Reference no: EM13172942

Problem 1:

Identify and describe (in your own words) any two of the major accounting differences between U.S. GAAP and IFRS. Please reference any outside sources used.

Problem 2:

On January 1, ABC Corporation, a U.S. based manufacturer, buys 10 million yen worth of inventory from SA Corporation, a Japanese-based firm. The purchase is made on credit and the balance is to be paid in 3 months. The U.S. dollar/Japanese yen exchange rate was $1.00 = 125 yen on January 1, and $1.00 = 120 yen on April 1.

Prepare dated journal entries for ABC Corporation in U.S. dollars for the incurrence and settlement of this foreign currency transaction. ABC Corporation employs a two-transaction perspective.

Problem 3:

Download Nokia's 2003 20-F report

(a) Refer to page 158 of the report. List the top 3 items (in Euros) which led to the difference between Nokia's 2003 net income under U.S. GAAP and its 2003 net income under International Accounting Standards.

(b) Refer to note #36 of the report. In your own words, describe the main reason(s) why the following items in the 2003 reconciliation of net income were positive or negative in amount (analyze each item separately):

- Development costs
- Stock compensation expense
- Amortization of goodwill

(c) In 2008, the U.S. SEC eliminated the U.S. GAAP net income reconciliation requirement for foreign private issuers that adopt International Financial Reporting Standards. Do you agree with this decision? Why or why not? [Problem #3 point distribution: part (a) = 1, part (b) = 6, part (c) = 3]