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Advanced Accounting 12th Edition Fischer Solutions Manual Full Chapter PDF
Advanced Accounting 12th Edition Fischer Solutions Manual Full Chapter PDF
1. Aside from the operational issues associated (b) to promote the use and rigorous applica-
with parent and subsidiary relationships, sever- tion of those standards;
al accounting issues become apparent. First, (c) in fulfilling the objectives associated with
assume that the accounting principles the sub- (a) and (b), to take account of, as appro-
sidiary uses may differ in certain respects from priate, the special needs of small and
those of the United States and that the subsidi- medium-sized entities and emerging
ary measures its activities in a foreign currency economies; and
(FC) rather than the U.S. dollar. Before consol- (d) to bring about convergence of national
idation can occur, the subsidiary’s transactions accounting standards and International
must be remeasured in accordance with U.S. Accounting Standards and International
GAAP. The importance of having transactions Financial Reporting Standards to high
measured in accordance with a single set of quality solutions.
accounting principles reinforces the goal of The FASB supports the objectives of the
developing a single set of international princi- Foundation primarily through its commitment
ples. Even after the subsidiary’s transactions to the convergence project. The FASB signed,
are remeasured into U.S. GAAP, their state- and subsequently reaffirmed, its memorandum
ments are still measured in terms of the FC. of understanding with the IASB formalizing its
Therefore, the measurements in FC must be commitment to the convergence of U.S. GAAP
translated into U.S. dollars using rates of with IFRS. A number of initiatives have been
exchange between the two currencies. This undertaken in order to move toward the goal
raises another issue in that a decision must be of convergence. Some of these initiatives in-
made as to which rates of exchange should be clude joint projects with the IASB, the short-
used: current, historical, or averages. The term convergence project, an IASB in resi-
question of the proper rate of exchange is dence at the FASB, and the consideration of
driven by the need to have translated financial convergence in all agenda items taken up by
statements that properly reflect the economic the FASB.
impact of changes in rates of exchange. For
3. U.S. GAAP differs from IFRS in a number
example, if the subsidiary conducts its transac-
of areas although, through the convergence
tions or functions exclusively in the FC, then it
project, the areas of difference are becoming
is unlikely that adverse changes in the rates of
fewer. Students may be encouraged to select
exchange would have an adverse economic
a topic covered by one of the standards and
impact on either the parent or the subsidiary.
research it on the IFRS Web site (http://www
2. The objectives of the International Accounting .iasb.org) or at http://www.iasplus.com/stand
Standards Committee Foundation are: ard/standard.htm and then compare the
(a) to develop, in the public interest, a single standard to that in the United States. Another
set of high-quality, understandable, and site of interest may be the comparisons between
enforceable global accounting standards U.S. GAAP and IFRS as set forth by Pricewa-
that require high-quality, transparent, terhouseCoopers: “Similarities and Differ-
and comparable information in financial ences—A Comparison of IFRS, US GAAP and
statements and other financial reporting to Indian GAAP” (www.pwc.com).
help participants in the world’s capital
markets and other users make economic
decisions;
9–1
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Ch. 9—Exercises 9–2
EXERCISES
EXERCISE 9-1
1. A company might incur several costs in connection with converging to International Accounting
Standards. Certainly, accounting staff will have to be educated regarding the new standards, which,
in some cases, may differ significantly from U.S. GAAP. Accounting systems and software will also
have to be redesigned to process and measure transactions per the new standards. Financial in-
formation that is prepared by the new standards will be used for both internal and external purpos-
es. Users within the company as well as outside users will have to be educated regarding the
statements. All of these transitional items have monetary costs associated with them. In addition,
change within an organization is often resisted, and such resistance can cost a company in a varie-
ty of monetary and nonmonetary ways.
2. Although the client currently operates only in the central United States, it should be positioning itself
to expand its operations in such a way that international vendors, customers, and lenders become
part of its environment. For example, if materials are purchased from a foreign vendor, that vendor
may want to review the client’s financial statements for purposes of assessing its creditworthiness.
