118-INTERNATIONAL ACCOUNTING

118-INTERNATIONAL ACCOUNTING - WHY ACCOUNTING RULES DIFFER...

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Econ 118-International accounting p1 WHY ACCOUNTING RULES DIFFER INTERNATIONALLY Sources of capital U.S. – Stockholders –full disclosure and transparency Germany – Banks – large blocks, hold seats on BoD – privy to operational detail Inflation - Hyper inflation in Mexico, Chile, Brazil – use of constant dollar accounting Taxation France and Germany – Accounting income = taxable income; accounting rules driven by tax policy U.S. – Accounting and tax rules may differ Culture - Core of beliefs Legal system Code – France and Germany; detailed and comprehensive Common law – U.S. and UK – less detailed (especially pre-FASB) Accidents of history - Former countries part of British Commonwealth or former French colonies Business complexity
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Econ 118-International accounting p2 MATERIAL DIFFERENCES Tax-based accounting - Revenue driven, not theory based Asset revaluations - Permitted in some countries Form over substance - Big deal in U.S. DEMAND FOR INTERNATIONAL STANDARDS
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This note was uploaded on 09/09/2009 for the course ECON 118 taught by Professor Loster during the Spring '07 term at UCSB.

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118-INTERNATIONAL ACCOUNTING - WHY ACCOUNTING RULES DIFFER...

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