Question

Briefly discuss why global accounting standards are needed in today's business environment. What are International Financial Reporting Standards? Who uses these accounting standards? What body is responsible for setting International Financial Reporting Standards? Briefly discuss the differences between: (a) adoption of IFRS by the U.S. Securities and Exchange Commission, and (b) convergence of U.S. GAAP with IFRS. Briefly discuss the difference between: (a) a "rules-based" approach to accounting standard setting, and (b) a "principles-based" approach to accounting standard setting. How is property, plant, and equipment measured on the balance sheet under IFRS? How does this differ from the way property, plant, and equipment is measured on the balance sheet under GAAP? What inventory costing methods are allowed under IFRS? How does this differ from the treatment under GAAP?

Answer 1

Why global accounting standards are needed in today's business environment?

Global accounting standards are very much needed in today's business environment because of following reasons:

1. To save investors from global market risk.
2. For making cross border transactions safer and easier.
3. For maintaining the uniformity and increasing efficiency of financial statements.
4. For bringing transparency and accountability in global financial markets.

What are International Financial Reporting Standards?

IFRS is a set of accounting and financial standards for public companies. IFRS provides guidelines for preparing financial statements. It is a framework of general accounting rules for all the companies in the world so that their financial statements can be easily understood and compared.

Who uses these accounting standards?

Companies of different countries use IFRS. For example; India, Russia, Japan, Malaysia, China etc.

What body is responsible for setting International Financial Reporting Standards?

International financial reporting standard foundation is the governing body of International Financial Reporting Standards and responsible for setting International Financial Reporting Standards.