Schmidt Ltd.aims to improve the qualitative characteristics of its financial statements. Your assistant has presented you with options shown below.Which of those options would most likely improve the comparability of your company's financial statements?
A)The restatement of its financial statements from Canadian GAAP to US GAAP for its American investors
B)The preparation of monthly financial statements
C)The introduction of a policy that specifies how Schmidt's capital assets should be amortized
D)The use of foreign-trained accountants

Question

Quizplus · Accepted Answer

Restating the financial statements from Canadian GAAP to US GAAP would ensure that investors who are familiar with US GAAP can easily compare the company's financial statements to other US companies. This improves comparability, which is one of the qualitative characteristics of financial reporting. The preparation of monthly financial statements (option B) may improve the timeliness of information but does not necessarily improve comparability. The introduction of a policy on amortization of capital assets (option C) may improve consistency, but again, comparability is not directly addressed. The use of foreign-trained accountants (option D) has no clear connection to improving qualitative characteristics of financial statements.