国际会计讨论题及答案

Definethe“InternationalAccounting”andexplainitscontent.DefinitionofInternationalAccountingisabranchofappliedeconomicsthatprovidesinformationaboutbusinessandfinancialtransactions.Internationalaccountingisdistinctbecausetheinformationconcernsamultinationalenterprise(MNE)withforeignoperationsandtransactions,ortheusersoftheinformationareinadifferentdomicilethanthereportingentity.Contentofinternationalaccounting:①Comparisonofaccountingstandards②Accountingharmonizationorconvergence③Internationalfinancialaccounting④Internationalmanagerialaccounting⑤InternationalauditingExplaintheeffectfactorsofaccountingdevelopment.WhichfactorsaretheimportantforChineseaccountingdevelopment?WhichfactorsaretheleastimportantforChineseaccountingdevelopment?Effectfactors:Sourceoffinance:Incountrieswherebankdominatessourceoffinance,accountingfocusesoncreditorprotectionthroughconservativeaccountingmeasurements.Legalsystem:Thelegalsystemdetermineshowindividualsandinteract.Taxation:Inmanycountries,taxlegislationeffectivelydeterminesaccountingstandardsPoliticalandeconomicties:Accountingideasandtechnologiesaretransferredthroughconquest,commerce,andsimilarforces.Inflation:Inflationdistortshistoricalcostaccountingandaffectsthetendencyacountrytoincorporatepricechangesintotheaccounts.Levelofeconomicdevelopment:Thefactoraffectsthetypesoftransactionsconductedinaneconomy.Educationlevel:Incountrieswithdevelopededucation,concernsforaccountinginformationishigh.Culture:Culturemeansthevaluesandattitudessharedbyasociety.Mostandleastimportant:Chinaistryingtodevelopaccountingstandardsthatareunderstandabletotheoutsideworld.ThemodelisInternationalFinancialReportingStandardsinorderattractoutsideinvestorsthatarevitaltothemakeoverofChina’seconomy.Thustheanticipatoryeffectofsourcesoffinanceisprobablythesignificantfactorinfluencingthedevelopmentofaccountingtoday.PoliticalandeconomictiesareprobablytheleastimportantfactorinthecaseofChina.China’seconomyhasbeeninsularuntilrecently.Evennow,importsandexportsasapercentageofgrossdomesticproductarelow(seeTable4.1).Thus,thereisnosignificantinfluencefromoneparticulartradingpartner,noristherecoloniallegacy.Distinguishfairpresentationandcomplianceaccounting.(1)Fairpresentation:①Itemphasizessubstanceoverformandisorientedtowardthedecisionneedsofexternalinvestors.②Itiscapitalmarketsoriented.③Itisassociatedwithcommonlawcountries(2)Legalcomplianceaccounting:①Itisdesignedtosatisfygovernment-imposedrequirementssuchascalculatingtaxableincomeorcomplyingwiththenationalgovernment’smacroeconomicplan.②legalcomplianceaccountingisassociatedwithcodelawcountries.(3)Athirdmodelistheinflation-adjustedmodel.Itisessentiallyanadd-ontooneoftheothertwomodelsinsomecountrieswithhighinflation.TheU.KandtheU.Shaveacommonaccountingheritageandarelinkedbyhistoryandlanguage.Anglo-Americanaccountingisatermsometimesusedtodenoteaccountingstyles,whicharesimilarinorientation,purpose,andapproach.Yetaccountingdifferencesstillexistbetweenthesetwocountries.Required:IdentifythemajordifferencesbetweenU.KandU.Saccounting.TheU.KTheU.SGoodwillCapitalize&amortizeCapitalize& impairmenttestedAssetvaluationHistorical¤tcostHistoricalcostLIFONotacceptableusedReservesforincomesmoothingsomenoThetwomajorareasofdifferenceareassetvaluationandaccountinggoodwill.①IntheU.K.,assetsmaybevaluedathistoricalcost,currentcost,oramixtureofthetwo.Whenfixedassetsarerevalued,depreciationandamortizationmustbecalculatedusingtherevaluedamounts.Onlyhistoricalcostisallowedinthe②IntheU.K.,goodwillcanbeimpairmentstested,asintheU.S.,butmayalsobeamortizedover20yearsorless.OtherdifferencesbetweenU.K.andU.S.GAAPrelatetoLIFOandcalculationoflong-termdeferredtaxes.①LIFOisrarelyusedintheU.K.,butisrelativelymorecommonintheU.S.②IntheU.K.,long-termdeferredtaxesmaybevaluedatdiscountedpresentvalue.(3)Finally,thechaptermentionsthatopportunitiesforincomesmoothingareprobablygreaterintheU.K.thanintheU.S.TodepictthemostnovelfeatureoftheDutchaccountingscene.①ThemostnovelfeatureoftheDutchaccountingsceneistheEnterpriseChamberoftheCourtofJusticeofAmsterdam.