Intermediate Accounting: IFRS Edition: Dedicated To

Intermediate Accounting: IFRS
Edition
Fourth Edition
DONALD E. KIESO PhD, CPA

Northern Illinois University DeKalb, Illinois
JERRY J. WEYGANDT PhD, CPA

University of Wisconsin—Madison Madison, Wisconsin
TERRY D. WARFIELD, PhD

University of Wisconsin—Madison Madison, Wisconsin
DEDICATED TO
Our wives, Donna, Enid, and Mary, for their love, support, and
encouragement
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ISBN-13 978-1-119503682
Table of Contents
Cover
Title Page
DEDICATED TO
Copyright
From the Authors
About the Authors
New to This Edition
Proven Pedagogical Framework
Acknowledgments
CHAPTER 1: Financial Reporting and Accounting Standards
Global Markets
Objective of Financial Reporting
Standard-Setting Organizations
Financial Reporting Challenges
Review and Practice
Global Accounting Insights
CHAPTER 2: Conceptual Framework for Financial Reporting
Conceptual Framework
Fundamental Concepts
Assumptions
Measurement, Recognition, and Disclosure Concepts
Review and Practice
CHAPTER 3: The Accounting Information System
Accounting Information System
Record and Summarize Basic Transactions
Identify and Prepare Adjusting Entries
Preparing Financial Statements
Financial Statements for a Merchandising Company
APPENDIX 3A: Cash-Basis Accounting versus Accrual
Basis Accounting
Conversion from Cash Basis to Accrual Basis
Theoretical Weaknesses of the Cash Basis
APPENDIX 3B: Using Reversing Entries
Illustration of Reversing Entries—Accruals
Illustration of Reversing Entries—Deferrals
Summary of Reversing Entries
APPENDIX 3C: Using a Worksheet: The Accounting Cycle
Revisited
Worksheet Columns
Preparing Financial Statements from a Worksheet
Review and Practice
CHAPTER 4: Income Statement and Related Information
Income Statement
Content and Format of the Income Statement
Reporting Various Income Items
Accounting Changes and Errors
Related Equity Statements
Review and Practice
CHAPTER 5: Statement of Financial Position and Statement of
Cash Flows
Statement of Financial Position
Preparation of the Statement of Financial Position
Statement of Cash Flows
Additional Information
APPENDIX 5A: Ratio Analysis—A Reference
Using Ratios to Analyze Performance
Review and Practice
CHAPTER 6: Accounting and the Time Value of Money
Basic Time Value Concepts
Single-Sum Problems
Annuities (Future Value)
Annuities (Present Value)
Other Time Value of Money Issues
Review and Practice
CHAPTER 7: Cash and Receivables
Cash
Receivables
Valuation of Accounts Receivable
Notes Receivable
Other Issues Related to Receivables
APPENDIX 7A: Cash Controls
Using Bank Accounts
The Imprest Petty Cash System
Physical Protection of Cash Balances
Reconciliation of Bank Balances
Review and Practice
CHAPTER 8: Valuation of Inventories: A Cost-Basis Approach
Inventory Issues
Goods and Costs Included in Inventory
Which Cost Flow Assumption to Adopt?
Effect of Inventory Errors
APPENDIX 8A: LIFO Cost Flow Assumption
Last-In, First-Out (LIFO)
Inventory Valuation Methods—Summary Analysis
Review and Practice
CHAPTER 9: Inventories: Additional Valuation Issues
Lower-of-Cost-or-Net Realizable Value (LCNRV)
Valuation Bases
The Gross Profit Method of Estimating Inventory
Retail Inventory Method
Presentation and Analysis
Review and Practice
CHAPTER 10: Acquisition and Disposition of Property, Plant,
and Equipment
Property, Plant, and Equipment
Borrowing Costs During Construction
Valuation of Property, Plant, and Equipment
Costs Subsequent to Acquisition
Disposition of Property, Plant, and Equipment
Review and Practice
CHAPTER 11: Depreciation, Impairments, and Depletion
Depreciation—A Method of Cost Allocation
Other Depreciation Issues
Impairments
Depletion
Revaluations
APPENDIX 11A: Revaluation of Property, Plant, and
Equipment
Revaluation of Land
Revaluation of Depreciable Assets
Review and Practice
CHAPTER 12: Intangible Assets
Intangible Asset Issues
Types of Intangible Assets
Goodwill
Impairment and Presentation of Intangible Assets
Research and Development Costs
Review and Practice
CHAPTER 13: Current Liabilities, Provisions, and
Contingencies
Current Liabilities
Provisions
Contingencies
Review and Practice
CHAPTER 14: Non-Current Liabilities
Bonds Payable
Long-Term Notes Payable
Extinguishment of Non-Current Liabilities
Review and Practice
CHAPTER 15: Equity
Corporate Capital
Reacquisition of Shares
Dividend Policy
Presentation and Analysis of Equity
APPENDIX 15A: Dividend Preferences and Book Value per
Share
Dividend Preferences
Book Value per Share
Review and Practice
CHAPTER 16: Dilutive Securities and Earnings per Share
Dilutive Securities
Share Warrants
Share Compensation Plans
Basic Earnings per Share
Diluted Earnings per Share
APPENDIX 16A: Accounting for Share-Appreciation Rights
SARs—Share-Based Equity Awards
SARs—Share-Based Liability Awards
Share-Appreciation Rights Example
APPENDIX 16B: Comprehensive Earnings per Share
Example
Diluted Earnings Per Share
Review and Practice
CHAPTER 17: Investments
Debt Investments
Equity Investments
Other Reporting Issues
APPENDIX 17A: Accounting for Derivative Instruments
Defining Derivatives
Who Uses Derivatives, and Why?
Basic Principles in Accounting for Derivatives
Derivatives Used for Hedging
Other Reporting Issues
Comprehensive Hedge Accounting Example
Controversy and Concluding Remarks
APPENDIX 17B: Fair Value Disclosures
Disclosure of Fair Value Information: Financial
Instruments
Disclosure of Fair Values: Impaired Assets or
Liabilities
Conclusion
Review and Practice
CHAPTER 18: Revenue Recognition
Fundamentals of Revenue Recognition
The Five-Step Process Revisited
Accounting for Revenue Recognition Issues
Presentation and Disclosure
APPENDIX 18A: Long-Term Construction Contracts
Revenue Recognition over Time
APPENDIX 18B: Revenue Recognition for Franchises
Franchise Accounting
Recognition of Franchise Rights Revenue over Time
Review and Practice
CHAPTER 19: Accounting for Income Taxes
Fundamentals of Accounting for Income Taxes
Additional Issues
Accounting for Net Operating Losses
Financial Statement Presentation
APPENDIX 19A: Comprehensive Example of Interperiod
Tax Allocation
First Year—2021
Second Year—2022
APPENDIX 19B: Accounting for Net Operating Loss
Carrybacks
Loss Carryback
Review and Practice
CHAPTER 20: Accounting for Pensions and Postretirement
Benefits
Fundamentals of Pension Plan Accounting
Using a Pension Worksheet
Past Service Cost
Remeasurements
Reporting Pension Plans in Financial Statements
Review and Practice
CHAPTER 21: Accounting for Leases
The Leasing Environment
Lessee Accounting
Lessor Accounting
Special Lease Accounting Problems
Appendix 21A: Sale-Leasebacks
Accounting Issues in Sale-Leaseback Transactions
Sale-Leaseback Example
Appendix 21B: Comprehensive Example
Lease Terms: Scenario 1
Lease Terms: Scenario 2
Review and Practice
CHAPTER 22: Accounting Changes and Error Analysis
Accounting Changes
Changes in Accounting Estimates
Accounting Errors
Error Analysis
Review and Practice
CHAPTER 23: Statement of Cash Flows
The Statement of Cash Flows
Preparing the Statement of Cash Flows
Special Problems in Statement Preparation
Use of a Worksheet
Review and Practice
CHAPTER 24: Presentation and Disclosure in Financial
Reporting
Full Disclosure Principle
Disclosure Issues
Auditor’s and Management’s Reports
Current Reporting Issues
Appendix 24A: Basic Financial Statement Analysis
Perspective on Financial Statement Analysis
Ratio Analysis
Comparative Analysis
Percentage (Common-Size) Analysis
Appendix 24B: First-Time Adoption of IFRS
General Guidelines
Implementation Steps
Summary
Review and Practice
Appendix A: Specimen Financial Statements: Marks and
Spencer Group plc
Appendix B: Specimen Financial Statements: adidas AG
Appendix C: Specimen Financial Statements: Puma Group
Company Index
Subject Index
End User License Agreement
List of Tables
CHAPTER 6
Table 6.1 Future Value of 1 (Future Value of a Single
Sum)
Table 6.2 Present Value of 1 (Present Value of a Single
Sum)
Table 6.3 Future Value of an Ordinary Annuity of 1
Table 6.4 Present Value of an Ordinary Annuity of 1
Table 6.5 Present Value of an Annuity Due of 1
List of Illustrations
CHAPTER 1
ILLUSTRATION 1.3 Capital Allocation Process
ILLUSTRATION 1.4 International Standard-Setting
Structure
ILLUSTRATION 1.5 IASB Due Process
ILLUSTRATION 1.6 User Groups that Influence the
Formulation of Accounting Standards
CHAPTER 2
ILLUSTRATION 2.1 Conceptual Framework for
Financial Reporting
ILLUSTRATION 2.2 Hierarchy of Accounting Qualities
ILLUSTRATION 2.4 Fair Value Hierarchy
ILLUSTRATION 2.5 The Five Steps of Revenue
Recognition
ILLUSTRATION 2.7 Conceptual Framework for
Financial Reporting
CHAPTER 3
ILLUSTRATION 3.1 Double-Entry (Debit and Credit)
Accounting System
ILLUSTRATION 3.2 The Basic Accounting Equation
ILLUSTRATION 3.3 Expanded Equation and
Debit/Credit Rules and Effects
ILLUSTRATION 3.4 Income Statement and Equity
Relationships
ILLUSTRATION 3.5 Effects of Transactions on Equity
Accounts
ILLUSTRATION 3.6 The Accounting Cycle
ILLUSTRATION 3.8 Posting a Journal Entry
ILLUSTRATION 3.10 Investment of Cash by
Shareholders
ILLUSTRATION 3.11 Purchase of Office Equipment
ILLUSTRATION 3.12 Receipt of Cash for Future Service
ILLUSTRATION 3.13 Payment of Monthly Rent
ILLUSTRATION 3.14 Payment for Insurance
ILLUSTRATION 3.15 Purchase of Supplies on Credit
ILLUSTRATION 3.16 Signing a Contract
ILLUSTRATION 3.17 Declaration and Payment of
Dividend
ILLUSTRATION 3.18 Payment of Salaries
ILLUSTRATION 3.19 Receipt of Cash for Services
Provided
