1、1. Define the“ International Accounting”and explain its content.(1)Definition of International Accounting ：Accounting is a branch of applied economics that provides information aboutbusiness and financial transactions. International accounting is distinct because the information concerns a multinati

2、onal enterprise(MNE) with foreign operations and transactions, or the users of the information are in a different domicile than the reporting entity.(2)Content of international accounting: Comparison of accounting standards Accounting harmonization or convergence International financial accounting I

3、nternational managerial accounting International auditing2. Explain the effect factors of accounting development. Which factors are the most important for Chinese accounting development? Which factors are the least important for Chinese accounting development?Effect factors:(1)Source of finance: In

4、countries where bank dominates source of finance,accounting focuses on creditor protection through conservative accountingmeasurements.(2)Legal system: The legal system determines how individuals and institutionsinteract.(3)Taxation: In many countries, tax legislation effectively determines accounti

5、ngstandards(4)Political and economic ties: Accounting ideas and technologies are transferredthrough conquest, commerce, and similar forces.(5)Inflation: Inflation distorts historical cost accounting and affects the tendency ofa country to incorporate price changes into the accounts.(6)Level of econo

6、mic development: The factor affects the types of businesstransactions conducted in an economy.(7)Education level: In countries with developed education, concerns for accountinginformation is high.(8)Culture: Culture means the values and attitudes shared by a society.Most and least important:(1)China

7、 is trying to develop accounting standards that are understandable to theoutside world. The model is International Financial Reporting Standards in order toattract outside investors that are vital to the makeover of China(2) Thus the anticipatory effect of sources of finance is probably the mostsign

8、ificant factor influencing the development of accounting today. s economy.(3) Political and economic ties are probably the least important factor in the case of China. China s economy has been insular until recently. Even now, imports and exports as a percentage of gross domestic product are low (se

9、e Table 4.1). Thus,there is no significant influence from one particular trading partner, nor is there any colonial legacy.3. Distinguish fair presentation and compliance accounting.(1)Fair presentation: It emphasizes substance over form and is oriented toward the decision needs of external investor

10、s.It is capital markets oriented. It is associated with common law countries(2)Legal compliance accounting: It is designed to satisfy government-imposed requirements such as calculatingtaxable income or complying with the national government s macroeconomic plan. legal compliance accounting is assoc

11、iated with code law countries.(3) A third model is the inflation-adjusted model. It is essentially an add-on to one of the other two models in some countries with high inflation.4. The U.K and the U.S have a common accounting heritage and are linked by historyand language. Anglo-American accounting

12、is a term sometimes used to denote their accounting styles, which are similar in orientation, purpose, and approach. Yet accounting differences still exist between these two countries.Required:Identify the major differences between U.K and U.S accounting.The U.KThe U.SGoodwillCapitalize & amorti

13、zeCapitalize & impairmenttestedAsset valuationHistorical & current costHistorical costLIFONot acceptableusedReserves for incomesomenosmoothing(1)The two major areas of difference are asset valuation and accounting for goodwill. In the U.K., assets may be valued at historical cost, current co

14、st, or a mixture ofthe two. When fixed assets are revalued, depreciation and amortization must be calculated using the revalued amounts. Only historical cost is allowed in the U.S. In the U.K., goodwill can be impairments tested, as in the U.S., but may also be amortized over 20 years or less.(2)Oth

15、er differences between U.K. and U.S. GAAP relate to LIFO and the calculation of long-term deferred taxes.LIFO is rarely used in the U.K., but is relatively more common in the U.S. In the U.K., long-term deferred taxes may be valued at discounted present value.(3)Finally, the chapter mentions that op

16、portunities for income smoothing are probably greater in the U.K. than in the U.S.5. To depict the most novel feature of the Dutch accounting scene. The most novel feature of the Dutch accounting scene is the Enterprise Chamber of the Court of Justice of Amsterdam. The Dutch Enterprise Chamber of th

17、e Court of Justice of Amsterdam helpsensure that filed or published Dutch financial statements conform to all applicable laws. The Enterprise Chamber carries out its mission by determining whether theallegations of deficient financial reporting are true and how material such deficiencies are. The Ch

18、amber is composed of three judges and two Dutch RAs. There is no jury.Appeals of any of the Chambers rulings are difficult, may only be lodged with the Dutch Supreme Court, and are restricted to points of law. Three examples of Dutch flexibility in financial reporting are (a) financialstatements can

19、 be in one of several languages, (b) companies may use historical cost or current costs, and (c) Council on Annual Reporting guidelines are recommendations only. It has relatively permissive statutory accounting and financial reportingrequirements but very high professional practice standards. It is

20、 a code law country, yet accounting is oriented toward fair presentation. The fairness orientation developed without a strong stock market influence. Financial reporting and tax accounting are two separate activities.6. In 1967, Gerhard Mueller proposed the developmental patterns. There are macroeco

21、nomic pattern, microeconomic pattern, Independent discipline approach and the uniform accounting approach respectively.The four patterns of accounting development still are valid today? Why or why not?The four patterns of accounting development are still valid today.Reasons:The description of accoun

22、ting for the respective exemplar countries is stillbroadly true. The Netherlands is really the only country that can be described by the microeconomic pattern. There are also only a few countries like Sweden that follow the macroeconomic pattern. The independent discipline approach is not as ad hoc

23、as it was in 1967. Most ofthese countries now have conceptual frameworks to guide accounting policy formulation. The uniform accounting approach may break down as more and more countriesprivatize their economies.Similarities:(1) Accounting and auditing standard setting is a private sector activity i