②TheDutchEnterpriseChamberoftheCourtofJusticeofAmsterdamhelpsensurethatfiledorpublishedDutchfinancialstatementsconformtoallapplicablelaws.③TheEnterpriseChambercarriesoutitsmissionbydeterminingwhethertheallegationsofdeficientfinancialreportingaretrueandhowmaterialsuchdeficienciesare.④TheChamberiscomposedofthreejudgesandtwoDutchRAs.Thereisnojury.AppealsofanyoftheChambers’rulingsaredifficult,mayonlybelodgedwiththeDutchSupremeCourt,andarerestrictedtopointsoflaw.⑤ThreeexamplesofDutchflexibilityinfinancialreportingare(a)financialstatementscanbeinoneofseverallanguages,(b)companiesmayusehistoricalcostorcurrentcosts,and(c)CouncilonAnnualReportingguidelinesarerecommendationsonly.⑥Ithasrelativelypermissivestatutoryaccountingandfinancialreportingrequirementsbutveryhighprofessionalpracticestandards.Itisacodelawcountry,yetaccountingisorientedtowardfairpresentation.Thefairnessorientationdevelopedwithoutastrongstockmarketinfluence.Financialreportingandtaxaccountingaretwoseparateactivities.In1967,GerhardMuellerproposedthedevelopmentalpatterns.Therearemacroeconomicpattern,microeconomicpattern,Independentdisciplineandtheuniformaccountingapproachrespectively.Thefourpatternsofaccountingdevelopmentstillarevalidtoday? Whyornot?Thefourpatternsofaccountingdevelopmentarestillvalidtoday.Reasons:①Thedescriptionofaccountingfortherespectiveexemplarcountriesisbroadlytrue.②TheNetherlandsisreallytheonlycountrythatcanbedescribedbythemicroeconomicpattern.③TherearealsoonlyafewcountrieslikeSwedenthatfollowthemacroeconomicpattern.④Theindependentdisciplineapproachisnotasadhocasitwasin1967.Mostofthesecountriesnowhaveconceptualframeworkstoguideaccountingpolicyformulation.⑤Theuniformaccountingapproachmaybreakdownasmoreandmorecountriesprivatizetheireconomies.AccountingandauditingstandardsettinginTaiwanispatternedafterthatintheU.S.A.Whatarethesimilaritiesanddifferencesinstandardsettinginthetwo?Similarities:AccountingandauditingstandardsettingisaprivatesectoractivityinTaiwanandtheUSA.TheARDFinTaiwanandtheFAFintheUSAhavethesameoversightresponsibilitiesforstandardsetting.TheFASCinTaiwandeterminesaccountingstandardsliketheFASBinUSA.Adueprocessprocedureisfollowedbybothbodiesandexposuredraftsoutsideopinionsaresolicitedbeforeafinalpronouncementisissued.TheASCinTaiwanusesthesameprocessastheFASCintheUSA.Differences:TheARDFinTaiwanissupervisedbytheMinistryofFinance,butthereiscomparableoversightoftheFAFbyaU.Sgovernmentagency.TheARDFinTaiwanhasoversightresponsibilityforbothaccountingauditingstandardsetting.However,intheUSA,theFAFisresponsibleforaccountingstandardswhilePCAOBisresponsibleforauditingstandards.Whatshouldbeincludedinthedisclosureofforward-lookinginformation?①Forecastsofrevenues,income(loss),earnings(loss)pershare(EPS),capitalexpendituresandotherfinancialitems.②Prospectiveinformationaboutfutureeconomicperformanceorposition.③Statementsofmanagement’splansandobjectivesforfutureoperations.Whydomanagershaveincentivestodiscloseinformationvoluntarilyandhowavoidmanagers’negativeeffect?(1)Reasons:①Voluntarydisclosureareforthcomingwhencorporationsarecompetingforfinancefrominvestors,especiallyinacross-bordercontext.②Voluntarydisclosurehavemanyotherbenefitsforthecorporation.Forexample,Lowertransactioncostsinthetradingofthefirm’ssecurities;Greaterinterestinthecompanybyfinancialanalystsandinvestors;Increasedshareliquidity;Lowercostofcapital.③Delaythedisclosureofadversenews,“manage”theirfinancialreportstoconveyamorepositiveimageofthefirm,andoverstatetheirfirms’financialperformanceandprospects.(2)Solution:①regulationsuchasaccountinganddisclosureregulation②third-partycertificatesuchasauditing.WhatevidenceistherethatInternationalAccountingStandardarewidelyacceptedaroundtheworld?①GrowingnumbersofcompaniesareadoptingIFRSvoluntarilyandrefertotheiruseofIFRSintheirannualreports.②DozensofcountriesbasetheirnationalaccountingstandardsonIFRS.③Manyinternationalorganizations,suchasIOSCO,endorsetheuseofIFRS.④IFRSareusedasaninternationalbenchmarkinmanymajorindustrializedcountries.