Read the case study indicated below, and answer the following questions:
James, M. L. (2010). Accounting for business combinations and the convergence of International Financial Reporting Standards with U.S. Generally Accepted Accounting Principles: A case study. Journal of the International Academy for Case Studies, 16(1), 95-108.
1. What key financial ratios will be affected by the adoption of FAS 141R and FAS 160? What will be the likely effect?
2. Could any of the recent and forthcoming changes affect the company’s acquisition strategies and potentially its growth?
3. What were FASB’s primary reasons for issuing FAS 141R and FAS 160?
4. What are qualifying SPEs? Do they exist under IFRS? What is the effect of FAS 166 eliminating the concept of qualifying SPEs on the convergence of accounting standards?
5. If the company adopts IFRS, what changes should management be aware of?
6. What are the principle differences between IFRS and U.S. GAAP?
7.
Your submission should be a minimum of three pages in length in APA style; however, a title page, a running head, and an abstract are not required. Be sure to cite and reference all quoted or paraphrased material appropriately in APA style.
Accounting for business combinations and the convergence of international financial reporting standards with U.S. generally accepted accounting principles: a case study.
Authors:
James, Marianne L.
Source:
Journal of the International Academy for Case Studies. 2010, Vol. 16, Issue 9, pages. 14
Publisher Information:
Jordan Whitney Enterprises, Inc., 2010.
Publication Year:
2010
Subject Terms:
Financial statements — Standards
Subject Geographic:
United States
Description:
CASE DESCRIPTION The primary subject matter of this case concerns changes in accounting for business combinations and the convergence of International Financial Reporting Standards (IFRS) with U.S. Generally Accepted Accounting Principles (GAAP). The case focuses on the effect of the changes on financial statements of global entities, as well as strategic decisions made by company executives. Secondary, continuing significant differences between U.S. GAAP and IFRS and future potential developments in accounting for consolidated multinational entities are explored. This case has a difficulty level of three to four and can be taught in about 50 minutes. Approximately three hours of outside preparation is necessary to fully address the issues and concepts. This case can be utilized in an Advanced Accounting course, either on the graduate or undergraduate level to help students understand changes in and differences between U.S. GAAP and IFRS. Two sets of questions address U.S. GAAP and IFRS and include researchable questions that are especially useful for a graduate level course. The case has analytical, critical thinking, conceptual, and research components. Utilizing this case can enhance students’ oral and written communication skills. CASE SYNOPSIS Financial reporting in the U.S. is changing dramatically. Consistent with the Securities and Exchange Commission’s proposed “Roadmap” (SEC, 2008), the U.S. likely will join the more than 100 nations worldwide that currently utilize International Financial Reporting Standards (IFRS), and require the use of IFRS in the U.S. Because of the globally widespread use of IFRS, multinational entities with subsidiaries that prepare IFRS-based financial statements already have to be knowledgeable about IFRS as well as the current differences between U.S. GAAP and IFRS. Fortunately, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are working together to bring about convergence between the two sets of accounting standards. Recently, FASB and the IASB issued new and revised several existing standards that eliminate many differences between U.S. GAAP and IFRS with respect to business combinations and consolidated financial statements. However, some significant differences persist. Until the SEC makes a final decision regarding the mandatory use of IFRS, and during the proposed multi-year transition period, current and future accounting professionals must continue to keep abreast of changes in U.S. GAAP, be knowledgeable about differences between U.S. GAAP and IFRS, and, at the same time, prepare for the likely transition to IFRS. In addition, company executives should be cognizant of developments that may affect their strategic decisions as the U.S. moves toward a likely adoption of IFRS during the next five years. This case focuses on the effect of changes in financial reporting for business combinations. Changes as well as continuing differences between U.S. GAAP and IFRS are explored. Secondarily, strategic decisions arising from the changes and the likely future adoption of IFRS are addressed. This case, which can be utilized in Advanced Accounting on either the graduate or undergraduate level can enhance students’ analytical, technical, critical thinking, research, and communication skills.
Document Type:
Case study
Language:
English
ISSN:
1078-4950
Rights:
Copyright 2010 Gale, Cengage Learning. All rights reserved. COPYRIGHT 2010 Jordan Whitney Enterprises, Inc.
Accession Number:
edsbig.A243526770
Database:
Business Insights Global
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