24、n both Taiwan and the USA.(2)The ARDF in Taiwan and the FAF in the USA have the same oversightresponsibilities for standard setting.(3)The FASC in Taiwan determines accounting standards like the FASB in the USA.(4)A due process procedure is followed by both bodies and exposure drafts and outside opi

25、nions are solicited before a final pronouncement is issued.(5)The ASC in Taiwan uses the same process as the FASC in the USA.Differences:(1)The ARDF in Taiwan is supervised by the Ministry of Finance, but there is no comparable oversight of the FAF by a U.S government agency.(2)The ARDF in Taiwan ha

26、s oversight responsibility for both accounting and auditing standard setting. However, in the USA, the FAF is responsible for accounting standards while PCAOB is responsible for auditing standards.8. What should be included in the disclosure of forward-looking information? Forecasts of revenues, inc

27、ome(loss),earnings(loss) per share(EPS),capital expenditures and other financial items.Prospective information about future economic performance or position .Statements of managements plans and objectives for future operations.9. Why do managers have incentives to disclose information voluntarily an

28、d how to avoid managers negative effect?(1)Reasons: Voluntary disclosure are forthcoming when corporations are competing forfinance from investors, especially in a cross-border context. Voluntary disclosure have many other benefits for the corporation. For example,Lower transaction costs in the trad

29、ing of the firm s securities; Greater interest in the company by financial analysts and investors; Increased share liquidity; Lower cost of capital.Delay the disclosure of adverse news,“manage” their financial reports to conveya more positive image of the firm, and overstate their firmsfinancial per

30、formancand prospects.(2)Solution: regulation such as accounting and disclosure regulation third-party certificate such as auditing.10. What evidence is there that International Accounting Standard are becoming widely accepted around the world? Growing numbers of companies are adopting IFRS voluntari

31、ly and refer to their use of IFRS in their annual reports. Dozens of countries base their national accounting standards on IFRS. Many international organizations, such as IOSCO, endorse the use of IFRS. IFRS are used as an international benchmark in many major industrialized countries. IFRS are acce

32、pted by many stock exchanges and securities regulators. IFRS are recognized by the European Commission (EC) and other supranational bodies. Norwalk Agreement committed FASB and IASB to convergence.11. Discuss the special features for accounting standards setting, regulation and enforcement, financia

33、l reporting, and measurement in China. Accounting standard setting is a government activity in China. The purpose ofaccounting was to serve the needs of the state for economic planning and control. A uniform set of standardized accounts was developed. The recent economic reforms enable accounting st

34、andards to reflect this new reality. The China Accounting Standards Committee is the authoritative body within the Ministry of Finance responsible for developing accounting standards. The ChinaSecurities Regulatory Committee is the government agency that regulates China stock exchanges. The CSRC is

35、also responsible for enforcing financial reporting for listed companies. s Financial reporting is frequent and detailed. The main feature is a fund-management orientation where funds meant the property, goods, and materials used in the production process. Financial reporting emphasize the balance sh

36、eet. China is likely moving toward fair presentation oriented accounting by adoptingIFRS as Chinese GAAP. Despite adopting fair presentation principles, one can question whether the Chinese achieve it in application. There is an acute shortage of trained accountants in China and the profession remai

37、ns undeveloped.12. Compare and contrast features of the major foreign currency translation methods which are current exchange rate method, and temporal method. Which method do you think is best? Why ?Current Rate Method(1)Advantages: Retains the initial relationships in the foreign currency statemen

38、ts. Simple to apply.(2)Limitations: Violates the basic purpose of consolidation, which is to present the results of a parent and its subsidiaries as if they were a single entity. Inconsistent with historical cost. Presumesthat all local assetsand liabilities are subject to exchange risk. Whilestockh

39、olders equity adjustments shield an MNE s bottom line from translation gainsand losses, such adjustments could distort certain financial ratios and be confusing.Temporal Method(1)Advantages: Theoretically valid: compatible with any accounting measurement method. Has the effect of translating foreign

40、 subsidiaries operations as if they wereoriginally transacted in the home currency, which is desirable for foreign operationsthat are extensions of the parent s activities.(2)Limitation:A company increases its earnings volatilityby recognizing translation gains andlosses currently.Which is best: The

41、re isprobablynoone translationmethod thatisappropriate forallcircumstances in which translations occur and for all purposes that translation serves. It is probably more fruitful to identify circumstances in which they think onetranslation method is more appropriate than another.13. What are features

42、 of FASB 52?(1) FASB 52 introduces a concept of functional currency.(2) Translation when the parent currency is functional. Foreign currency financial statements remeasured to reporting currency using the temporal method. Translation gains and losses resulting from the translation process are includ

43、ed incurrent income.(3)Translation when the local currency is functional. Foreign currency financial statements translated to reporting currency using the current rate method. Translation gains and losses disclosed as a separate component of consolidatedequity.14. For three approaches that are inter

44、national accounting standard, mutual recognition, and reconciliation, what do you expect is the preferred approach from the perspective of investors, company management, and regulatory authorities?(1)One of the main problems with mutual recognition: To make financial statements within the home marke

45、t non-comparable(2)Reconciliation: The United States SEC considers reconciliation to be a cost-effective means significant differences between domestic and foreign accounting principles can increase the burdens reconciliations do not provide a full picture of the enterprise(3) The use of Internation

46、al Financial Reporting Standards would provide many benefits for cross-border listings. Investors might prefer international standards. Company management might prefer mutual recognition. Regulatory authorities might prefer reconciliation.15. From a user s perspective, what is the inherent problem in attempting to analyze historical cost-based financial statements of a company domici