Theories and Debates Anytime that changes are made or changes are being discussed, there will be theories created and debates started as to what will be done and why it should (or should not) be done. There are many companies that want to see the changeover to IFRS standards, and nearly an equal number of companies that want to keep the GAAP standards they are used to (Crovitz, 2008)
It came from other companies that merged and consolidated, however, because the aerospace and defense industries had been going strong in the United States for many years before that. Defense contractors were one of the strongest companies in the country beginning in the 1950s (Edwards, 1979)
companies to spend time learning how to use the IFRS system, which will require a degree of time and effort (AICPA, 2008). Currently, the IFRS system is more strongly principles based, while a more rules based approach is taken by the GAAP (Gucenme & Arsoy, 2005)
This means that it is subject to GAAP accounting standards as opposed to IFRS rules. The company was founded in 1995 (Hartung, 2010)
BAE Systems Profile/Analysis BAE systems is a British company. It deals with security, aerospace, and defense, and is considered to be multinational (Sparaco & Morrocco, 1997)
Right now, however, current discussion does not allow for a compromise. It is focused on a one-or-the-other approach in that either the GAAP standards or the IFRS will prevail (Spiceland, et al
Many companies were around before BAE and were bought up by the company over time. These included Marconi and Vickers Shipbuilding (Spiegel, 2004)
The headquarters of BAE are in London, but the company operates on a worldwide basis. When it comes to defense contractors, BAE is among the largest (Warwick, 2004)
The consequent depreciation of goodwill results in a direct charge against a firm's annual earnings. Given the difficulties in measuring goodwill, recent practice has been a straight-line amortization over a maximum forty-year horizon" (Hake 389)
A cornerstone of these new accounting rules is fair value accounting, a true and fair evaluation of financial assets relying on the assessment of a secondary market. While this valuation principle is easy to apply for instruments that trade on an active secondary market, like stocks and bonds, it is much harder to apply to non-traded assets" (Krahnen and Schmidt 2004:512)
355). Moreover, there were also important differences between member states because of the many options included in the Directives (Leuz et al
Furthermore, the group reported that in the communications sector, analysts usually exclude goodwill when determining the companies' value. Based on these findings the group concluded that the value relevance of accounting earnings for stock returns is greater when goodwill is not amortized because of higher forecast accuracy (Morgan Stanley Dean Witter et al
Informally used to indicate the value of good customer relations" (694). By contrast, the term "consolidated goodwill" is used to refer to the difference between the fair value of the consideration given by an acquiring company when buying a business and the aggregate of the fair values of the separable net assets acquired; in this regard goodwill is generally a positive amount that should be eliminated by writing it off immediately to the reserves or alternatively by amortization to the profit and loss account over its useful life, to comply with "Statement of Standard Accounting Practice 22, Accounting for Goodwill" (Pallister et al
At that point, whoever is setting standards at the time will no doubt revert to one of the previous treatments of goodwill. And so the wheel will continue to turn'" (Paterson 2002: 101 in von Colbe at 201)
S. GAAP, in application of Section 292a HGB (Pellens and Sellhorn 2001: 1681-9); it is quite likely, though, that the International Accounting Standards Board (IASB) and the British ASB will to some extent follow the example of FASB by banning goodwill amortization in the future (von Colbe 201)
There is a need for uniformity in accounting principles used within multinational companies" (22). To this end, the International Accounting Standards Committee (IASC) was created in 1973 to achieve this goal, but the organization has encountered problems based on nationalistic pride and preference, different models in place and a dearth of authority when dealing with governmental bodies (Radig and Loudermilk 22)
Over the past several years, there has been a growing movement that continues to gain speed that is fueling the drive toward a single set of accounting standards that would be accepted in financial markets around the world. This movement has been characterized by the endorsement of International Financial Reporting Standards (IFRSs or IFRS)' for stock trading by the International Organization of Securities Commissions (IOSCO); the reorganization of the International Accounting Committee (IASC) into a more representative and aggressive body, called the International Accounting Standards Board (IASB), with direct links to primary national policymakers (Shoaf and Zaldivar 32)
. could be harnessed in the interests of enhancing accounting capacity and capabilities in developing and emerging nations" (Street 214)
This creates an interesting situation in regards to Human Resource Accounting in the international community. Human Resource Accounting (HRA) involves accounting for expenditures related to human resources as assets as opposed to traditional accounting which treats these costs as expenses that reduce profit; interest and contributions to growth in HRA have been evident in a number of countries and the strong growth of international financial reporting standards (IFRS) is an indication that the environment for international financial accounting is one that potentially encourages the consideration of alternative measurement and reporting standards and lends support to the possibility that future financial reports may include nontraditional measurements such as the value of human resources using HRA methods (Bullen & Eyler, 2009)
Top Management should ensure that the Financial Statements are prepared in compliance with the IFRS. Auditors and Accountants should prepare and audit Financial Statements in compliance with IFRS (Khairajani, 2012)