Question

Select one of the 5 foreign countries: China, Germany, Japan, Mexico or the UnitedKingdom, and provide a country profile discussing the topics outlined below. In addition, using EDGAR (http://www.sec.gov/edgar.shtml), find the non-U.S. GAAP financial statements for a company from that country. Prepare a 4-5 page analysis of the country you chose discussing the following:

Compare the accounting profession in your selected country including professional conduct rules.

Identify how the accounting standard are set in that country.

Identify two financial reporting standards that differ from those of U.S. GAAP.

Identify national characteristics unique to the country that influence accounting.

For the two financial reporting standards identified in your paper, use Excel to create an applicable supporting schedule that provides an example of the adjustments that would need to be made to your foreign company’s financial statements for it to comply with U.S. GAAP

Answer 1

The International Accounting Standards Board (IASB) was established as a part of the International Accounting Standards Committee Foundation. The IASB is responsible for the approval of IFRS and other related documents. One of the primary objective of the IASB is to bring about convergence between the national accounting standards and IFRS. IASB has been working closely with the FASB to harmonize the international standards with US GAAP.

The IASB’s objective is to require like transactions and events to be accounted for and reported in a like way and unlike transactions and events to be accounted for and reported differently, both within an entity and among all the entities across the industries and geographical boundaries. IASB considers those events where there is disparity or choice of different alternating accounting treatments with the objective of reducing the number of these choices or all alternative treatments for similar transactions or events.

A brief comparison of US GAAP and IFRS is listed below:

Topic	IFRS	US GAAP
Revenue recognition with respect to the sale of goods	Revenue is recognized when risks and rewards of ownership title has been transferred and the buyer has the control over the goods sold, then revenues can be measured reliably and it is probable that economic benefits will flow to the company.	Revenue is recognized when the delivery has occurred, risks and rewards of ownership has been transferred and there is a persuasive evidence a sale, the fee is determinable and collectability is reasonable assured.
Expense recognition with respect to share based payments and employee benefits	Compensation cost is recognized on an accelerated basis.	Compensation cost can be recognized on a straight line basis or over an accelerated basis.
Intangible assets with respect to development costs and revaluation	Development costs can be capitalized. Revaluations is permitted provided the asset is traded over in an active market.	Development costs are expensed off as and when incurred. Revaluation is strictly prohibited.
Financial statement presentation with respect to extraordinary items and changes in equity	Extraordinary items are prohibited. Changes in equity presented in a separate statement, disclosed in notes to accounts or a part of a single combined statement.	Extraordinary items are restricted to items that are unusual and infrequent in nature. Changes in equity are presented in a footnote or in a separate statement.