ILLUSTRATION 3.22 Adjusting Entries for Deferrals
ILLUSTRATION 3.23 Adjustment for Supplies
ILLUSTRATION 3.24 Adjustment for Insurance
ILLUSTRATION 3.25 Adjustment for Depreciation
ILLUSTRATION 3.27 Adjustment for Unearned Service
Revenue
ILLUSTRATION 3.28 Adjusting Entries for Accruals
ILLUSTRATION 3.29 Accrual Adjustment for
Receivable and Revenue Accounts
ILLUSTRATION 3.30 Formula for Computing Interest
for One Month
ILLUSTRATION 3.31 Adjustment for Interest
ILLUSTRATION 3.32 Accrued Salaries and Wages
ILLUSTRATION 3.33 Adjustment for Salaries and
Wages Expense
ILLUSTRATION 3.34 Adjustment for Bad Debt
ILLUSTRATION 3.36 Preparation of the Income
Statement and Retained Earnings Statement from the
Adj…
ILLUSTRATION 3.37 Preparation of the Statement of
Financial Position from the Adjusted Trial Balan…
ILLUSTRATION 3.39 Posting of Closing Entries
ILLUSTRATION 3A.12 Conversion of Statement of Cash
Receipts and Disbursements to Income Statement
ILLUSTRATION 3C.1 Use of a Worksheet
CHAPTER 4
ILLUSTRATION 4.7 Number of Unusual Items
Reported in a Recent Year by 500 Large Companies
CHAPTER 5
ILLUSTRATION 5.19 Cash Inflows and Outflows
CHAPTER 6
ILLUSTRATION 6.1 Simple vs. Compound Interest
ILLUSTRATION 6.6 Basic Time Diagram
ILLUSTRATION 6.13 Time Diagram to Solve for
Unknown Number of Pe…
Unknown Interest Rate
ILLUSTRATION 6.17 Solving for the Future Value of an
Ordinary Annuity
ILLUSTRATION 6.21 Comparison of the Future Value
of an Ordinary Annuity with an Annuity Due
ILLUSTRATION 6.22 Annuity Due Time Diagram
ILLUSTRATION 6.24 Future Value of Ordinary Annuity
Time Diagram (n = 10, i = 4%)
ILLUSTRATION 6.25 Future Value of Ordinary Annuity
Time Diagram, to Solve for Unknown Number of Pe…
ILLUSTRATION 6.26 Future Value Annuity Due Time
Diagram (n = 30, i = 9%)
ILLUSTRATION 6.28 Solving for the Present Value of
an Ordinary Annuity
ILLUSTRATION 6.31 Comparison of Present Value of
an Ordinary Annuity with an Annuity Due
ILLUSTRATION 6.33 Time Diagram to Solve for Present
Value of Lottery Payments
Effective-Interest Rate on Loan
ILLUSTRATION 6.35 Time Diagram for Ordinary
Annuity for a College Fund
ILLUSTRATION 6.37 Time Diagram for Present Value
of Deferred Annuity
ILLUSTRATION 6.39 Time Diagram for Present Value
of Deferred Annuity (Two-Step Process)
CHAPTER 7
ILLUSTRATION 7.4 Entries under Gross and Net
Methods of Recording Cash (Sales) Discounts
ILLUSTRATION 7.7 Time Diagram for Note Issued at
Face Value
ILLUSTRATION 7.9 Time Diagram for Zero-Interest
Bearing Note
ILLUSTRATION 7.11 Time Diagram for Interest-Bearing
Note
ILLUSTRATION 7.14 Basic Procedures in Factoring
ILLUSTRATION 7.17 Entries for Transfer of Receivables
—Secured Borrowing
ILLUSTRATION 7.18 Accounting for Transfers of
Receivables
ILLUSTRATION 7.19 Disclosure of Receivables
CHAPTER 8
ILLUSTRATION 8.2 Flow of Costs through
Manufacturing and Merchandising Companies
ILLUSTRATION 8.3 Inventory Cost Flow
ILLUSTRATION 8.4 Comparative Entries—Perpetual vs.
Periodic
ILLUSTRATION 8.6 Entries under Gross and Net
Methods
ILLUSTRATION 8.11 FIFO Method—Perpetual
Inventory
ILLUSTRATION 8.15 Effect of Ending Inventory Error
on Two Period
ILLUSTRATION 8A.2 LIFO Method—Perpetual
Inventory
CHAPTER 9
ILLUSTRATION 9.5 Accounting for the Reduction of
Inventory to Net Realizable Value—Perpetual Inve…
ILLUSTRATION 9.16 Application of Gross Profit
Formulas
ILLUSTRATION 9.21 Comprehensive Conventional
Retail Inventory Method Format
ILLUSTRATION 9.22 Conventional Retail Inventory
Method—Special Items Included
ILLUSTRATION 9.23 Disclosure of Inventory Methods
CHAPTER 10
ILLUSTRATION 10.1 Capitalization of Borrowing Costs
ILLUSTRATION 10.8 Accounting for Exchanges CHAPTER
11
ILLUSTRATION 11.11 Calculation of Partial-Period
Depreciation, Two Methods
ILLUSTRATION 11.15 Impairment Test
ILLUSTRATION 11.18 Graphic of Accounting for
Impairments
ILLUSTRATION GAAP 11.1 U.S. GAAP Impairment
Measurement
CHAPTER 12
ILLUSTRATION 12.1 Research and Development Stages
ILLUSTRATION 12.6 Determination of Goodwill—
Master Valuation Approach
ILLUSTRATION 12.12 Nestlé’s Intangible Asset
Disclosures
ILLUSTRATION 12.14 Research Activities versus
Development Activities
CHAPTER 13
ILLUSTRATION 13.4 Summary of Payroll Liabilities
CHAPTER 14
ILLUSTRATION 14.1 Time Diagram for Bonds Issued at
Par
ILLUSTRATION 14.3 Time Diagram for Bonds Issued at
a Discount
ILLUSTRATION 14.5 Bond Discount and Premium
Amortization Computation
ILLUSTRATION 14.14 Time Diagram for Zero-Interest
Note
ILLUSTRATION 14.18 Time Diagram for Interest
Bearing Note
CHAPTER 15
ILLUSTRATION 15.3 Issuance of Shares for Patent
ILLUSTRATION 15.4 Share Issuances/Buybacks 2004–
2018
ILLUSTRATION 15.10 Cash Dividend Entries
CHAPTER 16
ILLUSTRATION 16.1 Convertible Debt Components
ILLUSTRATION 16.2 Time Diagram for Convertible
Bond
ILLUSTRATION 16.10 Compensation Elements
ILLUSTRATION 16.11 Share-Option Plan Disclosure
ILLUSTRATION 16.23 Relation between Basic and
Diluted EPS
ILLUSTRATION 16.32 Reconciliation for Basic and
Diluted EPS
ILLUSTRATION 16.33 Calculating EPS, Simple Capital
Structure
ILLUSTRATION 16.34 Calculating EPS, Complex
Capital Structure
CHAPTER 17
ILLUSTRATION 17.20 Comparison of Fair Value and
Equity Method
ILLUSTRATION 17.24 HFCS Impairment Entries
ILLUSTRATION 17.26 Impairment Entries—Increase in
Credit Risk
ILLUSTRATION 17A.7 Effect of Hedge on Cash Flows
ILLUSTRATION 17A.9 Swap Transaction
ILLUSTRATION 17A.10 Interest Rate Swap
ILLUSTRATION 17A.13 Impact on Financial Statements
of Fair Value Hedge
CHAPTER 18
ILLUSTRATION 18.1 Key Concepts of Revenue
Recognition
ILLUSTRATION 18.2 Five Steps of Revenue
Recognition
ILLUSTRATION 18B.2 Franchise Entries—Inception
and Commencement of Operations
ILLUSTRATION 18B.3 Franchise Entries—First Year of
Franchise Operations
ILLUSTRATION 18B.5 Franchise Entries—Revenue
Recognized over Time
CHAPTER 19
ILLUSTRATION 19.1 Fundamental Differences Between
Financial and Tax Reporting
ILLUSTRATION 19.6 Reversal of Temporary Difference,
Chelsea Inc.
ILLUSTRATION 19.17 Reversal of Temporary
Difference, Cunningham Inc.
ILLUSTRATION 19.18 IFRS and Tax Reporting,
Hunt Company
ILLUSTRATION 19.29 Examples of Temporary
Differences
ILLUSTRATION 19.30 Tax Effects of Originating and
Reversing Differences
ILLUSTRATION 19.31 Examples of Permanent
Differences
ILLUSTRATION 19.36 Loss Carryforward Procedure
ILLUSTRATION 19.42 Possible Sources of Taxable
Income
ILLUSTRATION 19.48 Basic Principles of the Asset
Liability Method
ILLUSTRATION 19.49 Procedures for Computing and
Reporting Deferred Income Taxes
ILLUSTRATION 19A.13 Schedule of Future Taxable and
Deductible Amounts, End of 2022
ILLUSTRATION 19B.1 Loss Carryback Procedure
CHAPTER 20
ILLUSTRATION 20.1 Flow of Cash Among Pension Plan
Participants
ILLUSTRATION 20.3 Different Measures of the
Pension Obligation
ILLUSTRATION 20.5 Reporting Changes in the Pension
Obligation (Assets)
ILLUSTRATION 20.9 Basic Format of Pension
Worksheet
ILLUSTRATION 20.10 Pension Worksheet—2022
ILLUSTRATION 20.19 Partial Pension Worksheet—
2025
CHAPTER 21
ILLUSTRATION 21.12 Journal Entries—Guaranteed
Residual Value
ILLUSTRATION 21.13 Final Payments—Guaranteed and
Unguaranteed Residual Value
ILLUSTRATION 21.15 Journal Entries by Lessee
ILLUSTRATION 21.18 Lessor Classification Tests
ILLUSTRATION 21.28 Entries for Guaranteed and
Unguaranteed Residual Values—Sales-Type Lease
ILLUSTRATION 21.39 Disclosure of Leases by Lessee
ILLUSTRATION 21.41 Disclosure of Leases by Lessor
ILLUSTRATION 21A.1 Sale-Leaseback
ILLUSTRATION 21A.2 Sale-Leaseback Accounting
ILLUSTRATION 21A.4 Comparative Entries for Sale
Leaseback for Lessee and Lessor
ILLUSTRATION 21B.4 Lessee/Lessor Entries for
Finance/Sales-Type Lease
ILLUSTRATION 21B.8 Lessee Entries for Finance Lease
ILLUSTRATION 21B.9 Lessor Entries for Operating
Lease
ILLUSTRATION GAAP21.5 Lessee Operating Lease
Entries
CHAPTER 22
ILLUSTRATION 22.10 Comparative Information
Related to Accounting Change (FIFO)
ILLUSTRATION 22.21 Summary of Guidelines for
Accounting Changes and Errors
ILLUSTRATION 22.29 Worksheet to Correct Income
and Statement of Financial Position Errors
ILLUSTRATION 22.30 Worksheet to Analyze Effect of
Errors in Financial Statements
CHAPTER 23
ILLUSTRATION 23.1 Classification of Typical Cash
Inflows and Outflows
ILLUSTRATION 23.5 Net Income versus Net Cash Flow
from Operating Activities
ILLUSTRATION 23.17 Adjustments Needed to
Determine Net Cash Flow from Operating Activities—
Indirect…
ILLUSTRATION 23.21 Major Classes of Cash Receipts
and Payments
ILLUSTRATION 23.38 Format of Worksheet for
Preparation of Statement of Cash Flows
ILLUSTRATION 23.39 Comparative Statement of
Financial Position, Satellite Ltd.
ILLUSTRATION 23.41 Completed Worksheet for
Preparation of Statement of Cash Flows, Satellite Ltd.
CHAPTER 24
ILLUSTRATION 24.1 Types of Financial Information
ILLUSTRATION 24.4 Time Periods for Subsequent
Events
ILLUSTRATION 24.20 Types of Economic Crime
ILLUSTRATION 24B.1 First-Time Adoption Timeline
From the Authors
Globalization is occurring rapidly. As economic and other interactions
increase among countries, capital markets must provide high-quality
financial information. A need exists for high-quality financial reporting
standards that meet this objective. Fortunately, International
Financial Reporting Standards (IFRS) has broad international
acceptance and is being used in some form by more than 115 countries
around the world. One securities regulator noted that IFRS is best
positioned to serve as the single set of high-quality accounting
standards.
CHANGE IS THE ONLY CONSTANT