If the foreign vendor makes such decisions based on IFRS, decisions based on U.S. GAAP could
be significantly different. In turn, the client company would want to evaluate the creditworthiness of
its foreign customers and, therefore, must be familiar with IFRS. Securing capital is no longer just a
local or regional process. Capital markets are worldwide, and those markets are making decisions
based on financial information that is prepared according to international standards. Your client
needs to embrace international standards so that it can position itself for operating in a global
economy.
EXERCISE 9-2
If a purchase from a foreign vendor is both denominated and measured in terms of the U.S. dollar,
there is no exposure to exchange rate risk. Therefore, changes in the exchange rates will have no im-
pact on this purchase. However, in the case of the other two purchases, because the transactions are
denominated in foreign currency and measured in U.S. dollars, changes in exchange rates will have an
economic impact on the purchaser. In the case of FC-A, where the dollar has strengthened, the dollar
will buy more of FC-A, or inversely, FC-A will translate into fewer dollars. Therefore, payment to the
foreign vendor will require fewer dollars than were originally recorded as the account payable at the
time of the purchase. As a result, the purchaser will record an exchange rate gain. In the case of FC-B,
the dollar has weakened, and the impact will be the opposite of that for FC-A, resulting in an exchange
rate loss.
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
9–3
Ch. 9—Exercises
EXERCISE 9-3
1. Several advantages to investors result from the harmonization of accounting standards. First and
foremost, investors will have information that is more comparable. This will result from financial
statements that are prepared using the same accounting principles used by entities in other coun-
tries. No longer will investors be comparing apples to oranges. Harmonization will also result in the
development of accounting principles that are less responsive to national influences and more re-
sponsive to economic reality. The principles of less-developed nations will be improved, and other
nations’ principles, which are politically justified, will hopefully be reduced. To the extent that these
improved principles more fairly reflect economic reality, then the underlying equity of the entities will
also be more fairly reflected. This might result in security prices that more closely reflect underlying
economic value. Similar to this, companies that are currently at a competitive advantage or disad-
vantage in security markets will be placed on a more equal par with other countries if harmonization
occurs.
3. The U.S. accounting profession as represented by the Financial Accounting Standards Board is
committed to the convergence of U.S. GAAP and International Accounting Standards. The FASB
has adopted a number of initiatives that will reduce differences between accounting standards. The
FASB currently identifies areas where the differences can be eliminated without significant delay.
Furthermore, as new standards are developed both by the FASB and the IASB, improved commu-
nication and cooperation should result in fewer differences.
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Ch. 9—Exercises 9–4
EXERCISE 9-4
1. The IASB is under the umbrella of the International Accounting Standards Committee Foundation
and is responsible for carrying out the objectives of the Foundation. The Foundation appoints
the members of the IASB and develops and implements the strategy and operating policies of
the IASB. The chair of the IASB is the chief executive of the Foundation and is supervised by the
Foundation.
2. The SEC recognizes the importance of the convergence project and has affirmed its desire to keep
moving toward the adoption of International Financial Reporting Standards (IFRS). Actions taken by
the SEC to date include allowing foreign registrants to report per IFRS rather than having to report
in their country’s GAAP with a reconciliation to U.S. GAAP. Requiring U.S. companies to report ac-
cording to IFRS is a major decision and will not occur unless the SEC is confident that the decision
is best for both the reporting entities and investors. The staff of the SEC has also developed a work
plan that identifies key issues and processes that must be addressed before a recommendation of
adoption can be made. The SEC will hopefully decide in 2011 whether or not to move ahead with
the mandate to use IFRS. If it is decided to move forward with IFRS, 2015 would be the earliest
year for the requirement and no earlier adoption would be permitted.
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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of a word was written as the first letter of the next. According to the
Sanskrit plan, “the dog is mad” would be rendered “the do gi sma d-.”
Obviously, there is something unnaturally regular, a systematic
artificiality, about such a scheme. Love of system cropped out
otherwise. The Hindus devised a new symbol—mainly by
differentiation of old ones—for every sound that they had and
Semitic lacked. Thus they doubled the number of their letters. Then
they rearranged their order on a phonetic and logical basis. All
sounds made against the back palate were brought into one group;
those formed against the fore-palate, gums, and teeth came after;
the lip sounds last. Within each of the groups the letters followed one
another in a fixed order according to their method of production—
voiceless stops always first, nasals always last.
