As the text described, IFRS allow firms to exercise more latitude than exists in U.S.
GAAP.

Required:
1. Considering this latitude difference, what will happen when the SEC allows foreign issuers of securities in the United States to use IFRS in lieu of U.S. GAAP? What problems do you anticipate? Will there be a “level playing field” for both foreign and U.S. companies when they seek investment capital?
2. How do you think top management of U.S. companies will react to the SEC decision to allow foreign issuers to use IFRS?