Most countries want rapid action related to the acceptance of IFRS. A
number of countries have already switched from their own version of
accounting standards to IFRS. Students and instructors need
educational materials related to IFRS in order to meet this new
challenge. Our objective in revising Intermediate Accounting, IFRS
Edition, was to continue to provide the tools needed to understand
what IFRS is and how it is applied in practice. The emphasis on fair
value, the proper accounting for financial instruments, and the new
developments related to leasing, revenue recognition, and financial
statement presentation are examined in light of current practice. In
addition, given the rapid changes taking place, we provide and discuss
the new Conceptual Framework to understand how these issues will
likely be resolved in the future.
“If this text helps you appreciate the challenges, worth, and
limitations of financial reporting, if it encourages you to evaluate
critically and understand financial accounting concepts and
practice, and if it prepares you for advanced study, professional
examinations, and the successful and ethical pursuit of your career
in accounting or business in a global economy, then we will have
attained our objectives.”
A LOOK AT GLOBAL ACCOUNTING

While IFRS has achieved broad acceptance, not all countries have
adopted it. For example, U.S. companies still follow U.S. generally
accepted accounting principles (U.S. GAAP) in preparing their financial
statements. In fact, the differences between IFRS and U.S. GAAP may
provide certain companies with a competitive advantage, so
understanding these differences may be important in analyzing
company performance. In addition, the IASB and the FASB are working
together to converge their standards as appropriate. Accordingly, we
have included a Global Accounting Insights section at the end of
selected chapters, to highlight the important differences that remain
between IFRS and U.S. GAAP, as well as the ongoing joint convergence
efforts to resolve them. As a result, students truly gain a global
accounting education by studying this text.
INTERMEDIATE ACCOUNTING WORKS

Intermediate Accounting, Seventeenth Edition (based on U.S. GAAP),
is the market-leading text in providing the tools needed to understand
what U.S. GAAP is and how it is applied in practice. With this IFRS
Fourth Edition, we strive to continue to provide the material needed to
understand this subject area using IFRS. The text is comprehensive and
up-to-date, and provides the instructor with flexibility in the topics to
cover. We also include proven pedagogical tools, designed to help
students learn more effectively and to answer the changing needs of
this course.
We are excited about Intermediate Accounting, IFRS Fourth Edition.
We believe it meets an important objective of providing useful
information to educators and students interested in learning about
IFRS. Suggestions and comments from users of this text will be
appreciated. Please feel free to e-mail any one of us at
AccountingAuthors@yahoo.com.
Donald E. Kieso Jerry J. Weygandt Terry D. Warfield
Somonauk, Illinois Madison, Wisconsin Madison, Wisconsin
About the Authors
Don Kieso
DONALD E. KIESO, PhD, CPA, received his bachelor’s degree
from Aurora University and his doctorate in accounting from the
University of Illinois. He has served as chairman of the Department
of Accountancy and is currently the KPMG Emeritus Professor of
Accountancy at Northern Illinois University. He has public
accounting experience with Price Waterhouse & Co. (San Francisco
and Chicago) and Arthur Andersen & Co. (Chicago) and research
experience with the Research Division of the American Institute of
Certified Public Accountants (New York). He has done post
doctorate work as a Visiting Scholar at the University of California at
Berkeley and is a recipient of NIU’s Teaching Excellence Award and
four Golden Apple Teaching Awards. Professor Kieso is the author of
other accounting and business books and is a member of the
American Accounting Association, the American Institute of
Certified Public Accountants, and the Illinois CPA Society. He has
served as a member of the Board of Directors of the Illinois CPA
Society, then AACSB’s Accounting Accreditation Committees, the
State of Illinois Comptroller’s Commission, as Secretary-Treasurer of
the Federation of Schools of Accountancy, and as Secretary Treasurer
of the American Accounting Association. Professor Kieso is currently
serving on the Board of Trustees and Executive Committee of Aurora
University, as a member of the Board of Directors of Kishwaukee
Community Hospital, and as Treasurer and Director of Valley West
Community Hospital. From 1989 to 1993, he served as a charter
member of the National Accounting Education Change Commission.
He is the recipient of the Outstanding Accounting Educator Award
from the Illinois CPA Society, the FSA’s Joseph A. Silvoso Award of
Merit, the NIU Foundation’s Humanitarian Award for Service to
Higher Education, a Distinguished Service Award from the Illinois
CPA Society, and in 2003 an honorary doctorate from Aurora
University.
Jerry Weygandt
JERRY J. WEYGANDT, PhD, CPA, is the Arthur Andersen
Alumni Emeritus Professor of Accounting at the University of
Wisconsin—Madison. He holds a Ph.D. in accounting from the
University of Illinois. Articles by Professor Weygandt have appeared
in the Accounting Review, Journal of Accounting Research,
Accounting Horizons, Journal of Accountancy, and other academic
and professional journals. These articles have examined such
financial reporting issues as accounting for price-level adjustments,
pensions, convertible securities, stock option contracts, and interim
reports. Professor Weygandt is the author of other accounting and
financial reporting books and is a member of the American
Accounting Association, the American Institute of Certified Public
Accountants, and the Wisconsin Society of Certified Public
Accountants. He has served on numerous committees of the
American Accounting Association and as a member of the editorial
board of the Accounting Review; he also has served as President and
Secretary-Treasurer of the American Accounting Association. In
addition, he has been actively involved with the American Institute of
Certified Public Accountants and has been a member of the
Accounting Standards Executive Committee (AcSEC) of that
organization. He has served on the FASB task force that examined the
reporting issues related to accounting for income taxes and served as
a trustee of the Financial Accounting Foundation. Professor
Weygandt has received the Chancellor’s Award for Excellence in
Teaching and the Beta Gamma Sigma Dean’s Teaching Award. He is
on the board of directors of M & I Bank of Southern Wisconsin. He is
the recipient of the Wisconsin Institute of CPA’s Outstanding
Educator’s Award and the Lifetime Achievement Award. In 2001, he
received the American Accounting Association’s Outstanding
Educator Award.
Terry Warfield
TERRY D. WARFIELD, PhD, is the PwC Professor in Accounting
at the University of Wisconsin—Madison. He received a B.S. and
M.B.A. from Indiana University and a Ph.D. in accounting from the
University of Iowa. Professor Warfield’s area of expertise is financial
reporting, and prior to his academic career, he worked for five years
in the banking industry. He served as the Academic Accounting
Fellow in the Office of the Chief Accountant at the U.S. Securities and
Exchange Commission in Washington, D.C. from 1995–1996.
Professor Warfield’s primary research interests concern financial
accounting standards and disclosure policies. He has published
scholarly articles in The Accounting Review, Journal of Accounting
and Economics, Research in Accounting Regulation, and Accounting
Horizons, and he has served on the editorial boards of The
Accounting Review, Accounting Horizons, and Issues in Accounting
Education. He has served as president of the Financial Accounting
and Reporting Section, the Financial Accounting Standards
Committee of the American Accounting Association (Chair 1995–
1996), and on the AAA-FASB Research Conference Committee. He
also served on the Financial Accounting Standards
Advisory Council of the Financial Accounting Standards Board and
as a trustee of the Financial Accounting Foundation. Professor
Warfield has received teaching awards at both the University of Iowa
and the University of Wisconsin, and he was named to the Teaching
Academy at the University of Wisconsin in 1995. Professor Warfield
has developed and published several case studies based on his
research for use in accounting classes. These cases have been
selected for the AICPA Professor-Practitioner Case Development
Program and have been published in Issues in Accounting
Education.
New to This Edition
Content Changes by Chapter

