SOLUTION MANUAL FOR n n
Intermediate Accounting IFRS 4th Edition by
n n n n n n
DonaldE.Kieso,JerryJ.Weygandt, Terry
n n n n n n nn
n D. Warfield
n n
Chapter1-24 n n n
,SOLUTION MANUAL FOR n n
Intermediate Accounting IFRS 4th Edition by Donald E. Kieso, JerryJ.
n n n n n n n n n n
Weygandt, Terry D. Warfield Chapter 1-24
n n n n n n
CHAPTER 1 n
Financial Reporting and Accounting Standards n n n n
ASSIGNMENTCLASSIFICATION TABLE n n
Topics Questions Concepts for n
Analysis
1. Global markets and financial reporting.
n n n n 1, 2, 3, 4
n n n 4
2. Objectiveof financialreporting.
n n n 5, 6, 7, 8, 9, 10
n n n n n 2, 3n
3. Standard-setting organizations. n 11, 12, 13, 14, n n n 1, 2, 3, 5, 6, 8, 9,
n n n n n n
15, 16, 17, 18 n n n 11
4. Financialreporting challenges.
n n 19, 20, 21, 22,
n n n 3, 7, 8, 10, 11, 12
n n n n n
23, 24, 25
n n
ASSIGNMENT CHARACTERISTICS TABLE n n
Level of n Time
Item Description n Difficulty (minutes)
n
CA1.1 IFRS and standard-setting.
n n Simple 5–10
CA1.2 IFRS and standard-setting.
n n Simple 5–10
CA1.3 Financialreportingand accounting standards.
n n n n Simple 15–20
CA1.4 Financial accounting. n Simple 15–20
CA1.5 Need for IASB. n n Simple 15–20
CA1.6 IASB role in standard-setting.
n n n Simple 15–20
CA1.7 Accounting numbersand the environment. n n n n Simple 10–15
CA1.8 Politicalization of IFRS. n n Complex 15–20
CA1.9 Modelsfor setting IFRS. n n n Simple 10–15
CA1.10 Economic consequences. n Moderate 10–15
CA1.11 Rule-making Issues. n Complex 20–25
CA1.12 Financialreporting pressures. n n Moderate 25–35
, ANSWERS TO QUESTIONS n n
1. World markets are becoming increasingly intertwined. The tremendous variety and volume of both
n n n n n n n n n n n n
exported and imported goods indicates the extensive involvement in international trade. As a result,
n n n n n n n n n n n n n n
the move towards adoption of international financial reporting standards has and will continue in the
n n n n n n n n n n n n n n n
future.
n
LO: 1, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
2. Financial accounting measures, classifies, and summarizes in report form those activities and that
n n n n n n n n n n n n
information which relate to the enterprise as a whole for use by parties both internal and external to a
n n n n n n n n n n n n n n n n n n n
business enterprise. Managerial accounting also measures, classifies, and summarizes in report form
n n n n n n n n n n n n
enterprise activities, but the communication is for the use of internal, managerial parties, and relates
n n n n n n n n n n n n n n n
more to subsystems of the entity. Managerial accounting is management decision-oriented and
n n n n n n n n n n n n
directed more toward product line, division, and profit center reporting.
n n n n n n n n n n
LO: 1, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
3. Financial statements generally refer to the four basic financial statements: statement of financial
n n n n n n n n n n n n
position, statement of comprehensive income (or income statement), statement of cash flows, and
n n n n n n n n n n n n n
statement of changes in equity. Financial reporting is a broader concept; it includes the basic financial
n n n n n n n n n n n n n n n n
statements and any other means of communicating financial and economic data to interested external
n n n n n n n n n n n n n n
parties.
n
LO: 1, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
4. If a company‘s financial performance is measured accurately, fairly, and on a timely basis, the right
n n n n n n n n n n n n n n n
managers and companies are able to attract investment capital. To provide unreliable and irrelevant
n n n n n n n n n n n n n n
information leads to poor capital allocation which adversely affects the securities market.
n n n n n n n n n n n n
LO: 1, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
5. A single set of high quality accounting standards ensures adequate comparability. Investors are able to
n n n n n n n n n n n n n n
make better investment decisions if they receive financial information from a U.S. company that is
n n n n n n n n n n n n n n n
comparable to an international competitor.
n n n n n
LO: 2, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
6. The objective of general-purpose financial reporting is to provide financial information about the
n n n n n n n n n n n n
reporting entity that is useful to present and potential equity investors, lenders, and other creditors in
n n n n n n n n n n n n n n n n
making decisions about providing resources to the entity.
