The FASB and the IASB reached convergence on lease accounting, an important accounting subject, in recent years. You should do some research on how the convergence process evolved on this accounting subject before both standard-setters eventually issued their respective standards addressing this subject. An online search will turn up quite a bit of history and debate which occurred on this accounting subject between both standard-setters and feedback from the public, including publicly listed firms. You also may be able to find at the respective FASB and the IASB websites information related to the convergence process on this accounting subject.
Answer the following questions specifically in your Word document submission by copying and pasting each question in bold type with your answers below each question:
- Summarize in a few paragraphs the convergence process on this subject: How long did it take; was it contentious; what were the areas of disagreement as the convergence process developed; and once the standard-setters converged, which side went further than the other, in your opinion, to make the converged standard a reality?
- In your opinion, did the FASB and the IASB reach convergence on this accounting subject in the issuance of their respective new accounting standards?
- If no convergence was reached, what are the major differences that still exist on this accounting subject between the FASB and the IASB? Be specific in identifying any major differences that still exist, including but not limited to the potential impact on reported revenues and net income.
- In your opinion, how did the differences between rules-based and principle-based standards influence the debate and ultimately the final standard issued by both standard-setters?
- Once the new accounting standard is implemented by companies around the world in the future, will we really be able to compare Company A in Industry Z reporting under IFRS to Company B in Industry Z under the US GAAP? Explain in detail why or why not, justifying your opinion with specific details. You can even pick a specific company in a specific industry, if you wish, in preparing your answer to this question.
- Is either standard-setter still working on the implementation of the converged standard? If so, what are 1 or 2 of the key implementation matters which are still being developed with regards to the new standard?
- After doing your research for this Assignment Option, how has your opinion of convergence — the process, the goals, and the results to date — changed? Explain in detail.
- Write a paper of 6 pages in length, not counting the title and reference pages, which you must include.
- Copy and paste each one of the Questions into your paper in bold type to ensure you have answered each of the Assignment Requirements.
- Use terms, evidence, and concepts from class readings, including professional business language.
- Cite at least 5 credible, academic or professional sources for this assignment, outside of the textbook.
- Format your paper according to APA format.
Chapter 12 in Advanced Financial Accounting (p. 621 to the middle of p. 624)
Guillaume, O., & Pierre, D. (2016). The convergence of U.S. GAAP with IFRS: A comparative analysis of principles-based and rules-based accounting standards. Scholedge International Journal of Business Policy & Governance, 3(05), 63-72.
McEnroe, J., & Sullivan, M. (2014). The rise and stall the U.S. GAAP and IFRS convergence movement. The CPA Journal, 84(1), 14-19.
Pacter, P. (2013). What have IASB and FASB convergence efforts achieved? (International Accounting Standards Board). Journal of Accountancy, 215(2), 50-54, 56, 58-59.
Note: There is an important table included in this article titled “Results of Convergence Through 2013” which should be accessed and read from this article.
IASB-FASB convergence. (2019). Deloitte. Retrieved from https://www.iasplus.com/en-us/projects/convergence/iasb-fasb-convergence
Key differences between the US GAAP and IFRSs. (2019). Deloitte. Retrieved from https://www.iasplus.com/en-us/standards/ifrs-usgaap
Comparability in international accounting standards-a brief history. (n.d.). Financial Accounting Standards Board. Retrieved from https://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176156304264
Doupnik, T. S., & Perera, H. (2015). International accounting (4th ed.). New York, NY: McGraw-Hill Publication.