Chapter 1: Financial Reporting and Accounting
Standards
New opening story on the current usage of IFRS and its impact
on public companies worldwide.
New What Do the Numbers Mean? (WDNM) box on IFRS for
SMEs, which is helping IFRS to gain traction with non-public
companies.
Chapter 2: Conceptual Framework for Financial

Reporting
Updated throughout to reflect the 2018 IASB Conceptual
Framework for Financial Reporting.
Chapter 3: The Accounting Information System

New opening story on blockchain.
Chapter 4: Income Statement and Related Information

Updated WDNM box on alternative performance measures
used by companies.
Chapter 5: Statement of Financial Position and

Statement of Cash Flows
Updated discussions throughout on recent status of IASB
project on the presentation in the statement of financial
position as well as that on performance reporting.
New footnote on recent IFRS on classification of current/non
current assets.
Chapter 6: Accounting and the Time Value of Money
Reformatted time diagram problems for improved

understanding and visualization.
Chapter 7: Cash and Receivables

New opening story, discussing current effect of TCJA in terms
of amounts of company cash parked overseas as well as foreign
cash balance disclosures.
Updated definition and discussion of cash equivalents per
recent IFRS.
Updated discussion of sales returns and allowances per recent
IFRS, including use of Return Liability account.
New Evolving Issue on what companies should include as part
of cash and cash equivalents on the statement of financial
position, such as cryptocurrencies (now classified as intangible
assets or inventory).
New WDNM box on the pros and cons of securitizations.
Chapter 8: Valuation of Inventories: A Cost-Basis

Approach
New WDNM box on retailers using an omnichannel approach
and the impact this has on inventory levels.
Chapter 9: Inventories: Additional Valuation Issues

New WDNM box on the corporate barter method to handle
problem inventory.
Chapter 10: Acquisition and Disposition of Property,
Plant, and Equipment
Updated discussion on borrowing costs during construction per
recent IFRS.
Updated discussion on involuntary conversion per recent IFRS.
Chapter 11: Depreciation, Impairments, and Depletion
Updated opening story on how technology companies are

especially vulnerable to impairment losses.
Updated definition of depreciation per recent IFRS.
Updated per recent IFRS requirement that companies review
estimates for residual value and service life annually and revise
if needed.
Updated WDNM box on revaluation accounting to highlight
how companies use it effectively in the hospitality industry.
Chapter 12: Intangible Assets
Updated for ASB project on goodwill.
Chapter 13: Current Liabilities, Provisions, and

Contingencies
Updated opening story to include most recent IASB position
and considerations regarding liabilities, including contingent
liabilities.
New WDNM box on how SAP’s current liabilities account can
signal both good and bad news for investors.
Chapter 14: Non-Current Liabilities

New opening story discussing how total global debt as well as
bond issuances continue to increase.
New WDNM box on negative interest rates—what they are, who
issues them, and who invests in them.
New footnote on recognition that LIBOR is no longer a reliable
measure of interest rates between banks and how the Financial
Stability Board has been tasked with determining more reliable
benchmark rates.
Chapter 15: Equity

Updated opening story for most recent data indicating
continued increase in global investment opportunities.
New introduction and illustration to emphasize current
prevalence in share buybacks.
Chapter 16: Dilutive Securities and Earnings per Share

Updated opening story to include most recent information
about median CEO pay by region to indicate increased usage of
share option awards in employee pay packages.
Updated footnote 1 to provide latest information regarding
IASB’s development of a standard that will improve the financial
reporting requirements for financial instruments with
characteristics of debt and equity.
Chapter 17: Investments

New opening story on whether IFRS 9 has actually resulted in
companies reporting more decision-useful information.
Updated footnote 1 on definition of financial assets per latest
IFRS.
New WDNM box on whether the single impairment model,
based on expected credit losses, will give banks and investors in
banks a better early warning of deteriorating credit quality.
Updated table showing differences between traditional and
derivative financial instruments based on latest IFRS.
Updated WDNM box on equity method accounting per IFRS 10,
as well as updated WDNM box on derivatives market per recent
data.
Chapter 18: Revenue Recognition

Updated opening story as companies have begun to implement
the most recent revenue recognition standard, including the
continuing challenge on the amount of judgment that is still
required in determining how to report revenue transactions and
how that relates to key audit matters (KAMs).
Replaced Evolving Issue with discussion on whether the most
recent revenue recognition standard represents a convergence
with U.S. GAAP or has actually resulted in more differences.
New WDNM box on how returns can significantly affect
reported revenues for e-commerce companies.
Chapter 19: Accounting for Income Taxes

Loss carryforward and loss carrybacks updated per recent tax
law changes; loss carrybacks now discussed in a new Appendix
19B.
WDNM box on global tax rates completed updated per most
recent information as well as the OECD and G20 BEPS (Base
Erosion and Profit Sharing) initiative.
Chapter 20: Accounting for Pensions and

Postretirement Benefits
Updated opening story, for most recent information on how the
financial crisis of 2008 is still impacting companies’ pension
plans.
Updated discussion of IAS 19 (see footnote 11 as well as
“Recognition of the Net Funded Status of the Pension Plan”
section) and how it limits amount of pension asset that is
recognized (the asset ceiling).
Chapter 21: Accounting for Leases

Updated opening story as new lease accounting rules are not
expected to be implemented until 2020, a slight delay.
New illustration showing Air France’s incorporation of new
lease accounting standard into its financial statements.
Chapter 22: Accounting Changes and Error Analysis

Updated opening story based on recent IFRS 9, IFRS 15, and
IFRS 16.
Updated WDNM box on accounting change estimates to show
the 10 most common changes in accounting estimates as well
as the positive/negative impacts of these changes on income.
Chapter 23: Statement of Cash Flows

Updated chapter to include most recent IFRS on cash
equivalents, as well as IFRS on disclosures needed if beginning
and ending cash balances on the statement of cash flows do not
reconcile.
New footnote discussing IASB’s Primary Financial Statements
project regarding interest and dividends paid or received.
Chapter 24: Presentation & Disclosure in Financial

Reporting
Updated opening story to include new IFRS practice statement
related to making materiality judgments.
New discussion and example of key audit matters (KAMs).
New discussion and example of alternative performance
measures.
Improved Digital Assets