n n n n n n n n
LO: 2, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
7. General-purpose financial statements provide financial reporting information to a wide variety of users. n n n n n n n n n n n n
To be cost effective in providing this information, general-purpose financial statements provide at the
n n n n n n n n n n n n n n
least cost the most useful information possible.
n n n n n n n
LO: 2, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
8. Shareholders, creditors, suppliers, employees, and regulators all use general-purpose financial n n n n n n n n n
statements. The primary user group is capital providers (shareholders and creditors).
n n n n n n n n n n n
LO: 2, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
9. The proprietary perspective is not considered appropriate because this perspective generally does not
n n n n n n n n n n n n
reflect a realistic view of the financial reporting environment. Instead, the entity perspective is
n n n n n n n n n n n n n n
adopted which is consistent with the present business environment where most companies engaged in
n n n n n n n n n n n n n n
financial reporting have substance separate and distinct from their owners.
n n n n n n n n n n
LO: 2, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
, Questions Chapter 1 (Continued) n n n
10. This statement is not correct. The objective of financial reporting is primarily to provide information to
n n n n n n n n n n n n n n n
investors interested in assessing the company‘s ability to generate net cash inflows and
n n n n n n n n n n n n n
management‘s ability to protect and enhance the capital providers‘ investments. Financial reporting
n n n n n n n n n n n n
should help investors assess the amounts, timing and uncertainty of prospective cash inflows.
n n n n n n n n n n n n n
LO: 2, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
11. The two organizations involved in international standard-setting are IOSCO (International Organi-
n n n n n n n n n n
zation of Securities Commissions) and the IASB (International Accounting Standards Board.) The
n n n n n n n n n n n n
IOSCO does not set accounting standards, but ensures that the global markets can operate in an
n n n n n n n n n n n n n n n n
efficient and effective manner. Conversely, the IASB‘s mission is to develop a single set of high quality,
n n n n n n n n n n n n n n n n n
enforceable and global financial reporting standards (IFRSs) for general-purpose financial statements.
n n n n n n n n n n n
LO: 3, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
12. IOSCO (International Organization of Securities Commissions) is an association of organizations that
n n n n n n n n n n n
regulate the world‘s securities markets. Members are generally the main financial regulators for a
n n n n n n n n n n n n n n
given country. IOSCO does not set accounting standards.
n n n n n n n n
LO: 3, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
13. The mission of the IASB (International Accounting Standards Board) is to develop, in the public
n n n n n n n n n n n n n n
interest, a single set of high quality, enforceable global international financial reporting standards
n n n n n n n n n n n n n
(IFRSs) for general-purpose financial statements.
n n n n n
LO: 3, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
14. The purpose of the Monitoring Board is to establish a link between accounting standard-setters and
n n n n n n n n n n n n n n
those public authorities (such as IOSCO) that generally oversee accounting standard-setters. This
n n n n n n n n n n n n
board also provides political legitimacy to the overall organization.
n n n n n n n n n
LO: 3, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
15. The IASB preliminary views are based on research and analysis conducted by the IASB staff. IASB
n n n n n n n n n n n n n n n
exposure drafts are issued after the Board evaluates research and public response to preliminary
n n n n n n n n n n n n n n
views. IASB standards are issued after the Board evaluates responses to the exposure draft.
n n n n n n n n n n n n n n
LO: 3, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
16. IASB International Financial Reporting Standards are financial accounting standards issued by the
n n n n n n n n n n n
IASB and are referred to as International Financial Reporting Standards (IFRS). The IFRS Conceptual
n n n n n n n n n n n n n n
Framework for Financial Reporting sets forth fundamental objectives and concepts that the Board
n n n n n n n n n n n n n
uses in developing future standards of financial reporting. The intent of the Conceptual Framework is to
n n n n n n n n n n n n n n n n
form a cohesive set of interrelated concepts that will serve as tools for solving existing and emerging
n n n n n n n n n n n n n n n n n
problems in a consistent manner.
n n n n n
LO: 3, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
17. In ranking from the most authoritative to least authoritative, International Financial Reporting
n n n n n n n n n n n
Standards are the most authoritative, followed by International Financial Reporting Standard
n n n n n n n n n n n
Interpretations and then the Conceptual Framework for Financial Reporting.
