mid-term+review

1、Mid-term review Multiple choice 25 50% Short answer 5 30% Problem solving 1 20%Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduct

2、ion or distribution without the prior written consent of McGraw-Hill Education.Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Includes study of various functional areas of accounting Focuses on th

3、e accounting issues unique to multinational corporations Can be defined at three different levels Supranational accounting Standards, guidelines, and rules issued by supranational organizations Company level Followed by company in international business activities and foreign investments Internation

4、al accounting Study of the standards, guidelines, and rules of accounting, auditing, and taxation existing within each country and comparison across countries1-4 Increase sales and profits Enter rapidly growing or emerging markets Reduce costs Protect domestic markets Protect foreign markets Acquire

5、 technological and managerial know-how1-5 Issue for multinational companies making intercompany sales Companies use of discretionary transfer pricing （可自由支配的转让定价） Price negotiation between buyer and seller not feasible due to tax rate differences Companies shift profits from countries with high-tax

6、rates to countries with low tax-rates Countries regulate international transfer pricing to ensure companies pay their fair share of local taxes1-6Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Inte

7、rnational Accounting Chapter 2:Worldwide Accounting Diversity全球会计差异全球会计差异Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. Nature of diversity in accountingFormat TerminologyRecognition rules Measure

8、ment rules2-8Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.1. Worldwide Accounting Diversity: Reasons 国际会计差异原因 P28-30 Legal systems 法律系统Common law 普通法系/案例法Fewer statutesmore court interpretationCr

9、eation of precedents or case lawsGreat Britain and other English-speaking countriesAccounting law is detailed and specificSources are nonlegislative organizationsCode law 大陆法系/罗马法More statutes Non-English-speaking countriesLegislated accounting rules Accounting law is generalOther guidance required2

10、-9Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.2. Problems caused by Accounting Diversity国际会计差异造成的问题 P31-33 1）Preparation of consolidated financial statements 2）Access to foreign capital markets

11、3）Comparability of financial statements 4）Lack of high-quality accounting information2-10Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Exhibit2.5 Nobess Judgmental Classification2-11Copyright 2015

12、 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. International Accounting Chapter 3: International Convergence of Financial Reporting财务报告的国际趋同Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduc

13、tion or distribution without the prior written consent of McGraw-Hill Education.1. Harmonization and Convergence 和谐与趋同 P66-67Convergence as the Buzz word in International Financial Reporting Harmonization allows countries to have different standards as long as they do not conflict Accounting harmoni

14、zation considered in two waysHarmonization of accounting regulations or standards Harmonization of accounting practices3-13Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.1. Harmonization and Conver

15、genceHarmonization Can be considered in two waysHarmonization of accounting regulations and standardsHarmonization of accounting practiceUltimate goal of international harmonization efforts Harmonization of standards may or may not result in harmonization of practice Different from standardizationSt

16、andardization involves using the same standards in different countries Allows for different standards in different countries as long as they do not conflict3-14Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill

17、Education.1. Harmonization and Convergence Harmonization Reduction of alternatives while maintaining a high degree of flexibility in accounting practices Convergence Enforcement of single set of accepted standards by several regulatory bodies 3-15Copyright 2015 McGraw-Hill Education. All rights rese

18、rved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.2. Major Harmonization Efforts P67-73 Several organizations were involved at global and regional levels International Organization of Securities Commissions (IOSCO)International Federation of Accountants

19、 (IFAC)European Union (EU)International Forum on Accountancy Development (IFAD)International Accounting Standards Committee(IASC)International Accounting Standard Board (IASB)3-16Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written cons

20、ent of McGraw-Hill Education.2.4 European Union (EU) 欧洲联盟欧洲联盟 P68 Founded in March 1957 with the signing of the Treaty of Rome by six European nations Issued two directives aimed at harmonizing accountingFourth Directive: Dealt with valuation rules, disclosure requirements, and the format of financi

21、al statementsEstablished the true and fair view principleProvided considerable flexibilityAllowed countries to choose from among acceptable alternativesOpened the door for noncomparability in financial statements Seventh Directive: Dealt with consolidated financial statements3-17Copyright 2015 McGra

22、w-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.2.4 European Union (EU) 欧洲联盟欧洲联盟 P68 Directives helped reduce differences in financial statementsComplete comparability was not achieved European Commission decided not t

23、o issue additional accounting directivesAssociated itself with efforts undertaken by the IASC toward a broader international harmonization of accounting standards3-18Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw

24、-Hill Education.Principles-Based Approach to InternationalFinancial Reporting Standards原则基础法原则基础法-国际财务报告标准国际财务报告标准 P83 IASB follows a principles-based（原则导向） approach to standard setting vs a rules-based（规则导向）approachStandards establish general principles for recognition, measurements, and reporting

25、requirements for transactionsLimits guidance and encourages professional judgment in applying general principles to entities or industries3-19Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.3. Inter

26、national Accounting Standards Board (IASB) 国际会计准则理事会 P71-87 Replaced IASC in 2001 IFRS （International Financial Reporting Standard）Foundation appoints board of 16 members 13 full and 3 part-timeBoard approves standards, exposure drafts, and interpretations Shift in emphasis from harmonization to glo

27、bal standard-setting or convergence Main aim is to develop a set of high-quality financial reporting standards for global use3-20Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Copyright 2015 McGraw

