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Accounting Theory-Ch03
Accounting Theory-Ch03
RICHARD G. SCHROEDER
MYRTLE W. CLARK
JACK M. CATHEY
CHAPTER 3
INTERNATIONAL ACCOUNTING
CH03: International Accounting
International Accounting
Standards
Financial accounting is influenced by the environment in
which it operates
Companies develop financial reports directed at their
primary users
Previously most were residents of the same country as the corporation
Transnational financial reporting has become more commonplace
because of the European Union, GATT and NAFTA
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Problems:
1 Exchange gains or losses
2 Obtaining credit information
3 Evaluation of financial statements
Next step may be to open an international division
Another issue is raising capital in foreign markets
Must prepare financial statements in a format
acceptable by appropriate securities market
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Level of Political
Education System
Economic
Legal System
Development
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1 Same to all
2 Translate language
3 Translate language and currency
4 Two sets
5 World-wide standards
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IASC International
Formed in 1973 to Accounting Standards
aid in this process Board (IASB)
Replaced IASC in 2001
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Harmonizer Catalyst
2001:
Responsibility for international standards-
setting was transferred to the to the
International Accounting Standards Board
(IASB)
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Considerations:
a Fair presentation and compliance with IASC definitions and
recognition criteria.
b Accounting policies
c Going concern
d Accrual basis of accounting
e Consistency of presentation
f Materiality and aggregation
g Offsetting
h Comparative information
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Compliance requirements
Recognition of assets and liabilities
Only when required by IFRSs
Requires reclassifying if necessary
Applies existing IFRSs in measuring