Intermediate Accounting, IFRS Fourth Edition, is completely
integrated with Wiley’s online courseware, featuring a suite of
teaching and learning resources developed under the close review of
the authors. Driven by the same basic beliefs as the text, Wiley’s
online courseware allows students to create a personalized study
plan, assess their progress along the way, and access the content and
resources needed to master the material. Features of Wiley’s online
courseware includes the following:
NEW Data Analytics: Data Analytics activities include

corresponding data sets and assignments in Wiley’s online
courseware. These resources further prepare and enhance data
analytics skills that students will need in their future
accounting careers. Intermediate Accounting, IFRS Fourth
Edition, also includes a “Data Analytics and Accounting”
module within Wiley’s online courseware that contains seven
interactive lessons with industry-validated content to prepare
students for the evolving workforce, video tutorials of real
world data analytics applications, and a case study using Excel
that allows students to manipulate and think critically about
data.
Accessible Lecture PowerPoints: PowerPoints are a
hallmark of many lectures as well as an important study tool for
students. In addition to the fully accessible Wiley’s online
courseware course, we have also improved the lecture
PowerPoints to be accessible, including high-quality alt text and
screen-reader capabilities.
Proven Pedagogical Framework
This edition continues to provide numerous key learning aids to
help you master the text material and prepare you for a successful
career in accounting.
End-of-Chapter Pedagogy
Acknowledgments
Reviewers
Azlina Ahmad
Universiti Kebangsaan
Malaysia Wilfredo Baltazar
De La Salle University
Dennis Chan
University of Bunda Mulia
Christine Cheng
University of Mississippi
Peng-Chia Chiu
The Chinese University of Hong Kong
Teresa Chu
University of Macau
Antonio Dayag
University of Santo Tomas
David Dettner
Export-Import Bank of the United States
Charmaine Felder
Brandman University
Kaleed Jaarat
Middle East University
Edmund Keung
National University of Singapore
Kevin Li Chi Keung
The Open University of Hong Kong
Paul Kimmel
University of Wisconsin—Madison
H.R. Sampath Kumar
Karnataka Vidyuth Karkhane Limited
Kurniawati
University of Bunda Mulia
Raji Lakshmi
Dr. Pauls Engineering College, India
Phil Larprom
University of Toronto
Jessica Lee
Hong Kong University of Science and Technology
Vincent Leung
Macao Polytechnic Institute
Tom Linsmeier
University of Wisconsin—Madison
Hsin-Tsai Liu
National Taiwan University
Daphne Main
Loyola University—New Orleans
Kingsley Olibe
Kansas State University
Can Ozturk
Cankaya University
Hannah Pantaran
Silliman University, Philippines
Fernando Penalva
IESE Business School
Nuchjaree Pichetkun
Rajamangala University of Technology,
Thanyaburi Nuraini Sari
Binus University
Dr. Charlie Sohn
University of Macau
Nai Hui Su (Suzanne)
National Chung Hsing University
Sukarnen Suwanto
Indonesia
Professor Ting-Wong
National Chengchi University
Rita Yip
Lingnan University
Amy Zang
The Hong Kong University of Science and Technology
Stephen Zeff
Rice University
Ancillary Authors, Contributors, Proofers, and
Accuracy Checkers
Tom Bader
Madison, Wisconsin
Ellen Bartley
St. Joseph’s College
LuAnn Bean
Florida Institute of Technology
John C. Borke
University of Wisconsin—Platteville
Melodi Bunting
Edgewood College
Jack Cathey
University of North Carolina—Charlotte
Andrew Debbink
Ernst & Young—Chicago
Jim Emig
Villanova University
Larry Falcetto
Emporia State University
Coby Harmon, University of California, Santa Barbara
Kimberly Hurt
Central Community College—Hastings
Mark Kohlbeck
Florida Atlantic University
Ellen Lettenberger
Madison, Wisconsin
Steven Lifland
High Point University
Jill Misuraca
University of Tampa
Barbara Muller
Arizona State University
Yvonne Phang
Borough of Manhattan Community College
Laura Prosser
Black Hills State University
Lynn Stallworth
Appalachian State University
Alice Sineath
Benedictine University
Dick D. Wasson
Southwestern College
Irene Wiecek
University of Toronto
Annette Foo Wai Yin
National University of Singapore
Lori Grady Zaher
Bucks County Community College
Practicing Accountants and Business Executives

From the fields of corporate and public accounting, we owe thanks
to the following practitioners for their technical advice and for
consenting to interviews.
Tracy Golden
Deloitte LLP
John Gribble
PricewaterhouseCoopers (retired)
Darien Griffin
S.C. Johnson & Son
Michael Lehman
Sun Microsystems, Inc. (retired)
Michele Lippert
Evoke.com
Sue McGrath
Vision Capital Management
David Miniken
Sweeney Conrad
Robert Sack
University of Virginia
Clare Schulte
Deloitte LLP
Willie Sutton
Mutual Community Savings Bank, Durham, NC
Mary Tokar
IASB
Lynn Turner
former SEC Chief Accountant
We give special acknowledgment and thanks to Professor Jack
Cathey for his significant contributions to the development of the
Intermediate Accounting, IFRS Fourth Edition. We benefited
greatly from his IFRS expertise and his student-oriented
perspectives as an educator.
We also appreciate the exemplary support and professional
commitment given us by the development, marketing, production,
and editorial staffs of John Wiley & Sons, including the following:
Michael McDonald, Emily Marcoux, Lindsey Myers, Rachel Conrad,
Elena Saccaro, and Wendy Lai. Thanks, too, to Cathy Castle and the
staff at Lumina for their work on the text and the solutions manual.
Suggestions and comments from users of this text will be
appreciated. Please feel free to e-mail any one of us.
Donald E. Kieso Jerry J. Weygandt Terry D. Warfield
Somonauk, Illinois Madison,
Wisconsin Madison,
Wisconsin
CHAPTER 1
Financial Reporting and Accounting Standards
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Describe the global financial markets and their relation to

financial reporting.
2. Explain the objective of financial reporting.
3. Identify the major policy-setting bodies and their role in the
standard-setting process.
4. Discuss the challenges facing financial reporting.
This chapter also includes numerous conceptual
discussions that are integral to the topics presented here.
PREVIEW OF CHAPTER 1
As the following opening story indicates, countries are moving quickly
to adopt International Financial Reporting Standards (IFRS). It is
estimated that over 300 of the 500 largest global companies are using
IFRS. However, the accounting profession faces many challenges in
establishing these standards, such as developing a sound conceptual
framework, use of fair value measurements, proper consolidation of
financial results, off-balance-sheet financing, and proper accounting
for leases and pensions. This chapter discusses the international
financial reporting environment and the many factors affecting it, as
follows.
Continuing Evolution of International Financial Reporting
The age of international trade and the interdependence of national
economies continue to evolve. Many of the largest companies in the world
often do more of their business in foreign lands than in their home
countries. Companies now access not only their home country capital
markets for financing, but others as well. With this globalization,
companies are recognizing the need to have one set of financial reporting
standards. For globalization of capital markets to be efficient, what is
reported for a transaction in Beijing should be reported the same way in
Paris, New York, or London.
In the past, many countries used their own sets of accounting standards
or followed standards set by larger countries, such as those used in
Europe or in the United States. That protocol has changed through the
adoption of a single set of rules, called International Financial Reporting
Standards (IFRS). As indicated in the following chart, there is broad
acceptance of IFRS around the world.
As indicated, 126 jurisdictions require the use of IFRS by all or most
public companies, with most of the remaining jurisdictions permitting
their use. Indeed, 27,000 of the 49,000 companies listed on the 88
largest securities exchanges in the world use IFRS. IFRS also has appeal
for non-public companies; since its publication, the IFRS for SMEs (small
and medium-sized entities) is required or permitted in 57 percent, or 85
of 150, profiled jurisdictions, while a further 11 jurisdictions are also
considering adopting IFRS.
Changing to IFRS does not come without cost and effort. However,
academic research and studies by adopting jurisdictions provide
overwhelming evidence that the use of IFRS has brought the following
net benefits to capital markets:
IFRS was successful in creating a common accounting language for

capital markets (European Commission, 2015).
Evidence suggests that IFRS adoption was largely positive for listed
companies in Australia (Australian Accounting Standards Board,
2016).
IFRS adoption helped to reduce investment risk in domestic firms,
mitigate the “Korea discount,” and attract foreign capital via
overseas shares listing, bond issuance, or mergers and acquisitions
(Korean Accounting Standards Board, 2016).
Some companies also report benefits from being able to use IFRS in their
internal reporting. This improves their ability to compare operating units
in different jurisdictions by reducing the number of different reporting
systems. In Japan, where use of IFRS has been voluntary since 2010,
business efficiency, enhanced comparability, and better communications
with international investors have been identified as the main reasons why
many Japanese companies made the choice to adopt IFRS (Japanese
Financial Services Agency). Thus, the international financial reporting
environment has and is continuing to evolve. With these changes, it is
hoped that a more effective system of reporting will develop, which will
benefit all.
Review and Practice

