Key Assignment Choose a company from the SEC EDGAR Web site for your Key Assignment to evaluate for the impact of convergence to IFRS. Part 1 Deliverable Length: 1,000–1,200 words Review the financial...

In U.S, companies prepare their financial statements on various principal based methods like
IFRS and U.S. GAAP which makes presentation, understandability and comparability
difficult (H. Peter, A. W. Liz, 3013).
The solution for the problem suggested by agencies globally and SEC was to adopt a single
set of conforming principles of accounting which would be adopted by all the publicly listed
companies globally for preparing their financial statements. This is the reason for the adoption
of IFRS.
The International Accounting Standards Board (IASB) developed a set of standards for
accounting termed as International Financial Reporting Standards or IFRS which is being
gradually adopted worldwide as standards for the preparation of the financial statements for
the public limited companies. IFRS standards are based on principles which help in avoiding
thumb rule mentality and helps in generating greater flexibility. With the globalization the
importance of convergence with IFRS rises.
On the
oader perspective IFRS constitutes interpretations and standards which are approved
y IASC, IASB and SIC. The bigger advantage of adopting IFRS is the harmonization of the
financial standards and practices which makes global comparison easier (Doupnik & Perera,
2012). Some of the benefit could be decreased cost of financial reporting for the global
companies which would like to list their shared on stock exchange internationally, the cost of
preparing a consolidated financial statement would come down, the accounting professionals
could be easily relocated to other subsidiaries with no or little training (Doupnik & Perera,
2012).
The conversion to IFRS may cause hindrances in short rum but the advantage of consistency
and investment would outweigh the challenges and the cost. The parties which would benefit
from the adoption of IFRS are industry, investors, and economy, stakeholders and accounting
professionals. The expense of raising the funds would be reduced by adopting IFRS as there
would be no need of preparing double set of financial documents. The companies could
ecognise their relative strengths beyond the regional boundaries by adopting IFRS.
Converging to IFRS would trigger changes that are just not related to accounts but have
usiness and operational repercussions also. The management of the Ford Motors would
equire significant amount of lead time for implementing and analyzing the principles. It has
to focus on issues like budgeting and training, since this change would impact the business
communication, shareholders, human resources and contractual agreements directly. The
company should very well verse with these changes and take proper course of action to
implement the same. There are many transition issues which Ford Motors has to face. It has to
change the method in which it calculates its loss and income and other items on income
statement and balance sheet. The shift to IFRS would require the management to reprogram
their system which collects data for the preparation of financial statements. The company has
to collect different set of data. The data already collected by the company has to be analysed
differently. The company has to restructure its stock based compensation plan.
After the conversion is done there would be many areas that would change. Cu
ently the
company is allowed to measure the fair value of some of its investment at net asset value. But
once it adopts IFRS there would be no practical expedient that would allow it to measure its
investment at net asset value.
Cu
ently the consolidation in the company is based on the controlling financial interest
model ASC (810), but after the adoption of IFRS consolidation would be based on power to
direct model.
Cu
ently the income statement of the company is in multi step...