NexusTech, a cross-border multinational software company, operates in 15 different countries. Why is it important for NexusTech to adopt International Financial Reporting Standards (IFRS) rather than relying solely on local GAAP for its consolidated accounts?

Answer options:

It eliminates the need for the company to pay corporate income tax in any jurisdiction.

It enhances the comparability of financial statements across different jurisdictions for global investors.

It ensures that the company will always report a profit in its consolidated financial statements.

It allows the company to bypass all local legal and regulatory requirements.

How to approach this question

Evaluate the benefits of a unified global accounting framework.

Full Answer

B.It enhances the comparability of financial statements across different jurisdictions for global investors.✓ Correct

The primary benefit of IFRS is that it brings consistency, transparency, and comparability to financial statements worldwide, which is crucial for multinational companies and global investors.

Common mistakes

Confusing accounting standards with tax laws or local legal compliance.

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Practice the full ACCA FA — Financial Accounting Practice Exam 3

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