⑤IFRSareacceptedbymanystockexchangesandsecuritiesregulators.⑥IFRSarerecognizedbytheEuropeanCommission(EC)andothersupranationalbodies.⑦NorwalkAgreementcommittedFASBandIASBtoconvergence.Discussthespecialfeaturesforaccountingstandardssetting,regulationenforcement,financialreporting,andmeasurementinChina.①AccountingstandardsettingisagovernmentactivityinChina.Thepurposeofaccountingwastoservetheneedsofthestateforeconomicplanningandcontrol.Auniformsetofstandardizedaccountswasdeveloped.Therecenteconomicreformsenableaccountingstandardstoreflectthisnewreality.②TheChinaAccountingStandardsCommitteeistheauthoritativebodywithintheMinistryofFinanceresponsiblefordevelopingaccountingstandards.TheChinaSecuritiesRegulatoryCommitteeisthegovernmentagencythatregulatesChina’stwostockexchanges.TheCSRCisalsoresponsibleforenforcingfinancialreportingforlistedcompanies.③Financialreportingisfrequentanddetailed.Themainfeatureisafund-managementorientationwherefundsmeanttheproperty,goods,andmaterialsusedintheproductionprocess.Financialreportingemphasizethebalancesheet.④ChinaislikelymovingtowardfairpresentationorientedaccountingbyadoptingIFRSasChineseGAAP.Despiteadoptingfairpresentationprinciples,onecanquestionwhethertheChineseachieveitinapplication.ThereisanacuteshortageoftrainedaccountantsinChinaandtheprofessionremainsundeveloped.Compareandcontrastfeaturesofthemajorforeigncurrencytranslationmethodswhicharecurrentexchangeratemethod,andtemporalmethod.Whichmethoddothinkisbest? Why?CurrentRateMethod(1)Advantages:①Retainstheinitialrelationshipsintheforeigncurrencystatements.②Simpletoapply.(2)Limitations:②Violatesthebasicpurposeofconsolidation,whichistopresenttheresultsofaparentanditssubsidiariesasiftheywereasingleentity.②Inconsistentwithhistoricalcost.③Presumesthatalllocalassetsandliabilitiesaresubjecttoexchangerisk.Whilestockholders’equityadjustmentsshieldanMNE’sbottomlinefromtranslationgainsandlosses,suchadjustmentscoulddistortcertainfinancialratiosandbeconfusing.TemporalMethod(1)Advantages:①Theoreticallyvalid:compatiblewithanyaccountingmeasurementmethod.②Hastheeffectoftranslatingforeignsubsidiariesoperationsasiftheywereoriginallytransactedinthehomecurrency,whichisdesirableforforeignoperationsthatareextensionsoftheparent’sactivities.(2)Limitation:Acompanyincreasesitsearningsvolatilitybyrecognizingtranslationgainsandlossescurrently.Whichisbest:①There is probably no one translation method that is appropriate for circumstancesinwhichtranslationsoccurandforallpurposesthattranslationserves.②Itisprobablymorefruitfultoidentifycircumstancesinwhichtheythinkonetranslationmethodismoreappropriatethananother.WhatarefeaturesofFASB52?FASB52introducesaconceptoffunctionalcurrency.Translationwhentheparentcurrencyisfunctional.①Foreigncurrencyfinancialstatementsremeasuredto reportingcurrencyusingtemporalmethod.②Translationgainsandlossesresultingfromthetranslationprocessareincludedincurrentincome.Translationwhenthelocalcurrencyisfunctional.①Foreigncurrencyfinancialstatementstranslatedtoreportingcurrencyusingthecurrentratemethod.②Translationgainsandlossesdisclosedasaseparatecomponentofconsolidatedequity.Forthreeapproachesthatareinternationalaccountingstandard,mutualrecognition,andreconciliation,whatdoyouexpectisthepreferredapproachfromtheperspectiveofinvestors,companymanagement,andregulatoryauthorities?(1)Oneofthemainproblemswithmutualrecognition:Tomakefinancialstatementswithinthehomemarketnon-comparable(2)Reconciliation:①TheUnitedStatesSECconsidersreconciliationtobeacost-effectivemeans②significantdifferencesbetweendomesticandforeignaccountingprinciplescanincreasetheburdens③reconciliationsdonotprovideafullpictureoftheenterprise(3)TheuseofInternationalFinancialReportingStandardswouldprovidemanybenefitsforcross-borderlistings.①Investorsmightpreferinternationalstandards.②Companymanagementmightprefermutualrecognition.③Regulatoryauthoritiesmightpreferreconciliation.Fromauser’sperspective,whatistheinherent probleminattemptingtohistoricalcost-basedfinancialstatementsofacompanydomic