28、-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Accounting environment, profession, regulation, practices/principles and differences in national accounting practices with IFRS in:qChinaqGermanyqJapanqMexicoqUnited Kingd

29、om6-22Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.BackgroundWorlds largest country with population of 1.34 billion(2008)Peoples Republic of China (PRC) established in 1949Politically:qCommunist,

30、 one-party stateEconomically:q Until the 1980s, all firms state-ownedCurrently in transformation to socialist market economyWorlds second largest economy (in terms of GDP) and fastest growing among large economies, and is largest recipient of FDI6-23Copyright 2015 McGraw-Hill Education. All rights r

31、eserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Accounting ProfessionProfession less prestigious than in U.S./U.KAccounting and auditing have developed separatelyqChinese Institute of Certified Public Accountants (CICPA) and Chinese Association of

32、Certified Practicing Auditors (CACPA) merged in1998Economic reform and the large number of joint ventures with foreign companies has led to emergence of the audit professionIn October 2007, the ICAEW in the UK and CICPA set up a joint project for cooperation between the accounting professions in the

33、 two countries6-24Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.BackgroundEuropean Unions largest country, population 82.2 millionWest Germany and East Germany established in 1949, were reunified

34、in 1990Historically, banks have been primary source of finance via both loans and equitySince reunification, the economy has been affected by internationalizationGerman companies increasingly listing on foreign exchanges, e.g., New York Stock ExchangeMost common business forms are Aktiengesellschaft

35、 (AG)股份有限公司 and Gesellschaft mit beschrankter Haftung (GMBH)有限责任公司6-25Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Accounting ProfessionProfession has traditionally been less influential than in

36、U.S./U.KAuditing is dominant part of profession and certified auditors title of Wirtschaftsprufer 法定审计师(WP) was created in 1931Institut der Wirtschaftsprufer similar to the AICPAObtaining WP title is extremely rigorousWirtschaftspruferkammer (WPK) is a state-sponsored group that oversees auditing pr

37、ofession6-26Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.BackgroundPopulation 127.2 million, worlds third largest economyBanks are primary source of finance via both loans and equity, and cross-c

38、orporate equity ownership is also commonKeiretsu企业集团 (and predecessor Zaibatsu) emphasize close business ties and reflect cultural value of collectivism1990s recession led to an increase in Japanese firms attempts to obtain capital internationally6-27Copyright 2015 McGraw-Hill Education. All rights

39、reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.BackgroundPopulation of about 62 million, comprised of England, Northern Ireland, Scotland, and WalesAmong the five countries in this chapter, its financial structure is closest to the U.S15,000 Priv

40、ate Limited Companies (PLCs) with about 2,500 of these listed on the London Stock Exchange6-28Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Accounting ProfessionWorlds first association of profess

41、ional accountants:qThe Society of Accountants in Edinburgh, established in 1853Six professional chartered bodies coordinated through Consultative Committee of Accountancy Bodies (CCAB)The profession developed in response to the needs of industry and has influenced the development of professions in a

42、 number of other countriesCompared to the U.S. the certification requirements focus more on work experience and less on university education6-29Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Intern

43、ational Accounting Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.外币交易的会计处理 P344-348Transaction exposure 交易风险qExposure to foreign exchange risk 外汇交易风险qExport saleExport saleSale to foreign customer

44、 Later payment In customers currencyqImport purchaseImport purchasePurchases from foreign supplier Payment in the suppliers currencyqForeign exchange riskForeign exchange riskChange in the exchange rate results inExporter will receive less Importer will pay more than anticipated7-31Copyright 2015 Mc

45、Graw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.One transaction perspective 视为一个交易qTreats sale and collection as one transactionqTransaction complete when Foreign currency received and converted Sale is measured at

46、converted amountqNot allowed under IAS or U.S. GAAP7-32Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Two transaction perspective 视为两个交易qTwo transactions Two transactions SaleSaleCollectionCollecti

47、onqSale based on current exchange rateSale based on current exchange rateExchange rate changesCollection for different amountCollection for different amountDifference considered Foreign exchange gain Foreign exchange lossqConcepts are identical for purchase transactionq(IAS) 21 and FASB ASC 830 requ

48、ire two-transaction perspective7-33Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.对冲外汇风险 P349-352Hedging qProtects from exchange rate fluctuationsqForeign currency forward contracts qForeign curren

49、cy optionsForeign currency forward contractqBuy or sell foreign currencyqFuture dateForeign currency option qRight to buy or sell foreign currency qFor a period of time7-34Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of

50、McGraw-Hill Education.Accounting for Foreign Currency TransactionsqTransaction types, exposure type and gain or loss export salesqExport sale asset exposure-if foreign currency appreciates foreign exchange gainqExport sale asset exposure-if foreign currency depreciates foreign exchange loss7-35Copyr

51、ight 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Accounting for Foreign Currency TransactionsqTransaction types, exposure type and gain or loss import purchasesqImport purchase liability exposure - if for

52、eign currency appreciates foreign exchange lossqImport purchase liability exposure - if foreign currency depreciates foreign exchange gain7-36Copyright 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Export sale example 1Export sale example 1 On March 2, 2011, the spot rate is $0.09 per peso. Joe Inc. will receive 1,000,000 pesos, which are now worth $90,000. Joe makes the following journal entry:Dr. Accounts Receivable 90,000Cr. Sales 90,0007-37Copyright 2015 McGraw-H