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Free «Global Accounting Standards» Essay Sample

The Global Accounting Standard II was revised in the year 1993. It started being applied in the annual periods stating on or after 1st January, 2005. There were many reasons, which led to the revision of the Global Accounts Standards. These included improving to the international accounting standards. The task was carried out in the light of arguments and criticism rose relating to the standards safety regulators, professional accounts and many other parties, which were interested. The aims of the task were to decrease or eliminate choices and conflicts in the standards to deal with various convergence cases and to promote other improvements. The board never reconsidered the basic approach to accounting of inventories.

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According to Saudagaran (2009, the standard clarifies that various types of inventories are outside the scope and certain types of inventories may be exempted only from the measurement needs in the standard. The paragraph three brings out clearly that differentiation between the inventories, which may entirely not inside the scope of the set standard and those inventories, which may be outside the scope of the needs of measurements, but in the scope of the other requirements in the standard.

However, the standards do not apply to the inventories measuring of producers of some agricultural as well as forest products, to the extent, which they can be measured basing on the net realizable value in line with the well laid down industrial practices. The earlier version of the board was amended to replace the minerals of the world with minerals to show that the scope exemption unlimited to the initial stages of removal of mineral ores. This standard happens not to be useful in the measurement of inventories of good broker traders to the extent, which they can be measured at a fair value and low cost to sell.

The cost of purchase does not allow the exchange of the differences, which arises directly on the recent acquisition of inventories that are invoiced using a foreign currency including the cost of purchase of inventories (Kent, 2011). The change of the earlier board was as a result of the elimination of the allowed choice treatment of capitalizing various exchange differences. This choice had already restricted its use by the foreign exchange capitalization.

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The board inserted paragraph eighteen to ensure that inventories were bought using deferred terms of settlement, which was the difference of  money to be paid and the price of purchase that was recognized as interest of the expenses over the time of financing.

The standard incorporated the requirements of the previous board, consistency different cost formulas for inventories, which every entity always use the same expenses formula for all inventories that have similar nature and apply the entity (Rich et.al, 2009).

If the inventories are damaged, the cost of the inventories might not be recovered when they become partially of wholly obsolete, and their prices of sell declined. The expenses of inventories may not be recoverable if the approximated costs of completion or the expenses to be encountered to make the sale increased. The act of writing inventories below the expenses to the total realizable amount is in line with the view that assets may not be carried in excess of the cost expected to be realized resulting from their sale.

Information concerning the carrying amount that is held in different classifications of inventories and the degree of the changes in the same assets is essential to financial users of the statement. Inventories are commonly classified include merchandise, materials, finished goods and the work I progress. The inventories concerning the service providers might be elaborated as a task in progress.

 
 
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The amount of the inventories that may be recognized as an expense in the period that is always referred to as expenses of sales comprising of the costs, which are initially included in the measurement of the inventory. This is an inventory, which has been sold ad is not allocated in production overheads. The cases of the entity might also allow the introduction of various amounts, such as the costs of distribution. Some entities may adopt the format for profit or some losses, which results in amounts being disclosed. Under these circumstances, an entity displays an examination of expenses applying the classification that is based on the nature of costs.

Country as Case Example

The United States GAAP permit entities to apply and use qualified SPEs for no recognizing the financial assets. This is when the one to transfer is not permitted to dispose the transferred goods. United States permits offsetting after meeting some conditions. The parties involved should owe one another determinable costs and should be enforceable by the legal actions. As per IFRS, one is allowed to offset liabilities and assets when allowed by a standard.

The IFRS determines the mode of accounting to ensure equity of instruments based on the level of controlling the investors over the organization. Using both sets to account the standards, which hold the investor lacks vital influence are accounted for using the method that is fair. The two boards IFRS and the United States GAAP assume an investor has no significant say over an institution if he or she has less than twenty percent of the power of voting, not unless there is a clarification of contrary. The second generation of accounting management concentrated more on the proactive and analytical aspects of protecting, as well as managing, liquidity in the global market with fluctuating interest rates and currencies. This was possible due to the invention of controlled disbursement in the USA as well as sweep account products which were provided by banks together with the past treasury system. The third generation is currently starting to evolve. Economic and world events are currently resulting to an increase in the focus towards financial accountability, risk management, transparency, and reporting, thus making treasury management a vitally essential system in the

   

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