Week 3 Case 3-5

315 Words2 Pages
Case 3-5 International versus U.S. Standards Discuss the qualitative concept of comparability. In your opinion, would the financial statements of companies operating in one of the foreign countries listed above be comparable to a U.S. company’s financial statements? Explain. The qualitative characteristics attribute to the usefulness of the information provided for users in the financial statements. Comparability is a qualitative characteristic that allows for comparison of accounting information between or among different entities. To be comparable the accounting information of the companies being compared is recorded and reported in a similar manner. To ensure the comparability of accounting information companies may disclose their accounting methods and policies. In the United States, GAAP represents the most authoritative accounting standards. GAAP necessitates the accounting information to contain qualitative characteristics on which stakeholders can trust. The nations of Australia, Brazil, England, Mexico, and Singapore use the International Financial Reporting Standards (IFRS) as the authoritative accounting standard (Schroeder, Clark, & Cathey, 2011). The financial statements between the US and the other nations are not comparable, in my opinion, because of the differences, overall, in reporting and recording the accounting information. A US company does have the option to generate a second set of financial statements in compliance to IFRS for users in other nations to compare the financial information. The GAAP and IFRS have similarities and differences for the financial reporting. Similarities are recognizing the property, plant, and equipment initially at cost and the assets are depreciated over the expected useful life. A major difference relating to the property, plant, and equipment is the IFRS allows for

More about Week 3 Case 3-5

Open Document