n n n n n n n n n
LO: 3, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
Intermediate Accounting IFRS 4th Edition by
n n n n n n
DonaldE.Kieso,JerryJ.Weygandt, Terry
n n n n n n nn
n D. Warfield
n n
Chapter1-24 n n n
,SOLUTION MANUAL FOR n n
Intermediate Accounting IFRS 4th Edition by Donald E. Kieso, JerryJ.
n n n n n n n n n n
Weygandt, Terry D. Warfield Chapter 1-24
n n n n n n
CHAPTER 1 n
Financial Reporting and Accounting Standards n n n n
ASSIGNMENTCLASSIFICATION TABLE n n
Topics Questions Concepts for n
Analysis
1. Global markets and financial reporting.
n n n n 1, 2, 3, 4
n n n 4
2. Objectiveof financialreporting.
n n n 5, 6, 7, 8, 9, 10
n n n n n 2, 3n
3. Standard-setting organizations. n 11, 12, 13, 14, n n n 1, 2, 3, 5, 6, 8, 9,
n n n n n n
15, 16, 17, 18 n n n 11
4. Financialreporting challenges.
n n 19, 20, 21, 22,
n n n 3, 7, 8, 10, 11, 12
n n n n n
23, 24, 25
n n
ASSIGNMENT CHARACTERISTICS TABLE n n
Level of n Time
Item Description n Difficulty (minutes)
n
CA1.1 IFRS and standard-setting.
n n Simple 5–10
CA1.2 IFRS and standard-setting.
n n Simple 5–10
CA1.3 Financialreportingand accounting standards.
n n n n Simple 15–20
CA1.4 Financial accounting. n Simple 15–20
CA1.5 Need for IASB. n n Simple 15–20
CA1.6 IASB role in standard-setting.
n n n Simple 15–20
CA1.7 Accounting numbersand the environment. n n n n Simple 10–15
CA1.8 Politicalization of IFRS. n n Complex 15–20
CA1.9 Modelsfor setting IFRS. n n n Simple 10–15
CA1.10 Economic consequences. n Moderate 10–15
CA1.11 Rule-making Issues. n Complex 20–25
CA1.12 Financialreporting pressures. n n Moderate 25–35
, ANSWERS TO QUESTIONS n n
1. World markets are becoming increasingly intertwined. The tremendous variety and volume of both
n n n n n n n n n n n n
exported and imported goods indicates the extensive involvement in international trade. As a result,
n n n n n n n n n n n n n n
the move towards adoption of international financial reporting standards has and will continue in the
n n n n n n n n n n n n n n n
future.
n
LO: 1, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
2. Financial accounting measures, classifies, and summarizes in report form those activities and that
n n n n n n n n n n n n
information which relate to the enterprise as a whole for use by parties both internal and external to a
n n n n n n n n n n n n n n n n n n n
business enterprise. Managerial accounting also measures, classifies, and summarizes in report form
n n n n n n n n n n n n
enterprise activities, but the communication is for the use of internal, managerial parties, and relates
n n n n n n n n n n n n n n n
more to subsystems of the entity. Managerial accounting is management decision-oriented and
n n n n n n n n n n n n
directed more toward product line, division, and profit center reporting.
n n n n n n n n n n
LO: 1, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
3. Financial statements generally refer to the four basic financial statements: statement of financial
n n n n n n n n n n n n
position, statement of comprehensive income (or income statement), statement of cash flows, and
n n n n n n n n n n n n n
statement of changes in equity. Financial reporting is a broader concept; it includes the basic financial
n n n n n n n n n n n n n n n n
statements and any other means of communicating financial and economic data to interested external
n n n n n n n n n n n n n n
parties.
n
LO: 1, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
4. If a company‘s financial performance is measured accurately, fairly, and on a timely basis, the right
n n n n n n n n n n n n n n n
managers and companies are able to attract investment capital. To provide unreliable and irrelevant
n n n n n n n n n n n n n n
information leads to poor capital allocation which adversely affects the securities market.
n n n n n n n n n n n n
LO: 1, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
5. A single set of high quality accounting standards ensures adequate comparability. Investors are able to
n n n n n n n n n n n n n n
make better investment decisions if they receive financial information from a U.S. company that is
n n n n n n n n n n n n n n n
comparable to an international competitor.
n n n n n
LO: 2, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
6. The objective of general-purpose financial reporting is to provide financial information about the
n n n n n n n n n n n n
reporting entity that is useful to present and potential equity investors, lenders, and other creditors in
n n n n n n n n n n n n n n n n
making decisions about providing resources to the entity.
