Chapter 1 - Chapter 1: outline Chapter 1: Outline...

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Chapter 1: outline Chapter 1: Outline International accounting is an extremely broad topic. o At a minimum it focuses on the accounting issues unique to multinational corporations, especially with respect to foreign operations. o 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. T his course 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. There are several accounting issues encountered by companies involved in international trade. o One issue is the accounting for foreign currency-denominated export sales and import purchases: An important issue is how to account for changes in the value of the foreign currency-denominated account receivable (payable) that occur as exchange rates fluctuate. o A related issue is the accounting for derivative financial instruments, such as forward contracts and foreign currency options, used to hedge the foreign exchange risk associated with foreign currency transactions.
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Chapter 1: outline There is an even greater number of accounting issues encountered by companies that have made a direct investment in a foreign operation. These issues primarily result from the fact that GAAP, tax laws, and other regulations differ across countries.
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Chapter 1: outline o Figuring out how to make sense of the financial statements of a foreign acquisition target prepared in accordance with an unfamiliar GAAP when making a foreign direct investment decision. o Determining the correct amounts to include in consolidated financial statements for the assets, liabilities, revenues, and expenses of foreign operations. The consolidation of a foreign subsidiary involves a two-step process: restate foreign GAAP financial statements into parent company GAAP and translate foreign currency amounts into parent company currency. Determining the appropriate translation method and deciding how to report the resulting
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This note was uploaded on 03/21/2012 for the course BACC 102 taught by Professor A during the Spring '11 term at Andhra University.

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Chapter 1 - Chapter 1: outline Chapter 1: Outline...

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