The result of these innovations was that the Hindu alphabets
diverged much more from the Semitic original than did ours. This
perhaps was really to be expected, since writing entered India by
long leaps between peoples that were not in intimate relations. Also,
by the time the alphabet first reached them, the Hindus, in the
isolation of their remote peninsula, had already worked out an
advanced and unique type of civilization. This fact must have
predisposed them to make over any imported invention in conformity
with their established habits.
The table on the opposite page gives a brief characterization of these four sub-
culture-areas.
153. The Shaping of a Problem
So far we have been discriminating, that is, looking for characteristic
differences. On the other hand, there has always existed a consensus of
impression, among experienced as well as hasty observers, that a certain
likeness runs through the culture of most the tribes of California, northern,
central, and southern. With scarcely an exception they were unwarlike; nearly all
of them made excellent baskets, but were deficient in wood-working. Obviously it
is necessary to reconcile these uniformities with the peculiarities that distinguish
the four regional types or sub-culture-areas, as well as to account for the
peculiarities.
Let us simplify the problem by considering only one aspect of the four native
cultures instead of the whole cultures. In this way there will be more likelihood of
making a substantial beginning; any results obtained from the example can be
subsequently checked from other aspects of the cultures to see if the findings are
broadly representative. Further, let us arrange the items of information that are
available on this one aspect of culture, not haphazardly, nor mechanically as
under an alphabetic classification, nor in the sequence in which authors have
published their observations, but naturally, or according to some principle that is
likely to work out into an interpretation. Since part of the problem is the relation of
the uniform features to the peculiar ones, a promising order will be to put at one
end of the line or series of data the most universal features, and at the other the
most particular or localized ones.
Let us select religion as that part of native culture to be examined, and limit this
still farther by eliminating from consideration, for the time being, all forms of
religion except public rituals, which among Indians are frequently accompanied or
signalized by sacred dances. We may forget, for the moment, private rites,
individual sacrifices, superstitions and taboos, medicine men, myths, and the like,
and direct attention to dances made by groups of people, or the obvious
equivalents of such dances, and ritual acts definitely associated with the dances
or the common weal.
Northwestern Lower
Central California Southern
California Colorado
(California-Great California
(North Pacific River
Basin) (Southwest)
Coast) (Southwest)
Houses Planks Earth or thatch Earth or thatch Earth
Sweat- Planks Earth Earth None
houses
Head-gear Women’s Men’s head-nets Women’s caps None
caps
Foot-wear Moccasins None Sandals or Sandals
moccasins
Women’s Deer-skin Deer-skin or fibers Fibers Fibers
skirts
Basketry Twined Twined and coiled Mostly coiled Almost
absent
Pottery None None Undecorated Decorated
Boats Dug-out Rush rafts Joined planks Rush rafts
canoes
Paddles Single-bladed Single-bladed Double-bladed Poles
Staple food Salmon Acorns Acorns and Maize
fish
Ring-and-pin Salmon Deer vertebræ Acorn cups Pumpkin rind
game vertebræ
Shell money Dentalia Clam disks Clam disks Almost none
Bows Sinew- Sinew-backed Plain Plain
backed
War clubs Edged stone None Knobbed wood Knobbed
wood
Social None Dual Dual and Multiple
divisions multiple
Shamans Women Men Men Men
Origin legend Previous race Creator Birth from Birth from
Earth Earth
Religious None Kuksu Jimsonweed None
society
Dances Wealth Spirit Simple dances Dream
displays impersonations singings
Choice of this phase of native culture is not quite random; ritual ordinarily is
rather freer from the complications caused by natural environment than most
other institutions and customs. Had industrial arts, for instance, been selected as
the point of attack, it might be imagined that certain tribes made pottery, and
others did not, because of the presence or absence of suitable clay in their
respective habitats; or perhaps that a particular weave of basketry occurred
universally because this weave followed more or less directly from the physical
properties of some plant material that abounded everywhere in the state. On the
other hand, when tribes do or do not make dances in honor of their divinities, or
when they do or do not practise an elaborate mourning for their dead, these are
customs into which the influence of natural environment can scarcely enter, since
all peoples believe in spirits and suffer the loss of relatives.