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Chapter 13: Q1ISTQ (page 658)

All of the following are critical similarities between GAAPand IFRS concerning accounting for investments except:

(a) IFRS and GAAP require the exact accounting for equity securities.

(b) IFRS and GAAP apply the equity method to significant influence equity investments.

(c) IFRS and GAAP have a fair value option for financial instruments.

(d) the accounting for impairment of investments is similar, although IFRS allows recovery of impairment losses.

Short Answer

Expert verified

Option (a) is correct option

Step by step solution

01

Definition of GAAP

It stands for Generally Accepted Accounting Principles; it contains all the principles and rules which are used by the accountant for financial reporting purposes

02

Similarities between IFRS and GAAP

From these four statements, three statements are the similarity of IFRS and GAAP, but statement one is not the similarity between IFRS and GAAP. Because both do not require exact accounting for equity securities.

Hence, option (a) is correct.

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Most popular questions from this chapter

A typical provision is:

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Under what conditions is an employer required to accrue a lability for sick pay? Under what conditions is an employer permitted but not required to accrue a liability for sick pay?


Question: 13-17 (L04) (Ratio Computations and Discussion) Sprague Company has been operating for several years, and on December 31, 2017, presented the following balance sheet.

SPRAGUE COMPANY
BALANCE SHEET
DECEMBER 31, 2017

Cash

\(40,000

Accounts payable

\)80,0000

Receivables

\(75,0000

Mortgage payable

\)140,000

Inventory

\(95,000

Common stock (\)1 par)

\(150,000

Plant assets (net)

\)220,000

Retained earnings

\(60,000

\)430,000

\(430,000

The net income for 2017 was \)25,000. Assume that total assets are the same in 2016 and 2017.

Instructions

Compute each of the following ratios. For each of the four, indicate how it is computed and its significance as a tool in the analysis of the financial soundness of the company.

(a) Current ratio. (C) Debt to assets ratio.

(b) Acid-test ratio. (d) Return on assets.

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for \)65,118, which provides a 6% return. The bonds pay interest semiannually. Prepare Carow鈥檚 journal entries for (a) the purchase

of the investment, and (b) the receipt of semiannual interest and premium amortization

Question: At what amount should trading, available-for-sale, and held-to-maturity debt securities be reported on the balance sheet?
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