International Financial Reporting

Anonymous
timer Asked: Dec 17th, 2018
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Question description

Greetings!


I am needing help on a paper regarding IFRS versus GAAP:


Part 1

Deliverable Length: 1,000 words

Review the financial reports and notes of the company you have chosen from the EDGAR Web site. Using this company as your point of reference, provide general information on the following questions:

  • Create an overview on IFRS.
  • What will be some of the main concerns for your company as they move from U.S. GAAP to IFRS?
  • Generate a list of differences that you would expect to see on your Income Statement and your Balance Sheet after the convergence process is complete.
  • Describe what impact the convergence will have on your company’s inventory account (IAS 2).
  • Describe some of the differences between IFRS and US GAAP regarding the accounting for financial instruments
  • Give a minimum of two examples of how your company will be impacted by the conversion process (IAS 32, IAS 39 & IFRS 7)

Part 2

Deliverable Length: 1,000 words

For this assignment, use the company you have chosen from the EDGAR Web site as your point of reference.

After the reporting period has ended, you could potentially encounter other events that will have impacts on your company (IAS 10).

  • Describe the recognition and measurement differences currently existing between IFRS and U.S. GAAP.
  • What impacts could these differences have on disclosure requirements?

Create an overview of considerations regarding income taxes that the company may encounter.

  • Give 2 examples of areas you see as the greatest concern.
  • What impact will the convergence process have on your company’s tax planning?

A key area of contention between IFRS and U.S. GAAP lies in the classification and measurement of leases.

  • Describe the 2 main types of leases and where the differences lie.
  • What impact will this have your company?

Give your opinion on the U.S. moving into IFRS.

  • For the company you have selected, what do you see as the major advantages and disadvantages of convergence?
  • Provide a minimum of 3 examples of each supported by your research.

Please submit your assignment.

Tutor Answer

ProfKelseyJ
School: UC Berkeley

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Running Head: IFRS and GAAP

1

IFRS and GAAP
Name
Institution
Course
Date

IFRS and GAAP

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Part 1: The impact of convergence to IFRS: A case of Apple Inc.
An Overview on IFRS
The IFRS are the financial reporting standards issued by the IASB and the IFRS
Foundation to provide a universal accounting procedure with global recognition. IFRS are
conventional accounting standards that facilitate effective comparison of the financial statements
of a different entity across the world. The application of IFRS is necessitated by the globalization
of stock exchange which makes it necessary to have a uniform standard for all the financial
statements of the companies listed in stock exchange market (Kim, Shi & Zhou, 2014). It is
based on historical data expect the IAS29 that applies to countries experiencing hyperinflation.
Some of the Main Concerns for Walmart Inc. as it Moves from U.S. GAAP to IFRS
Despite the milestones made towards the convergence of GAAP with the IFRS, Walmart
Inc. will still have to overcome certain concerns that have slowed down the convergence process.
These concerns must be addressed amicably to ensure that the convergence meets its objectives
of streamlining comparison of financial statements across the globe (Mestelman, Mohammad &
Shehata, 2015). Otherwise, failure to address these issues will lead to a failure in the
convergence process.
To begin with, Walmart Inc. faces the main concern of adapting to the challenge of
coping with the approaches used by the IFRS which is different from the once it has been
applying when using the US GAAP. In particular, the transition from the rules-based
methodology as provided for in the US GAAP to the principle-based approach as per the IFRS
provision is a concern for Walmart Inc. (Bohušová, 2014). The transition would impose a more
challenge for the company to abandon the complex set of guidelines of GAAP that is
contingencies and rule-based to the principle-based IFRS to promote uniformity in reporting

IFRS and GAAP

3

(Walmart, 2018). How to deal with recognition and measurement differences such as borrowing
costs, fair value, revenue recognition, and extraordinary items is also a major concern since the
GAAP and IFRS have a totally different approach.
The company will also shift from focusing on accountability and uniformity of the
financial statements to transparency once it transitions from GAAP to IFRS (Lemus, 2016). This
major change in accounting practices, approaches, standards, mythology, framework, and
principles, would be a major concern for Walmart Inc. in the transition process. Sometimes the
company may be forced to maintain two sets of books in both IFRS and GAAP, a move that
would increase the cost of maintaining the financial statements (Mestelman, Mohammad &
Shehata, 2015). In addition, the transition will have a great impact on the accounting profession
with a dilemma on whether to focus on uniformity of the financial statements or transparency in
the financial statements.
There is also the concern of how Walmart Inc. will deal with the different methods of
reporting its costs related to the pre-opening and pre-operating activities which are totally
different in the two standards. Abandoning the LIFO in inventory valuation method would mean
that the profit margin and the tax obligation of the company would increase, thus subjecting the
company to more liquidations vulnerabilities (Bohušová, 2014). The greatest concern would be
the cost of convergence which involves training staff and acquiring the appropriate financial
statements system that would be time-consuming and may cause disruption of the company’s
operations.
Differences Expected in the Income Statement and Balance Sheet of Walmart Inc. after the
Convergence Process is Complete

IFRS and GAAP

4

The income statements and the balance sheet of Walmart Inc. will be impacted once
con...

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