ACCT105 WK1 Forum - 100%

docx

School

American Military University *

*We aren’t endorsed by this school

Course

105

Subject

Accounting

Date

Jan 9, 2024

Type

docx

Pages

Uploaded by ggggddddoooogggg

Forums: Week 1 Professor and classmates, There are two main types of accounting standards that companies follow: GAAP and IFRS. The abbreviation "GAAP" stands for "Generally Accepted Accounting Principles" in the business world. Most companies in the United States operate under the guidelines established by the Financial Accounting Standards Board (FASB). IFRS is an abbreviation for "International Financial Reporting Standards." The International Accounting Standards Board (IASB) has made it mandatory for many countries outside of the United States to follow these guidelines. A balance sheet in the United States follows a different structure than one in, say, the United Kingdom. Unlike IFRS, which prioritizes long-term investments over short-term ones, GAAP prioritizes current assets. In addition, the two standards have different recommendations for how to set up the various sections of a balance sheet. In accordance with GAAP, books must be set up so that cash can be withdrawn from them as quickly and easily as possible. Ordered from most liquid to least liquid are a company's current assets, noncurrent assets, current liabilities, and owners' equity. Noncurrent assets, current assets, owners' equity, noncurrent liabilities, and current liabilities make up the IFRS order of liquidity from least to most liquid (Loeb & Miranti, 2003; Mintz, 2010). The SEC recommends goal-based standard design and implementation. IFRS's principle-based approach relies more on professional judgment than strict rules, which can lead to people finding ways to get around them rather than focusing on transactions' economic substance. Lease accounting rules demonstrate how IFRS prioritizes principles over appearance. IAS 17 treats a transaction like a purchase and sale if its main purpose is to transfer ownership to the lessee. IAS 17 focuses more on the ideas behind transferring ownership rights, but it still provides a list of criteria to determine if substantially all of the risks and benefits of ownership have been transferred to the lessee. In the U.S., bright-line rules record assets and liabilities at the present value of future lease payments if any of four criteria hold. Lease payments must be 90% or more of the estimated fair value of the leased asset, including a guaranteed residual value. The issue is that a properly structured lease requires the lessee to not guarantee the residual value. Failure to meet other conditions makes the lease an operating lease and writes off payments as operating expenses. U.S. law prefers this method for recording leases outside the balance sheet. Some may argue that since there are always ways around the rules, why have them? Principles-based standards don't address every controversial issue like rules-based systems. They confuse important things like keeping records and measuring. The principles-based approach may lack clear rules, making it difficult for different organizations to apply standards. Good example: IAS 16. Accounts for property, plant, and equipment. The standard allows the cost or revaluation method for property, plant, and equipment. When to use one method over another is unclear. Revaluations are done at fair value, but there isn't much information to help determine this other than "fair value is the amount for which an asset could be exchanged between knowledgeable, willing parties in an arm's-length transaction." Fair and accurate fair value determination over time is the question ( GAAP vs. IFRS , 2019; Loeb & Miranti, 2003; Mintz, 2010).

The incorporation of the Institute of Accountants and Book-keepers of the City of New York, subsequently known as the IA, occurred on the 28th of July in the year 1882. On July 16, 1886, a gathering of the Institute of Accounts took place. Following a concise overview of the IA's influence on the development of CPA legislation during the 1890s, our subsequent analysis will delve into the IA's initial focal points and culminate with a comprehensive examination of the organization as a cohesive entity. The primary objective of the group was to facilitate the advancement of knowledge and development within the realm of accounting. However, it also aimed to offer tangible financial advantages to its members as a secondary aim. The confluence of objectives engendered a diverse membership base, comprising individuals such as public accountants, business managers, and bookkeepers. Following the establishment of The Book-Keeper, a specialized journal by Selden R. Hopkins, a public accountant, Colonel Charles Ezra Sprague, secretary and subsequently president of the Loeb, Stephen E., and Paul J. Miranti, expressed the need to form a representative association for bookkeepers and accountants. This call was made through articles authored by the editor of the aforementioned journal ( GAAP vs. IFRS , 2019; Loeb & Miranti, 2003; Mintz, 2010). GAAP vs. IFRS: What’s the Difference? | HBS Online . (2019, August 30). Business Insights Blog. https://online.hbs.edu/blog/post/gaap-vs-ifrs Loeb, S. E., & Miranti, P. J. (2003). The Institute of Accounts . Taylor & Francis Group. http://ebookcentral.proquest.com/lib/apus/detail.action?docID=200172 Mintz, S. M. (2010). Implementation Concerns about IFRS Adoption in the U.S. Journal of International Business Education , 5 , 97–115. https://www.proquest.com/docview/865740526/abstract/2A5BF8BC29C14991PQ/1

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version