Hilton6E Sm01

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Chapter 1

A Survey of International Accounting
A brief description of the major points covered in each case and problem.

CASES

Case 1

In this case, students are introduced to the difference in accounting for R&D costs between IFRS and U.S. GAAP and asked to comment on whether one method is better than the other, as well as whether any part of R&D should be capitalized.

Case 2 (prepared by Peter Secord, Saint Mary’s University)

In this real life case, students are asked to discuss the merits of historical costs vs. replacement costs. Actual note disclosure from a company’s financial statements is provided as background material.

Case 3 (adapted from a case prepared by Peter Secord, Saint Mary’s University) A Canadian company prepares two sets of financial statement: one based on Canadian GAAP, and the other on U.S. GAAP. The reasons for some of the differences in numbers are investigated.

Case 4
This case is based on Homburg Invest Inc.’s 2006 financial statements. A reconciliation of differences between two sets of financial statements is required along with a brief note explaining why differences exist.

Case 5
This case is adapted from a CICA case. It provides details regarding a company`s activities as well as financial details that were revealed as part of planning and interim work performed in the context of an audit of the financial statements. It places the student in the role of CA, reporting to the audit partner, and asks for a memo on the results of the interim audit work as well as any issues that should be raised in an upcoming meeting between the partner and the client.

PROBLEMS
Problem 1 (40 min.)
A single asset is acquired, and students are asked to prepare and compare financial statement numbers during the life of the asset using both a historical cost and a current value model.

Problem 2 (40 min.)
Details of a European company that reports using IFRS are given along with specific details relating to certain account balances. Students are asked to show how these balances should be reported under 1) U.S. GAAP, and 2) IFRS using the facts provided. Students are also asked to reconcile Net Income and Shareholders` Equity to from IFRS to U.S. GAAP.

WEB-BASED PROBLEMS
Problem 1
The student chooses a public company incorporated in China and listed on a U.S. stock exchange. The student answers a series of questions based on the company’s financial statements. The questions are aimed at highlighting the differences between IFRS and U.S. GAAP.

Problem 2
The student chooses a public company incorporated in India and listed on a U.S. stock exchange. The student answers a series of questions based on the company’s financial statements. The questions are aimed at highlighting the differences between IFRS and U.S. GAAP.

Problem 3
The student chooses a public company incorporated in Japan and listed on a U.S. stock exchange. The student answers a series of questions based on the company’s financial statements. The questions are aimed at highlighting the differences between IFRS and U.S. GAAP.

Problem 4
The student compares the 2006 and most recent financial statements of Cadbury, a British chocolate manufacturer, and answers a series of questions aimed at highlighting the differences between IFRS and U.S. GAAP.

Problem 5
The student compares the 2006 and most recent financial statements of Philips Electronics, a Dutch company, and answers a series of questions aimed at highlighting the differences between IFRS and U.S. GAAP.

REVIEW QUESTIONS

1. Accounting students and professionals need to be aware of the differences between accounting practices in Canada and in other countries for three reasons. First, as the markets become more and more international, there is a higher chance that they may need to interpret financial statements from other countries at some point in their career. Second, they may want to move to another country to...
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