Quiz 11: Worldwide Accounting Diversity and International Accounting Standards

Business

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Memo to the CEO of C Company describing the potential benefits and the potential risks associated with the early use of IFRS: MEMO Date : 08 th July, 2015 To : Mr. X, CEO From : Student Sub : Potential benefits and potential risks associated with the early use of IFRS. Sir, Usage of IFRS is a primary requirement of the company to comply with the legal requirements and to make the financial statements universally acceptable and comparable. However, that usage should be in par with the requirement. The early use of the IFRS will yield in better benefits in the same time the company is exposed to potential risks. I would like bring your kind notice the following potential benefits and potential risks that are associated with the early use of IFRS: Potential Benefits: (a) Moving early from U.S. GAAP to IFRS before the due date will provide a time to look back the compliance factors to be in par with convergence to IFRS. (b) It provides a global gateway to IFRS Community. (c) It provides an internal consistency for the companies used the IFRS early, with the international affiliates and subsidiaries. (d) It reduces the potential costs to the company over compliance issues. (e) The companies will be in unified global business transactions. Potential Risks: (a) The differences between the IFRS and U.S GAAP will expose the financial statements to a great risk. (b) The conflict in methods and procedures followed under IFRS and U.S. GAAP. Hence, it will be worthy for us to consider the enlisted potential benefits and risk for early use of IFRS. Thanks, Student

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