,
,
, Melville: International Financial Reporting, Instructor's Manual, 9th edition
Chapter 1
The regulatory framework
1.8
The advantages of adopting IFRS® Accounting Standards (and IAS® Standards) might include:
(a) Application of the international standards should ensure that the company's financial statements
ST
provide high-quality, transparent and comparable information. This should help investors, lenders
and other users of the financial statements to make sound economic decisions. If potential investors
and lenders feel that they can trust Baxen's financial statements, this should make it easier for the
company to raise fresh capital in the form of share issues or borrowings.
UV
(b) Furthermore, adoption of the international standards should allow Baxen to obtain a listing on stock
exchanges around the world, most of which now require listed companies to comply with these
standards. This would also provide new opportunities for raising capital.
(c) Many of the foreign companies with which Baxen trades will also use international standards. This
IA
should help Baxen to compare its own financial statements with theirs and perhaps to identify foreign
companies that might be suitable candidates as prospective subsidiaries. Baxen would also be able to
compare its own financial statements much more easily with those of its competitors.
(d) Once Baxen has subsidiaries, it will need to prepare group accounts. This involves combining all of
?_
the financial statements of the group members into a single set of consolidated financial statements
(see Chapter 18). This task will be a great deal easier (and cheaper) if all of the companies in the
group are applying the same financial reporting standards. There would also be less work for the
group's auditors to do, so that the audit fee should be lower.
AP
(e) Within the group, the use of consistent standards would make it easier to assess each subsidiary's
performance and to compare subsidiaries with each other.
(f) Accounting staff working for the Baxen group would all become familiar with the international
standards and would not need retraining if they moved around the group from one company to
PR
another. This would certainly reduce staff training costs.
OV
ED
??
1
© 2025 Pearson Education Limited. All Rights Reserved.
,
, Melville: International Financial Reporting, Instructor's Manual, 9th edition
Chapter 1
The regulatory framework
1.8
The advantages of adopting IFRS® Accounting Standards (and IAS® Standards) might include:
(a) Application of the international standards should ensure that the company's financial statements
ST
provide high-quality, transparent and comparable information. This should help investors, lenders
and other users of the financial statements to make sound economic decisions. If potential investors
and lenders feel that they can trust Baxen's financial statements, this should make it easier for the
company to raise fresh capital in the form of share issues or borrowings.
UV
(b) Furthermore, adoption of the international standards should allow Baxen to obtain a listing on stock
exchanges around the world, most of which now require listed companies to comply with these
standards. This would also provide new opportunities for raising capital.
(c) Many of the foreign companies with which Baxen trades will also use international standards. This
IA
should help Baxen to compare its own financial statements with theirs and perhaps to identify foreign
companies that might be suitable candidates as prospective subsidiaries. Baxen would also be able to
compare its own financial statements much more easily with those of its competitors.
(d) Once Baxen has subsidiaries, it will need to prepare group accounts. This involves combining all of
?_
the financial statements of the group members into a single set of consolidated financial statements
(see Chapter 18). This task will be a great deal easier (and cheaper) if all of the companies in the
group are applying the same financial reporting standards. There would also be less work for the
group's auditors to do, so that the audit fee should be lower.
AP
(e) Within the group, the use of consistent standards would make it easier to assess each subsidiary's
performance and to compare subsidiaries with each other.
(f) Accounting staff working for the Baxen group would all become familiar with the international
standards and would not need retraining if they moved around the group from one company to
PR
another. This would certainly reduce staff training costs.
OV
ED
??
1
© 2025 Pearson Education Limited. All Rights Reserved.
