International Accounting and the Global Economy.ppt
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1、,International Accounting and the Global Economy,Advanced Accounting, Third Edition,11,Describe how the changing world environment is leading to an increased focus on international accounting standards. Explain some differences in accounting methods as they are applied internationally. List five maj
2、or classifications of accounting models used in different geographical regions. Describe the role of the International Accounting Standards Committee and the International Accounting Standards Board in establishing international accounting standards.,Learning Objectives,List the steps that a non-U.S
3、. company must follow to list its shares on a U.S. stock market. Explain the role of form 20-F filed with the Securities and Exchange Commission. Indicate the role of American Depository Receipts in the issuing of securities of non-U.S. companies in the United States.,Learning Objectives,The Increas
4、ing Importance of International Accounting Standards,Beginning in 2005, the European Union (EU) mandated that accounting standards for companies listed in its securities markets conform to International Financial Reporting Standards. In 2006, the total value of cross-border transactions in bonds and
5、 equities was $90 trillion U.S. dollars annually.,LO 1 Increased focus on International Accounting Standards.,Importance of International Accounting Standards,LO 1 Increased focus on International Accounting Standards.,FIGURE 11-1 Composition of the Global Equity and Debt Markets by Each Countrys Do
6、mestic Securities,Importance of International Accounting Standards,LO 1 Increased focus on International Accounting Standards.,FIGURE 11-1 Composition of the Global Equity and Debt Markets by Each Countrys Domestic Securities,Importance of International Accounting Standards,LO 1 Increased focus on I
7、nternational Accounting Standards.,U.S. holdings of foreign securities (870 billion to 3.5 trillion increase),Foreign holdings of U.S. securities (1.2 to 6 trillion increase),FIGURE 11-2 Holdings of U.S. and Foreign Securities, 19942004,Market Value of Holdings of U.S. and Foreign Securities, 1994-2
8、004,The demand for uniform international accounting standards has increased because: Investors seek comparable standards to evaluate investment opportunities, Managers seek to evaluate the performance of foreign subsidiaries and competitors, and Creditors and debt capital markets seek comparable sta
9、ndards to determine credit quality and bankruptcy risk.,Importance of International Accounting Standards,LO 1 Increased focus on International Accounting Standards.,Financial accounting practices, required disclosures, and auditing requirements are not uniform across countries. Variations exist in t
10、he accounting for: Goodwill. Business combination methods. Tax allocation. LIFO inventory costing. Development costs. Use of reserves,Harmonization of Worldwide Accounting Standards,LO 1 Increased focus on International Accounting Standards.,The International Accounting Standards Committee (IASC) wa
11、s founded in 1973. 41 standards were issued by January 2001. In 2001, the IASC announced formation of the International Accounting Standards Board (IASB). Goal is to develop high-quality internationally accepted accounting standards. Issues standards known as International Financial Reporting Standa
12、rds (IFRS). To date six IFRSs have been issued.,Harmonization of Worldwide Accounting Standards,LO 1 Increased focus on International Accounting Standards.,Harmonization of accounting standards. The International Accounting Standards Committee (IASC) was founded in 1973. In 2002, the FASB and IASB a
13、greed to begin converging U.S. GAAP and the IFRSs. By 2005, over 90 countries had announced they would be following IFRSs. In 2005, European Union requires publicly traded EU companies to follow IFRSs.,Harmonization of Worldwide Accounting Standards,LO 1 Increased focus on International Accounting S
14、tandards.,Differing accounting practices could result in the same economic event being reported differently.,LO 2 Differences in accounting methods.,Comparative Accounting Models,FIGURE 11-3 Differences in Net Income and Equity due to Differing GAAP,= ROE,Format and Terminology Differences,LO 2 Diff
15、erences in accounting methods.,Comparative Accounting Models,Some non-U.S. companies prepare statements in: English still using their national GAAP. Their local currency with a column that is translated into U.S. dollars. English conforming to U.S. GAAP or the IFRS. The first step is to determine wh
16、ich GAAP is being used.,Format and Terminology Differences,LO 2 Differences in accounting methods.,Comparative Accounting Models,Examples of terminology differences:,Format and Terminology Differences,LO 2 Differences in accounting methods.,Comparative Accounting Models,Various formats are allowed i
17、n presenting financial statements in different countries. In the UK: Noncurrent assets are listed first in the balance sheets. Current assets listed second and in order of increasing liquidity (i.e., the most liquid assets are listed last). Assets and liabilities are combined to compute total net as
18、sets.,A company located in Japan prepares an annual report denominated in U.S. dollars. Any report denominated in U.S. dollars is always prepared in accordance with U.S. GAAP.,Review:,False,LO 2 Differences in accounting methods.,Comparative Accounting Models,In the United Kingdom, stock refers to c
19、ommon stock.,Review:,False, stock refers to inventory,LO 2 Differences in accounting methods.,Comparative Accounting Models,Since 2005, all European Union companies listed on a regulated market are required to prepare consolidated accounts in accordance IASB accounting standards.,Review:,True,LO 2 D
20、ifferences in accounting methods.,Comparative Accounting Models,LO 5 Five major classifications of accounting methods.,Classification of International Accounting Models,Five Major Geographical Classifications:,Type of Accounting Practice Region Anglo-Saxon United States Anglo-Saxon United Kingdom Ge
21、rman Germany, Switzerland Latin France, Italy, Brazil Asia-Pacific Japan, China,LO 5 Five major classifications of accounting methods.,Classification of International Accounting Models,Standards referred to as Financial Reporting Standards (FRS). Issued by the Accounting Standards Board (ASB). The A
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