Chapter 1: Introduction to International Accounting Essay

3569 Words Mar 10th, 2015 15 Pages
CHAPTER 1
INTRODUCTION TO INTERNATIONAL ACCOUNTING

Chapter Outline

I. International accounting is an extremely broad topic. A. At a minimum it focuses on the accounting issues unique to multinational corporations, especially with respect to foreign operations. B. At the other extreme it encompasses the study of the various functional areas of accounting in all countries of the world, as well as the activities of a number of supranational organizations. C. This book provides an overview of the broadly defined area of international accounting, with a focus on the accounting issues encountered by multinational companies engaged in international trade and invested in foreign operations.

II. There are several accounting
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Determining the appropriate translation method and deciding how to report the resulting translation adjustment are important questions. C. Complying with host country income tax laws, as well as home country tax laws related to income earned in a foreign country (foreign source income). Double taxation of income is a potential problem, and foreign tax credits are the most important relief from this problem. D. Establishing prices for intercompany transactions that cross national borders (international transfer prices) to achieve corporate objectives and at the same time comply with governmental regulations. E. Evaluating the performance of both a foreign operating unit and its management. Decisions must be made with respect to issues such as the currency in which a foreign operation should be evaluated and whether foreign management should be held responsible for items over which they have little control. F. Establishing an effective internal audit function to help maintain control over foreign operations. Differences in culture, customs, and language must be taken into consideration. G. Deciding whether to cross-list securities on foreign stock exchanges, and complying with local stock exchange regulations to do so. This could involve the preparation of financial information in accordance with a GAAP different from that used

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