Instructional Case: Worldwide Shipping Corporation Ltd: Early or Late Adoption of a New International Accounting Standard?
The management of Worldwide Shipping Corp. Ltd. is confronted with a dilemma when a new international accounting standard on leases is introduced which contains a transitional provision allowing firms to defer implementation for a period of 4 years. Students are required to put themselves in the position of managers who have to weigh the adverse impact of early adoption of the new accounting standard against a responsibility for fair financial reporting. The case aims to provide students with a better understanding of the impact of off-balance sheet transactions on a firm's financial statements. The case requires students to examine implications of accounting choice on management compensation and debt-contracting costs, as well as the perplexing problem of recognition in financial statements versus footnote disclosures. The case provides students with a useful exercise in the mechanics of effecting a change in accounting method using the retroactive method.
Accounting | Education
Corporate Governance, Auditing and Risk Management
Issues in Accounting Education
American Accounting Association
TAN, Pearl Hock Neo and LEE, Peter Lip-Nyean.
Instructional Case: Worldwide Shipping Corporation Ltd: Early or Late Adoption of a New International Accounting Standard?. (1999). Issues in Accounting Education. 2, (2), 211-231. Research Collection School Of Accountancy.
Available at: http://ink.library.smu.edu.sg/soa_research/299