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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

IFRS is comprised of:

(a) International Financial Reporting Standards and FASB Financial Reporting Standards.

(b) International Financial Reporting Standards, International Accounting Standards, and International Accounting Interpretations.

(c) International Accounting Standards and International Accounting Interpretations.

(d) FASB Financial Reporting Standards and International Accounting Standards.

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.(b) Is the financial vice president acting improperly or immorally?

Some individuals have indicated that the FASB must be cognizant of the economic consequences of its pronouncements. What is meant by 鈥渆conomic consequences鈥�? What dangers exist if politics play too much of role in the development of GAAP?

The Sarbanes-Oxley Act was enacted to combat fraud and curb poor reporting practices. What are some key provisions of this legislation?

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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