Question 1

Which statement below concerning the accountability and funding of the IASC Foundation is correct?

Accepted Answer

The statement that the IASC Foundation is not controlled by any national securities regulators is correct, as it is an independent organization that sets global accounting standards. The funding for the IASC Foundation comes from a combination of voluntary contributions from firms in the accounting profession, as well as grants from governments and international organizations. The accountability and funding mechanisms for the IASC Foundation are not specifically evaluated or approved by the SEC, as it is a global organization and not subject to US regulatory oversight. The appointments of IASC Foundation Trustees are made by the existing Trustees, and do not require SEC approval.

Question 2

The roles of the IASC Foundation include

Accepted Answer

The IASC Foundation's role includes financing the operations of the IASB, but it does not establish global standards or coordinate filing requirements.

Question 3

IFRS and US GAAP differ with regard to financial statement presentation in all of the following except:

Accepted Answer

B

Question 4

Property, plant and equipment are valued at

Accepted Answer

While US GAAP only allows property, plant and equipment to be valued at historical cost, IFRS allows the assets to be valued at either historical cost or revalued amounts. Therefore, D is the correct answer.

Question 5

Accounting terminology that differs between IFRS and US GAAP include all of the following except:

Accepted Answer

The answer of Accounting terminology that differs between IFRS and...

Question 6

Use the following information to answer the next three questions.
On January 1, 2013, BelgianAir purchases an airplane for €14,400,000.The components of the airplane and their useful lives are as follows:
 $\begin{array}{|c|c|c|}
\hline \text { Component } & \text { Cost } & \text { Usefull life } \
\hline \text { Frame } & € 7,200,000 & 24 \text { years } \
\hline \text { Engine } & 4,800,000 & 20 \text { years } \
\hline \text { Other } & 2,400,000 & 10 \text { years } \
\hline
\end{array}$ BelgianAir uses the straight-line method of depreciation.The asset is assumed to have no salvage value.
-Under IFRS, the entry to record the acquisition of the airplane would include

Accepted Answer

Under IFRS, components of an asset with different useful lives should be depreciated separately. Therefore, the acquisition entry would include debits to separate accounts for each component, such as the engine for €4,800,000.

Question 7

The major difference between IFRS and US GAAP in accounting for inventories is that

Accepted Answer

The major difference between IFRS and US GAAP in accounting for inventories is that US GAAP allows the use of the LIFO cost flow assumption, while IFRS prohibits it.

Question 8

Which of the following statements is true regarding the IASC?

Accepted Answer

The IASC (International Accounting Standards Committee) was a standalone, private-sector organization that was responsible for developing international accounting standards. It was later replaced by the IASB (International Accounting Standards Board) in 2001, which is also a private-sector organization.

Question 9

In accounting for liabilities, IFRS interprets "probable" as

Accepted Answer

According to IFRS, "probable" means more likely than not, which is a higher threshold than just possible or somewhat possible. Therefore, option B is the best choice.

Question 10

Use the following information to answer the next three questions.
On January 1, 2013, BelgianAir purchases an airplane for €14,400,000.The components of the airplane and their useful lives are as follows:
 $\begin{array}{|c|c|c|}
\hline \text { Component } & \text { Cost } & \text { Usefull life } \
\hline \text { Frame } & € 7,200,000 & 24 \text { years } \
\hline \text { Engine } & 4,800,000 & 20 \text { years } \
\hline \text { Other } & 2,400,000 & 10 \text { years } \
\hline
\end{array}$ BelgianAir uses the straight-line method of depreciation.The asset is assumed to have no salvage value.
-Under IFRS, the entry to record depreciation expense on the asset at December 31, 2014 will include a credit to accumulated depreciation of

Accepted Answer

The answer of Use the following information to answer the...

Question 11

The goals of the International Accounting Standards Committee include all of the following except:

Accepted Answer

The International Accounting Standards Committee's goals include improving international accounting, promoting global acceptance of its standards, and harmonizing accounting practices between countries. However, it does not aim to formulate a single set of auditing standards to be applied in all countries, as this falls under the jurisdiction of other organizations such as the International Auditing and Assurance Standards Board.

Question 12

Use the following information to answer the next three questions.
On January 1, 2013, BelgianAir purchases an airplane for €14,400,000.The components of the airplane and their useful lives are as follows:
 $\begin{array}{|c|c|c|}
\hline \text { Component } & \text { Cost } & \text { Usefull life } \
\hline \text { Frame } & € 7,200,000 & 24 \text { years } \
\hline \text { Engine } & 4,800,000 & 20 \text { years } \
\hline \text { Other } & 2,400,000 & 10 \text { years } \
\hline
\end{array}$ BelgianAir uses the straight-line method of depreciation.The asset is assumed to have no salvage value.
-Under US GAAP, the entry to record depreciation expense on the asset at December 31, 2014 will include

Accepted Answer

The answer of Use the following information to answer the...

Question 13

In accounting for research and development costs.

Accepted Answer

Under US GAAP, all research and development costs are expensed as incurred. However, under IFRS, research costs are expensed as incurred, but development costs can be capitalized once technological and economic feasibility has been demonstrated.

Question 14

Which of the following is true about the FASB after the mandatory adoption of IFRS by US companies?

Accepted Answer

The role of the FASB post-IFRS adoption has not been definitively determined, as the mandatory adoption of IFRS by US companies has not occurred, and discussions about convergence and the future roles of FASB and IASB continue.

Question 15

SFAS No.162, the Accounting Standards Codification, is directed to

Accepted Answer

SFAS No.162, the Accounting Standards Codification, is directed to entities as it is a comprehensive source of authoritative accounting principles for preparing and presenting financial statements in accordance with generally accepted accounting principles (GAAP) in the United States.

Question 16

One difference between IFRS and GAAP in valuing inventories is that

Accepted Answer

A) IFRS allows for the reversal of inventory write-downs if the value of inventory increases after the write-down, whereas GAAP does not permit such reversals.

Question 17

Benefits of the FASB Accounting Standards Codification (ASC) include all of the following except:

Accepted Answer

The FASB Accounting Standards Codification (ASC) does not increase the independence of the FASB. The ASC is a centralized database that provides guidance for accounting professionals, but it does not impact the independence of the organization responsible for creating those standards. The other three options are benefits of the ASC.

Question 18

The amount of a long-lived asset impairment loss is generally determined by comparing

Accepted Answer

The answer of The amount of a long-lived asset impairment...

Question 19

Accounting under IFRS and US GAAP is similar for all of the following topics except:

Accepted Answer

Accounting for research and development costs may differ between IFRS and US GAAP because IFRS allows for capitalization of some development costs while US GAAP generally requires expensing. The other topics listed (changes in estimates, related party transactions, and changes in methods) have similar accounting treatment under both IFRS and US GAAP.

Question 20

Milestones in the transition plan for mandatory adoption of IFRS by US companies include all of the following except:

Accepted Answer

The answer of Milestones in the transition plan for mandatory...

Quiz 11: International Financial Reporting Standards