GAAP \#1: The Historical Cost Principle states that assets and services should be recorded at their acquisition cost, thus using verifiable information that is the most reliable information. Q4 An auto has a sticker price of $20,000. A company purchases the auto, but negotiates with the sales person and pays a price of only $18,000. On the balance sheet, ($18,000/$20,000) will be reported for the auto. Thirty years ago, land was purchased for $2,000, which now has a current market value of $100,000. On the balance sheet, ($2,000/$100,000) will be reported for the land. Q5 When the financial statements are prepared according to GAAP, assets and services are reported at their (acquisition cost / current market value). Q6 THINK ABOUT IT: is knowledge of an asset's current market value ever useful? (Yes / No) If so, when? INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) Q7 There (are / are not) differences among the accounting standards of different countries. IFRS are global accounting standards that U.S. GAAP is (converging toward / in full compliance with). GAAP \#1: The Historical Cost Principle states that assets and services should be recorded at their acquisition cost, thus using verifiable information that is the most reliable information. Q4 An auto has a sticker price of $20,000. A company purchases the auto, but negotiates with the sales person and pays a price of only $18,000. On the balance sheet, ($18,000/$20,000) will be reported for the auto. Thirty years ago, land was purchased for $2,000, which now has a current market value of $100,000. On the balance sheet, ($2,000/$100,000) will be reported for the land. Q5 When the financial statements are prepared according to GAAP, assets and services are reported at their (acquisition cost / current market value). Q6 THINK ABOUT IT: is knowledge of an asset's current market value ever useful? (Yes / No) If so, when? INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) Q7 There (are / are not) differences among the accounting standards of different countries. IFRS are global accounting standards that U.S. GAAP is (converging toward / in full compliance with)