Go to the Review and Practice section at the end of the chapter for
a targeted summary review and practice problem with solution.
Multiple-choice questions with annotated solutions, as well as
additional exercises and practice problem with solutions, are also
available online.
Global Markets
LEARNING OBJECTIVE 1
Describe the global financial markets and their relation to financial
reporting.
World markets are increasingly intertwined. International consumers

drive Japanese cars, wear Italian shoes and Scottish woolens, drink
Brazilian coffee and Indian tea, eat Swiss chocolate bars, sit on Danish
furniture, watch U.S. movies, and use Arabian oil. The tremendous
variety and volume of both exported and imported goods indicates the
extensive involvement in international trade—for many companies, the
world is their market.
To provide some indication of the extent of globalization of economic
activity, Illustration 1.1 provides a listing of the top 20 global
companies in terms of sales.
Ran Company Country Revenues ($
k millions)
1 Walmart U.S. 5,00,343
2 State Grid China 3,48,903
3 Sinopec Group China 3,26,953
4 China National China 3,26,008
Petroleum
5 Royal Dutch Shell Netherland 3,11,870
s
6 Toyota Motor Japan 2,65,172
7 Volkswagen Germany 2,60,028
8 BP Britain 2,44,582
9 ExxonMobil U.S. 2,44,363
10 Berkshire Hathaway U.S. 2,42,137
11 Apple U.S. 2,29,234
12 Samsung Electronics South 2,11,940
Korea
13 McKesson U.S. 2,08,357
14 Glencore Switzerlan 2,05,476
d
15 UnitedHealth Group U.S. 2,01,159
16 Daimler Germany 1,85,235
17 CVS Health U.S. 1,84,765
18 Amazon.com U.S. 1,77,866
19 EXOR Group Italy 1,61,677
20 AT&T U.S. 1,60,546
ILLUSTRATION 1.1 Top 20 Global Companies in Terms of
Sales
Source: Data from Global Fortune 500, 2018.
www.fortune.com/global500/2018/search/?revenues=desc.
In addition, due to technological advances and less onerous regulatory

requirements, investors are able to engage in financial transactions
across national borders and to make investment, capital allocation, and
financing decisions involving many foreign companies. Also, many
investors, in attempts to diversify their portfolio risk, have invested more
heavily in international markets. As a result, an increasing number of
investors are holding securities of foreign companies. For example, over a
recent seven-year period, estimated investments in foreign equity
securities by U.S. investors doubled, from $3,422 billion to $7,844 billion
(OECD, 2018).
An indication of the significance of these international investment
opportunities can be found when examining the number of foreign
registrations on various securities exchanges. As shown in Illustration
1.2, a significant number of foreign companies are found on national
exchanges.
As indicated, capital markets are increasingly integrated and companies
have greater flexibility in deciding where to raise capital. In the absence of
market integration, there can be company-specific factors that make it
cheaper to raise capital and list/trade securities in one location versus
another. With the integration of capital markets, the automatic linkage
between the location of the company and the location of the capital market
is loosening. As a result, companies have expanded choices of where to
raise capital, either equity or debt. The move toward adoption of global
accounting standards has and will continue to facilitate this trend.
Exchange Market Total Domest Foreig Forei
Capitalizatio Listing icListin nListi gn%
n($ s gs ngs
millions)
NYSE 2,42,30,840 2,335 1,832 503 21.5
Nasdaq 1,16,58,201 3,080 2,637 443 14.4
Japan 56,14,217 3,677 3,672 5 0.1
Exchange
Group
Euronext 44,18,229 1,239 1,087 152 12.3
Hong 41,89,279 2,382 2,218 164 6.9
Kong
Exchange
s
and Clearing
LSE Group 39,34,491 2,450 2,049 401 16.4
TMX Group 22,86,818 3,408 3,354 54 1.6
National 21,83,847 1,945 1,944 1 0.1
Stock
Exchange of
India
Limited
Deutsche 19,49,134 519 469 50 9.6
Boerse AG
SIX Swiss 17,11,019 274 240 34 12.4
Exchange
Nasdaq 14,84,297 1,029 986 43 4.2
Nordic
and
Baltics
ASX 14,54,171 2,124 1,983 141 6.6
Australian
Securities
Exchange
Korea 14,32,601 2,221 2,200 21 0.9
Exchange
Taiwan 10,46,389 948 858 90 9.5
Stock
Exchange
Exchange Market Total Domest Foreig Forei

Capitalizatio Listing icListin nListi gn%
n($ s gs ngs
millions)
B3 (Brasil 10,45,210 330 325 5 1.5
Bolsa
Balcão)
Johannesbu 9,77,496 349 280 69 19.8
rgStock
Exchange
BME 7,74,947 2,937 2,910 27 0.9
Spanish
Exchanges
Singapore 7,25,887 738 478 260 35.2
Exchange
ILLUSTRATION 1.2 International Exchange Statistics

Source: Data from Market Statistics-October 2019, The WFE Statistics Team.
The World Federation of Exchanges.
Financial Statements and Financial Reporting

Accounting is the universal language of business. One noted economist
and politician indicated that the single most important innovation
shaping capital markets was the development of sound accounting
principles. The essential characteristics of accounting are (1) the
identification, measurement, and communication of financial information
about (2) economic entities to (3) interested parties. Financial
accounting is the process that culminates in the preparation of financial
reports on the enterprise for use by both internal and external parties.
Users of these financial reports include investors, creditors, managers,
unions, and government agencies. In contrast, managerial accounting
is the process of identifying, measuring, analyzing, and communicating
financial information needed by management to plan, control, and
evaluate a company’s operations.
Financial statements are the principal means through which a company
communicates its financial information to those outside the business.
These statements provide a company’s history quantified in money
terms. The financial statements most frequently provided are (1) the
statement of financial position, (2) the income statement (or statement
of comprehensive income), (3) the statement of cash flows, and (4) the
statement of changes in equity. Note disclosures are an integral part of
each financial statement.
Some financial information is better provided, or can be provided only, by
means of financial reporting other than formal financial statements.
Examples include the president’s letter or supplementary schedules in the
company annual report, prospectuses, reports filed with government
agencies, news releases, management’s forecasts, and social or
environmental impact statements. Companies may need to provide such
information because of authoritative pronouncements and regulatory
rules, or custom. Or, they may supply it because management wishes to
disclose it voluntarily.
In this textbook, we focus on the development of two types of financial
information: (1) the basic financial statements and (2) related
disclosures.
Accounting and Capital Allocation

Resources are limited. As a result, people try to conserve them and
ensure that they are used effectively. Efficient use of resources often
determines whether a business thrives. This fact places a substantial
burden on the accounting profession.
Accountants must measure performance accurately and fairly on a timely
basis, so that the right managers and companies are able to attract
investment capital. For example, relevant financial information that
faithfully represents financial results allows investors and creditors to
compare the income and assets employed by such companies as Nokia
(FIN), McDonald’s (USA), Air China Ltd. (CHN), and Toyota Motor
Company (JPN). Because these users can assess the relative return and
risks associated with investment opportunities, they channel resources
more effectively. Illustration 1.3 shows how this process of capital
allocation works.
ILLUSTRATION 1.3 Capital Allocation Process
An effective process of capital allocation is critical to a healthy economy.
It promotes productivity, encourages innovation, and provides an
efficient and liquid market for buying and selling securities and obtaining
and granting credit. Unreliable and irrelevant information leads to poor
capital allocation, which adversely affects the securities markets.
High-Quality Standards
To facilitate efficient capital allocation, investors need relevant
information and a faithful representation of that information to enable
them to make comparisons across borders. For example, assume that you
were interested in investing in the telecommunications industry. Four of
the largest telecommunications companies in the world are Nippon
Telegraph and Telephone (JPN), Deutsche Telekom (DEU),
Telefonica (ESP and PRT), and AT&T (USA). How do you decide in
which of these telecommunications companies to invest, if any? How do
you compare, for example, a Japanese company like Nippon Telegraph
and Telephone with a German company like Deutsche Telekom?
A single, widely accepted set of high-quality accounting standards is a
necessity to ensure adequate comparability. Investors are able to make
better investment decisions if they receive financial information from
Nippon Telegraph and Telephone that is comparable to information
from Deutsche Telekom. Globalization demands a single set of high
quality international accounting standards. But how is this to be
achieved? Here are some elements:
1. Single set of high-quality accounting standards established by a
single standard-setting body.
2. Consistency in application and interpretation.
3. Common disclosures.
4. Common high-quality auditing standards and practices. 5.
Common approach to regulatory review and enforcement. 6.
Education and training of market participants.
7. Common delivery systems (e.g., eXtensible Business Reporting
Language—XBRL).
8. Common approach to company governance and legal frameworks
around the world.1
Fortunately, as indicated in the opening story, significant changes in the

financial reporting environment are taking place, which hopefully will lead
to a single, widely accepted set of high-quality accounting standards. The
major standard-setters of the world, coupled with regulatory authorities,
now recognize that capital formation and investor understanding are
enhanced if a single set of high-quality accounting standards is developed.
Objective of Financial Reporting
Explain the objective of financial reporting.
What is the objective (or purpose) of financial reporting? The

objective of general-purpose financial reporting is to provide financial
information about the reporting entity that is useful to present
and potential equity investors, lenders, and other creditors in
making decisions about providing resources to the entity. Those
decisions involve buying, selling, or holding equity and debt instruments,
and providing or settling loans and other forms of credit. [1] (See the
Authoritative Literature References section near the end of
the chapter.) Information that is decision-useful to capital providers
(investors) may also be useful to other users of financial reporting who
are not investors. Let’s examine each of the elements of this objective.
General-Purpose Financial Statements

General-purpose financial statements provide financial reporting
information to a wide variety of users. For example, when Nestlé (CHE)
issues its financial statements, these statements help shareholders,
creditors, suppliers, employees, and regulators to better understand its
financial position and related performance. Nestlé’s users need this type
of information to make effective decisions. To be cost-effective in
providing this information, general-purpose financial statements are most
appropriate. In other words, general-purpose financial statements
provide, at the least cost, the most useful information possible.
Equity Investors and Creditors

