kandksummarizeskinkrep
ortkformkenterprisekactivities,kbutkthekcommunicationkiskforkthekusekofkinternal,kmanagerialkparties,ka
ndkrelateskmorektoksubsystemskofkthekentity.kManagerialkaccountingkiskmanagementkdecisionkorien
tedkandkdirectedkmorektowardkproductkline,kdivision,kandkprofitkcenterkreporting.
3. Financialkstatementskgenerallykreferktokthekfourkbasickfinancialkstatements:kstatementkofkfinancialkp
osition,kincomekstatement,kstatementkofkcashkflows,kandkstatementkofkchangeskinkequity.kFinancialkr
eportingkiskakbroaderkconcept;kitkincludeskthekbasickfinancialkstatementskandkanykotherkmeanskofkc
ommunicatingkfinancialkandkeconomickdataktokinterestedkexternalkparties.
4. Ifkakcompany’skfinancialkperformancekiskmeasuredkaccurately,kfairly,kandkonkaktimelykbasis,kthekrigh
tkmanagerskandkcompanieskarekablektokattractkinvestmentkcapital.kTokprovidekunreliablekandkirreleva
ntkinformationkleadsktokpoorkcapitalkallocationkwhichkadverselykaffectsktheksecuritieskmarket.
5. Thekobjectivekofkgeneralkpurposekfinancialkreportingkisktokprovidekfinancialkinformationkaboutkthekre
portingkentitykthatkiskusefulktokpresentkandkpotentialkequitykinvestors,klenders,kandkotherkcreditorskin
kmakingkdecisionskinktheirkcapacitykaskcapitalkproviders.
6. Generalkpurposekfinancialkstatementskprovidekfinancialkreportingkinformationktokakwidekvarietykofku
sers.kTokbekcostkeffectivekinkprovidingkthiskinformation,kgeneralkpurposekfinancialkstatementskprovidek
atkthekleastkcostkthekmostkusefulkinformationkpossible.
7. Shareholders,kcreditors,ksuppliers,kemployees,kandkregulatorskallkusekgeneralkpurposekfinancialkst
atements.kThekprimarykuserkgroupkiskcapitalkprovidersk(shareholderskandkcreditors).
8. Thekproprietarykperspectivekisknotkconsideredkappropriatekbecausekthiskperspectivekgenerallykdoes
knotk reflectk a k realistick viewk ofk the k financial k reporting k environment. k Insteadk thek entityk perspectiv
ekiskadoptedkwhichkiskconsistentkwithkthekpresentkbusinesskenvironmentkwherekmostkcompaniesken
gagedkinkfinancialkreportingkhaveksubstancekdistinctkfromktheirkinvestors.
9. Thekobjectivekofkfinancialkreportingkiskprimarilyktokprovidekinformationktokinvestorskinterestedkinkass
essingkthekcompany’skabilityktokgenerateknetkcashkinflowskandkmanagement’skabilityktokprotectkand
kenhancekthekcapitalkproviders’kinvestments. kFinancialkreporting kshouldkhelpkinvestorskassesskthek
amounts,ktimingkandkuncertaintykofkprospectivekcashkinflows.
10. Aksingleksetkofkhighkqualitykaccountingkstandardskensureskadequatekcomparability.kInvestorskareka
blektokmakekbetterkinvestmentkdecisionskifktheykreceivekfinancialkinformationkfromkakU.S.kcompanykt
hatkiskcomparablektokankinternationalkcompetitor.
11. Thektwokorganizationskinvolvedkinkinternationalkstandard-settingkarekIOSCOk(InternationalkOrgani-
kzation kofkSecuritieskCommissions)kandkthekIASBk(InternationalkAccounting kStandardskBoard.)kThe
kIOSCOkdoesknotksetkaccountingkstandards,kbutkensureskthatkthekglobalkmarketskcankoperate kinkan
kefficientkandkeffectivekmanner.kConversely, kthe kIASB’skmissionkisktokdevelopkaksingleksetkofkhigh kq
uality,kunderstandable kandkinternationalkfinancialkreportingkstandardsk(IFRSs)kforkgeneralkpurposekf
inancialkstatements.
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