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Chapter 1: Q5ISTQ (page 34)

Question: Which of the following statements is true?

(a) The IASB has the same number of members as the FASB.

(b) The IASB structure has both advisory and interpretation functions, but no trustees.

(c) The IASB has been in existence longer than the FASB.

(d) The IASB structure is quite similar to the FASB鈥檚, except the IASB has a larger number of board members.

Short Answer

Expert verified

Answer

The correct option is(d) The IASB structure is quite similar to the FASB鈥檚 except the IASB has a large number of board members.

Step by step solution

01

Definition of Accounting Standards

Accounting standards can be defined as the common principles and procedures that provide information regarding basic accounting practices. The standards promote comparability and transparency of the financial statement.

02

Explanation for the correct option

Option (d) is correct because the structure of IASB and FASB is similar. The only difference is that IASB normally has 14 board members, while FASB has seven board members.

03

Explanation for incorrect options

  1. Option (a) is incorrect because the number of members in IASB differs from the number in FASB.
  2. Option (b) is an incorrect option because the IFRS foundation trustee is present at the second number in the organizational structure of IASB.
  3. Option (c) is incorrect because FASB was in existence from 1973 while IASB was in existence from 2001.

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Most popular questions from this chapter

What is the likely limitation of 鈥済eneral-purpose financial statements鈥�?

Briefly explain the meaning of decision-usefulness in the context of financial reporting.

What are the sources of pressure that change and influence the development of GAAP?

Presented below are comments made in the financial press.InstructionsPrepare responses to the requirements in each item.

a) Rep. John Dingell, at one time the ranking Democrat on the House Commerce Committee, threw his support behind the FASB鈥檚 controversial derivatives accounting standard and encouraged the FASB to adopt the rule promptly. Indicate why a member of Congress might feel obligated to comment on his proposed FASB standard.

b) In a strongly worded letter to Senator Lauch Faircloth (R-NC) and House Banking Committee Chairman Jim Leach (R-IA), the American Institute of Certified Public Accountants (AICPA) cautioned against government intervention in the accounting standard-setting process, warning that it had the potential of jeopardizing U.S. capital markets. Explain how government intervention could possibly affect capital markets adversely.

ETHICS (Rule-Making Issues) When the FASB issues new pronouncements, the implementation date is usually 12 months from date of issuance, with early implementation encouraged. Karen Weller, controller, discusses with her financial vice president the need for early implementation of a rule that would result in a fairer presentation of the company鈥檚 financial condition and earnings. When the financial vice president determines that early implementation of the rule will adversely affect the reported net income for the year, he discourages Weller from implementing the rule until it is required.

Instructions:Answer the following questions.(a) What, if any, is the ethical issue involved in this case?

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