The objective of financial reporting identifies investors and creditors as
the primary user group for general-purpose financial statements.
Identifying investors and creditors as the primary user group provides an
important focus of general-purpose financial reporting. For example,
when Nestlé issues its financial statements, its primary focus is on
investors and creditors because they have the most critical and
immediate need for information in financial reports. Investors and
creditors need this financial information to assess Nestlé’s ability to
generate net cash inflows and to understand management’s ability to
protect and enhance the assets of the company, which will be used to
generate future net cash inflows. As a result, the primary user groups are
not management, regulators, or some other non-investor group.
What Do the Numbers Mean?
Don’t Forget Management Stewardship
In addition to providing decision-useful information about future

cash flows, management also is accountable to investors for the
custody and safekeeping of the company’s economic resources and
for their efficient and profitable use. For example, the management of
Nestlé has the responsibility of protecting its economic resources
from unfavorable effects of economic factors, such as price changes,
and technological and social changes. Because Nestlé’s performance
in discharging its responsibilities (referred to as its stewardship
responsibilities) usually affects its ability to generate net cash inflows,
financial reporting may also provide decision-useful information to
assess management performance in this role. [2]
Entity Perspective
As part of the objective of general-purpose financial reporting, an entity
perspective is adopted. Companies are viewed as separate and distinct
from their owners (present shareholders) using this perspective. The
assets of Nestlé are viewed as assets of the company and not of a specific
creditor or shareholder. Rather, these investors have claims on Nestlé’s
assets in the form of liability or equity claims. The entity perspective is
consistent with the present business environment, where most companies
engaged in financial reporting have substance distinct from their investors
(both shareholders and creditors). Thus, the perspective that financial
reporting should be focused only on the needs of shareholders—often
referred to as the proprietary perspective—is not considered
appropriate.
Decision-Usefulness
Investors are interested in financial reporting because it provides
information that is useful for making decisions (referred to as the
decision-usefulness approach). As indicated earlier, when making
these decisions, investors are interested in assessing (1) the company’s
ability to generate net cash inflows and (2) management’s ability to
protect and enhance the capital providers’ investments. Financial
reporting should therefore help investors assess the amounts, timing,
and uncertainty of prospective cash inflows from dividends or interest,
and the proceeds from the sale, redemption, or maturity of securities or
loans. In order for investors to make these assessments, the economic
resources of an enterprise, the claims to those resources, and the changes
in them must be understood. Financial statements and related
explanations should be a primary source for determining this
information.
The emphasis on “assessing cash flow prospects” does not mean that the
cash basis is preferred over the accrual basis of accounting. Information
based on accrual accounting generally indicates more accurately a
company’s present and continuing ability to generate favorable cash flows
than does information limited to the financial effects of cash receipts and
payments.
Recall from your first accounting course the objective of accrual-basis
accounting: it ensures that a company records events that change its
financial statements in the periods in which the events occur, rather than
only in the periods in which it receives or pays cash. Using the accrual
basis to determine net income means that a company recognizes revenues
when it provides the goods or performs the services (that is, satisfies its
performance obligation) rather than when it receives cash. Similarly, it
recognizes expenses when it incurs them rather than when it pays them.
Under accrual accounting, a company generally recognizes revenues when
it makes sales or performs services. The company can then relate the
revenues to the economic environment of the period in which they
occurred. Over the long run, trends in revenues and expenses are
generally more meaningful than trends in cash receipts and
disbursements.2
Standard-Setting Organizations
Identify the major policy-setting bodies and their role in the
standard-setting process.
For many years, many nations have relied on their own standard-setting
organizations. For example, Canada has the Accounting Standards Board,
Japan has the Accounting Standards Board of Japan, Germany has the
German Accounting Standards Committee, and the United States has the
Financial Accounting Standards Board (FASB). The standards issued by
these organizations are sometimes principles-based, rules-based, tax-
oriented, or business-based. In other words, they often differ in concept
and objective.
The main international standard-setting organization is based in London,
England, and is called the International Accounting Standards
Board (IASB). The IASB issues International Financial Reporting
Standards (IFRS), which are used on most foreign exchanges. As
indicated earlier, IFRS is presently used or permitted in over 149
jurisdictions (similar to countries) and is rapidly gaining acceptance in
other jurisdictions as well.
IFRS has the best potential to provide a common platform on which
companies can report, resulting in financial statements investors can use
to compare financial information. As a result, our discussion focuses on
IFRS and the organization involved in developing these standards— the
International Accounting Standards Board (IASB). The two organizations
that have a role in international standard-setting are the International
Organization of Securities Commissions (IOSCO) and the IASB.
International Organization of Securities Commissions

(IOSCO)
The International Organization of Securities Commissions
(IOSCO) is an association of organizations that regulate the world’s
securities and futures markets. Members are generally the main
financial regulator for a given country. IOSCO does not set accounting
standards. Instead, this organization is dedicated to ensuring that the
global markets can operate in an efficient and effective basis. The member
agencies (such as from France, Germany, New Zealand, and the United
States) have resolved to:
Cooperate to promote high standards of regulation in order to

maintain just, efficient, and sound markets.
Exchange information on their respective experiences in order to
promote the development of domestic markets.
Unite their efforts to establish standards and an effective
surveillance of international securities transactions.
Provide mutual assistance to promote the integrity of the markets
by a rigorous application of the standards and by effective
enforcement against offenses.
IOSCO supports the development and use of IFRS as the single set of
high-quality international standards in cross-border offerings and
listings. It recommends that its members allow multinational issuers to
use IFRS in cross-border offerings and listings, as supplemented by
reconciliation, disclosure, and interpretation where necessary to address
outstanding substantive issues at a national or regional level. (For more
information, go to the IOSCO website.)
What About the Little Guy?
As discussed in the opening story, IFRS has gained acceptance,

especially for publicly traded companies that wish to access
international capital markets. What about non-public companies?
Well, IFRS has a financial reporting answer for these “SMEs” (small
and medium-sized entities).
The 250-page IFRS for SMEs focuses on the information needs of
lenders, creditors, and other users of SME financial statements, who
are primarily interested in information about cash flows, liquidity,
and solvency. It also takes into account the costs to SMEs and the
capabilities of SMEs to prepare financial information. While based on
the full-IFRS principles, the IFRS for SMEs is considerably less
complex. It reflects five types of simplifications from full IFRS:
1. Some full-IFRS topics are omitted because they are not relevant
to typical SMEs.
2. Some full-IFRS accounting policy options are not allowed
because a more simplified method is available to SMEs.
3. Many of the full-IFRS recognition and measurement principles
have been simplified.
4. Substantially fewer disclosures are required.
5. The full-IFRS text has been redrafted in “plain English” for
increased understandability and translation.
To date, 85 of the 150 jurisdictions whose profiles are followed by the

IASB require or permit the IFRS for SMEs. It is also currently under
consideration in a further 11 jurisdictions. So IFRS is gaining
traction with both public and non-public companies.
International Accounting Standards Board (IASB)

The standard-setting structure internationally is composed of the
following four organizations:
1. The IFRS Foundation provides oversight to the IASB, IFRS

Advisory Council, and IFRS Interpretations Committee. In this role,
it appoints members, reviews effectiveness, and helps in the
fundraising efforts for these organizations.
2. The International Accounting Standards Board (IASB)
develops, in the public interest, a single set of high-quality,
enforceable, and global international financial reporting standards
for general-purpose financial statements.3
3. The IFRS Advisory Council (the Advisory Council) provides
advice and counsel to the IASB on major policies and technical
issues.
4. The IFRS Interpretations Committee assists the IASB through
the timely identification, discussion, and resolution of financial
reporting issues within the framework of IFRS.
In addition, as part of the governance structure, a Monitoring Board

was created. The purpose of this board is to establish a link between
accounting standard-setters and those public authorities (e.g., IOSCO)
that generally oversee them. The Monitoring Board also provides
political legitimacy to the overall organization. Illustration 1.4 shows
the organizational structure for the setting of international accounting
standards.
ILLUSTRATION 1.4 International Standard-Setting Structure
Due Process
In establishing financial accounting standards, the IASB has a thorough,
open, and transparent due process. The IASB due process has the
following elements: (1) an independent standard-setting board overseen
by a geographically and professionally diverse body of trustees; (2) a
thorough and systematic process for developing standards; (3)
engagement with investors, regulators, business leaders, and the global
accountancy profession at every stage of the process; and (4) collaborative
efforts with the worldwide standard-setting community.
To implement its due process, the IASB follows specific steps to develop a
typical IFRS, as Illustration 1.5 shows.
ILLUSTRATION 1.5 IASB Due Process

Furthermore, the characteristics of the IASB, as shown below, reinforce
the importance of an open, transparent, and independent due process.
Membership. The Board consists of 14 full-time members.

Members are well-paid, appointed for five-year renewable terms,
and come from different countries.4
Autonomy. The IASB is not part of any other professional
organization. It is appointed by and answerable only to the IFRS
Foundation.
Independence. Full-time IASB members must sever all ties from
their past employer. The members are selected for their expertise in
standard-setting rather than to represent a given country.
Voting. A majority of votes are needed to issue a new IFRS. In the
event of a tie, the chairperson is granted an additional vote.
With these characteristics, the IASB and its members will be insulated
as much as possible from the political process, favored industries, and
national or cultural bias.
Types of Pronouncements
The IASB issues three major types of pronouncements:
1. International Financial Reporting Standards.