n n n n n n n n
LO: 2, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
7. General-purpose financial statements provide financial reporting information to a wide variety of users. n n n n n n n n n n n n
To be cost effective in providing this information, general-purpose financial statements provide at the
n n n n n n n n n n n n n n
least cost the most useful information possible.
n n n n n n n
LO: 2, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
8. Shareholders, creditors, suppliers, employees, and regulators all use general-purpose financial n n n n n n n n n
statements. The primary user group is capital providers (shareholders and creditors).
n n n n n n n n n n n
LO: 2, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
9. The proprietary perspective is not considered appropriate because this perspective generally does not
n n n n n n n n n n n n
reflect a realistic view of the financial reporting environment. Instead, the entity perspective is
n n n n n n n n n n n n n n
adopted which is consistent with the present business environment where most companies engaged in
n n n n n n n n n n n n n n
financial reporting have substance separate and distinct from their owners.
n n n n n n n n n n
LO: 2, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
, Questions Chapter 1 (Continued) n n n
10. This statement is not correct. The objective of financial reporting is primarily to provide information to
n n n n n n n n n n n n n n n
investors interested in assessing the company‘s ability to generate net cash inflows and
n n n n n n n n n n n n n
management‘s ability to protect and enhance the capital providers‘ investments. Financial reporting
n n n n n n n n n n n n
should help investors assess the amounts, timing and uncertainty of prospective cash inflows.
n n n n n n n n n n n n n
LO: 2, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
11. The two organizations involved in international standard-setting are IOSCO (International Organi-
n n n n n n n n n n
zation of Securities Commissions) and the IASB (International Accounting Standards Board.) The
n n n n n n n n n n n n
IOSCO does not set accounting standards, but ensures that the global markets can operate in an
n n n n n n n n n n n n n n n n
efficient and effective manner. Conversely, the IASB‘s mission is to develop a single set of high quality,
n n n n n n n n n n n n n n n n n
enforceable and global financial reporting standards (IFRSs) for general-purpose financial statements.
n n n n n n n n n n n
LO: 3, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
12. IOSCO (International Organization of Securities Commissions) is an association of organizations that
n n n n n n n n n n n
regulate the world‘s securities markets. Members are generally the main financial regulators for a
n n n n n n n n n n n n n n
given country. IOSCO does not set accounting standards.
n n n n n n n n
LO: 3, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
13. The mission of the IASB (International Accounting Standards Board) is to develop, in the public
n n n n n n n n n n n n n n
interest, a single set of high quality, enforceable global international financial reporting standards
n n n n n n n n n n n n n
(IFRSs) for general-purpose financial statements.
n n n n n
LO: 3, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
14. The purpose of the Monitoring Board is to establish a link between accounting standard-setters and
n n n n n n n n n n n n n n
those public authorities (such as IOSCO) that generally oversee accounting standard-setters. This
n n n n n n n n n n n n
board also provides political legitimacy to the overall organization.
n n n n n n n n n
LO: 3, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
15. The IASB preliminary views are based on research and analysis conducted by the IASB staff. IASB
n n n n n n n n n n n n n n n
exposure drafts are issued after the Board evaluates research and public response to preliminary
n n n n n n n n n n n n n n
views. IASB standards are issued after the Board evaluates responses to the exposure draft.
n n n n n n n n n n n n n n
LO: 3, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
16. IASB International Financial Reporting Standards are financial accounting standards issued by the
n n n n n n n n n n n
IASB and are referred to as International Financial Reporting Standards (IFRS). The IFRS Conceptual
n n n n n n n n n n n n n n
Framework for Financial Reporting sets forth fundamental objectives and concepts that the Board
n n n n n n n n n n n n n
uses in developing future standards of financial reporting. The intent of the Conceptual Framework is to
n n n n n n n n n n n n n n n n
form a cohesive set of interrelated concepts that will serve as tools for solving existing and emerging
n n n n n n n n n n n n n n n n n
problems in a consistent manner.
n n n n n
LO: 3, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
17. In ranking from the most authoritative to least authoritative, International Financial Reporting
n n n n n n n n n n n
Standards are the most authoritative, followed by International Financial Reporting Standard
n n n n n n n n n n n
Interpretations and then the Conceptual Framework for Financial Reporting.
n n n n n n n n n
LO: 3, Bloom: K, Difficulty: Simple, Time: 3-5, AACSB: None, AICPA BB: None, AICPA FC: Reporting, AICPA PC: Communication
n n n n n n n n n n n n n n n n n n