2. Conceptual Framework for Financial Reporting.
3. International Financial Reporting Standards Interpretations.
International Financial Reporting Standards
Financial accounting standards issued by the IASB are referred to as

International Financial Reporting Standards (IFRS). The IASB has
issued 17 of these standards to date, covering such subjects as business
combinations, share-based payments, and leases.
Prior to the IASB (formed in 2001), standard-setting on the international
level was done by the International Accounting Standards Committee,
which issued International Accounting Standards (IAS). The committee
issued 41 IASs, many of which have been amended or superseded by the
IASB. Those still remaining are considered under the umbrella of IFRS.
Conceptual Framework for Financial Reporting
As part of a long-range effort to move away from the problem-by problem

approach, the IASB uses an IFRS conceptual framework. This
Conceptual Framework for Financial Reporting sets forth the
fundamental objective and concepts that the Board uses in developing
future standards of financial reporting. The intent of the document is to
form a cohesive set of interrelated concepts—a conceptual framework—
that will serve as tools for solving existing and emerging problems in a
consistent manner. For example, the objective of general-purpose
financial reporting discussed earlier is part of this Conceptual Framework.
The Conceptual Framework and any changes to it pass through the same
due process (preliminary views, public hearing, exposure draft, etc.) as an
IFRS. However, this Conceptual Framework is not an IFRS and hence
does not define standards for any particular measurement or disclosure
issue. Nothing in this Conceptual Framework overrides any specific
international accounting standard. The Conceptual Framework is
discussed more fully in Chapter 2.
International Financial Reporting Standards Interpretations
Interpretations issued by the IFRS Interpretations Committee are

also considered authoritative and must be followed. These interpretations
cover (1) newly identified financial reporting issues not specifically dealt
with in IFRS and (2) issues where unsatisfactory or conflicting
interpretations have developed, or seem likely to develop, in the absence
of authoritative guidance. The IFRS Interpretations Committee has issued
over 20 of these interpretations to date.
In keeping with the IASB’s own approach to setting standards, the IFRS
Interpretations Committee applies a principles-based approach in
providing interpretative guidance. To this end, the IFRS Interpretations
Committee looks first to the Conceptual Framework as the foundation for
formulating a consensus. It then looks to the principles articulated in the
applicable standard, if any, to develop its interpretative guidance and to
determine that the proposed guidance does not conflict with provisions in
IFRS.
The IFRS Interpretations Committee helps the IASB in many ways. For
example, emerging issues often attract public attention. If not resolved
quickly, these issues can lead to financial crises and scandals. They can
also undercut public confidence in current reporting practices. The next
step, possible governmental intervention, would threaten the
continuance of standard-setting in the private sector. The IFRS
Interpretations Committee can address controversial accounting
problems as they arise. It determines whether it can resolve them or
whether to involve the IASB in solving them. In essence, it becomes a
“problem filter” for the IASB. Thus, the IASB will hopefully work on
more pervasive long-term problems, while the IFRS Interpretations
Committee deals with short-term emerging issues.
Hierarchy of IFRS
Because it is a private organization, the IASB has no regulatory mandate
and therefore no enforcement mechanism. As a result, the Board relies on
other regulators to enforce the use of its standards. For example, the
European Union requires publicly traded member country companies to
use IFRS.
Any company indicating that it is preparing its financial statements in
conformity with IFRS must use all of the standards and interpretations.
The following hierarchy is used to determine what recognition,
valuation, and disclosure requirements should be used. Companies first
look to:
1. International Financial Reporting Standards, International

Accounting Standards (issued by the predecessor to the IASB), and
IFRS interpretations originated by the IFRS Interpretations
Committee (and its predecessor, the IAS Interpretations
Committee);
2. The Conceptual Framework for Financial Reporting; and
3. Pronouncements of other standard-setting bodies that use a similar
conceptual framework (e.g., U.S. GAAP).
In the absence of a standard or an interpretation in item 1 above,

companies look to the Conceptual Framework for Financial Reporting and
then to most recent pronouncements of other standard-setting bodies that
use a similar conceptual framework to develop accounting standards (or
other accounting literature and accepted industry practices to the extent
they do not conflict with the above). The overriding requirement of IFRS
is that the financial statements provide a fair presentation (often referred
to as a “true and fair view”). Fair representation is assumed to occur if a
company follows the guidelines established in IFRS.5 [3]
Financial Reporting Challenges

Discuss the challenges facing financial reporting.
Much is right about international financial reporting. One reason for this
success is that financial statements and related disclosures capture and
organize financial information in a useful and reliable fashion. However,
much still needs to be done. Here are some of the major challenges.
IFRS in a Political Environment

User groups are possibly the most powerful force influencing the
development of IFRS. User groups consist of those most interested in or
affected by accounting rules. Various participants in the financial
reporting environment may want particular economic events accounted
for or reported in a particular way, and they fight hard to get what they
want. They know that the most effective way to influence IFRS is to
participate in the formulation of these rules or to try to influence or
persuade the formulators of them.6
These user groups often target the IASB, to pressure it to change the
existing rules and develop new ones. In fact, these pressures have been
multiplying. Some influential groups demand that the accounting
profession act more quickly and decisively to solve its problems. Other
groups resist such action, preferring to implement change more slowly,
if at all. Illustration 1.6 shows the various user groups that apply
pressure.
Should there be politics in establishing IFRS for financial accounting
and reporting? Why not? Politics is everywhere: at the office, home,
school, church, temple, and mosque. IFRS is part of the real world, and
it cannot escape political pressures.
That is not to say that politics in establishing IFRS is a negative force.
Considering the economic consequences of many accounting rules,
special interest groups are expected to vocalize their reactions to
proposed rules.7 What the Board should not do is issue standards that
are primarily politically motivated. While paying attention to its
constituencies, the Board should base IFRS on sound research and a
conceptual framework that has its foundation in economic reality.
ILLUSTRATION 1.6 User Groups that Influence the
Formulation of Accounting Standards
Fair Consequences?
No accounting issue better illustrates the economic consequences of

accounting than the current debate over the use of fair value
accounting for financial assets. The IASB has had long-standing
standards requiring the use of fair value accounting for financial
assets, such as investments and other financial instruments. Fair value
provides the most relevant and reliable information for investors
about these assets and liabilities. However, in the wake of the credit
crisis of 2008, some countries, their central banks, and bank
regulators wanted to suspend fair value accounting based on concerns
that use of fair value accounting, which calls for recording significant
losses on poorly performing loans and investments, would scare
investors and depositors and lead to a “run on the bank.”
Most notable was the lobbying of then French President Nicolas
Sarkozy in urging his European Union counterparts to back changes to
accounting rules and give banks and insurers some breathing space
amid the market turmoil. Mr. Sarkozy sought agreement to the new
regulations, including changes to the mark-to-market accounting rules
that have been blamed for aggravating the crisis. International
regulators also have conducted studies of fair value accounting and its
role in the credit crisis. It is clear that political pressure affected the
final standard on financial instruments. The standard (issued in 2016)
permits companies to use amortized cost instead of fair value for held-
for-collection financial assets. The amortized cost approach was
favored by financial institutions with substantial portfolios of held-for-
collection financial assets. These financial institutions applied much
pressure on regulators, noting the dire economic consequences that
might follow if they had to use fair value in reporting on these
financial assets. In short, numbers have consequences.
Sources: Adapted from Ben Hall and Nikki Tait, “Sarkozy Seeks EU Accounting
Change,” The Financial Times Limited (September 30, 2008).

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Intermediate Accounting: IFRS

DONALD E. KIESO PhD, CPA

JERRY J. WEYGANDT PhD, CPA

TERRY D. WARFIELD, PhD

EXECUTIVE EDITOR Emily Marcoux

CONTENT DEVELOPMENT EDITOR Lindsey Myers

EDITORIAL SUPERVISORS Terry Ann Tatro/Nicola Smith

SENIOR DEVELOPMENT AND PRODUCTION MANAGER Ed Brislin

SENIOR PRODUCTION EDITORS Elena Saccaro/Rachel Conrad

DIRECTOR OF MARKETING Karolina Honsa Zarychta

MARKETING MANAGER Jenny Geiler

SENIOR DESIGNER Wendy Lai

ASSISTANT EDITOR Kirsten Loose

COVER IMAGE © Elymas / Shutterstock

(BACKCOVER) © Hero Images/Getty Images

CHANGE IS THE ONLY CONSTANT

A LOOK AT GLOBAL ACCOUNTING

INTERMEDIATE ACCOUNTING WORKS

Content Changes by Chapter

Chapter 2: Conceptual Framework for Financial

Chapter 3: The Accounting Information System

Chapter 4: Income Statement and Related Information

Chapter 5: Statement of Financial Position and

Chapter 6: Accounting and the Time Value of Money

Reformatted time diagram problems for improved

Chapter 7: Cash and Receivables

Chapter 8: Valuation of Inventories: A Cost-Basis

Chapter 9: Inventories: Additional Valuation Issues

Chapter 11: Depreciation, Impairments, and Depletion

Updated opening story on how technology companies are

Chapter 12: Intangible Assets

Updated for ASB project on goodwill.

Chapter 13: Current Liabilities, Provisions, and

Chapter 14: Non-Current Liabilities

Chapter 15: Equity

Chapter 16: Dilutive Securities and Earnings per Share

Chapter 17: Investments

Chapter 18: Revenue Recognition

Chapter 19: Accounting for Income Taxes

Chapter 20: Accounting for Pensions and

Chapter 21: Accounting for Leases

Chapter 22: Accounting Changes and Error Analysis

Chapter 23: Statement of Cash Flows

Chapter 24: Presentation & Disclosure in Financial

Improved Digital Assets

NEW Data Analytics: Data Analytics activities include

Practicing Accountants and Business Executives

1. Describe the global financial markets and their relation to

IFRS was successful in creating a common accounting language for

Review and Practice

World markets are increasingly intertwined. International consumers

In addition, due to technological advances and less onerous regulatory

Exchange Market Total Domest Foreig Forei

ILLUSTRATION 1.2 International Exchange Statistics

Financial Statements and Financial Reporting

Accounting and Capital Allocation

Fortunately, as indicated in the opening story, significant changes in the

Objective of Financial Reporting

What is the objective (or purpose) of financial reporting? The