International Accounting and Multinational Enterprises, 6th Edition

Chapter 1 International Accounting and International Business 1

Introduction 1

The International Development of the Accounting Discipline 2

National Differences in Accounting Systems 5

The Evolution and Significance of International Business 6

Forms of International Involvement 9

Environmental Influences on Accounting 15

Major Development Factors 18

Accountability and Multinational Enterprises 24

Accounting Aspects of International Business 25

The Field of International Accounting 26

Summary 29

Case: Toyota’s Global Expansion

Case: Ahold and the Challenges of Going Global

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Chapter 2 International Accounting Patterns, Culture and Development 34

Introduction 34

Purposes of International Classification 35

Classification of Accounting and Reporting Systems 35

Cultural Influences on Accounting Systems 41

Culture, Societal Values, and Accounting 42

International Pressures for Accounting Change 52

Summary 54

Case: General Motors and Japanese Convergence vs. Chinese Convergence

Case: Inductive Methods and Deductive Methods Relating Reporting Standards to Cultural Values

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Chapter 3 Comparative International Financial Accounting I 60

Introduction 60

Anglo-American Accounting 62

Nordic Accounting 65

Germanic Accounting 67

Latin Accounting 70

Asian Accounting 72

Summary 74

Case: Reporting Standards vs. Tax Standards

Case: EU Conversion

These cases can be found on the following website: www.wiley.com/college/radebaugh

Chapter 4 Comparative International Financial Accounting II 79

Introduction 79

Anglo-American Accounting 82

Latin Accounting 83

Asian Accounting 85

Eastern European Accounting 88

Summary 91

Case: Small GAAP vs. Large GAAP

Case: Developing Countries

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Chapter 5 International Financial Statement Analysis 95

Introduction 95

International Accounting Differences and Financial Statement Analysis 96

Major Differences in Accounting Principles Around the World 99

The Impact of U.S.-U.K. Accounting Differences: A Quantitative Analysis 103

A Global Perspective on Earnings Measurement 106

A Comparative Global Analysis 108

International Accounting Differences and the Stock Market 109

Factors Influencing Measurement Differences 109

Global Accounting Convergence 110

Summary 110

Case: Alcatel and Lucent

Case: Hanson and ICI

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Chapter 6 International Transparency and Disclosure 124

Introduction 124

The Meaning of Transparency 125

Disclosure in Corporate Reports 126

International Disclosure Regulation 135

Corporate Reporting Trends 139

Corporate Review Information 139

Operations Review 143

Financial Review 144

Frequency and Timeliness of Reporting 145

Growing Pressures for Transparency 145

Summary 145

Case: Infosys Technologies (India)

Case: Stora Enso and the Versel Vision—A Model of Sustainability

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Chapter 7 International Accounting Standards and Global Convergence 151

Introduction 151

Governments 153

Trade Unions and Employees 167

Investors 169

Bankers and Lenders 171

Accountants and Auditors 171

The International Harmonization and Disclosure Debate 182

Summary 183

Case: European Adoption of IFRS

Case: IAS 39

These cases can be found on the following website: www.wiley.com/college/radebaugh

Chapter 8 International Business Combinations, Goodwill, and Intangibles 189

Introduction 190

Consolidated Financial Statements 190

Funds and Cash Flow Statements 197

Joint Venture Accounting 199

Goodwill and Intangibles 200

Goodwill 202

Brands, Trademarks, Patents, and Related Intangibles 209

Research and Development 213

Summary 216

Case: Multigroup (Switzerland)

Case: Vodafone’s Operations

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Chapter 9 International Segment Reporting 223

Introduction 223

Users and Uses of Segment Information 224

The Benefits of Segment Reporting 225

The Costs of Segment Reporting 226

International Financial Reporting Standards 227

Regulations around the World 228

Segment Reporting Problems 231

The Dual-Yardstick Proposal 234

Summary 241

Case: BMW

Case: Nestlé

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Chapter 10 Accounting for Foreign Currency 246

Introduction 246

Basics in Foreign Exchange 247

Foreign Currency Transactions 250

Translation of Foreign Currency Financial Statements 254

Translation Methodologies: An Overview 255

International Accounting Standards 257

Historical Development in the United States 257

Convergence 274

Summary 274

Case: Kamikaze Enterprises

Case: Coca-Cola

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Chapter 11 International Accounting for Price Changes 284

Introduction 284

Impact of Inflation on the Corporation 285

Accounting Measurement Alternatives 286

International Financial Reporting Standards 289

Comparative National Regulation and Practice 291

Problems and Prospects 298

Summary 299

Case: BP

Case: Fosters Brewing Group

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Chapter 12 Corporate Governance and Control of Global Operations 303

Introduction 303

Global Strategic Issues 304

Informal and Subtle Mechanisms 308

Organizational Structure 308

Corporate Governance 313

International Importance of Governance 316

Studies on International Corporate Governance Practices 317

Cross National Differences in Corporate Governance 322

Internal Controls 326

The Role of Information Technology in MNEs 328

Firm Strategy, Structure, and the Accounting Function 332

Summary 334

Case: P&G and Unilever—Restructuring for Growth

Case: The Royal Dutch/Shell Scandal

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Chapter 13 Managing Foreign Exchange Exposure 342

Introduction 342

Foreign Exchange 343

Types of Hedging Exposure 353

Hedging Strategies 356

Accounting for Foreign Currency Derivatives 360

Use of Derivatives to Hedge a Net Investment 369

Disclosure of Derivative Financial Instruments 369

Summary 371

Case: Nokia’s Foreign Exchange Exposure

Case: RadCo International

These cases can be found on the following website: www.wiley.com/college/radebaugh

Chapter 14 International Budgeting and Performance Evaluation 380

Introduction 380

The Strategic Control Process 381

Empirical Studies of Differences in Management Accounting and Control Practices Across Nations 382

Challenges of Control in the Global Firm 390

Intracorporate Transfer Pricing 397

Performance Evaluation Issues 403

Economic Value Added 405

The Balanced Scorecard 407

Summary 409

Case: Niessen Apparel

Case: Global Telecom

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Chapter 15 International Auditing Issues 420

Introduction 420

The Accounting and Auditing Profession 421

Global Audit Services and the International Auditing Challenge 422

Audit Challenges: Local Business Practices and Customs 424

Audit Challenges: Currency, Language, and Law 425

Audit Challenges: Distance and Organization for Providing Audit Services 425

Audit Challenges: Audit Impediments from International Diversity,Availability, and Training of Auditors 427

Global Accounting Firms 430

Audit Standards 434

Summary 455

Case: Lucas International: Coordinating an International Audit

Case: Xerox Corporation

These cases can be found on the following website: www.wiley.com/college/radebaugh

Chapter 16 International Taxation Issues 464

Introduction 464

Direct Taxes 465

Indirect Taxes 468

The Avoidance of Double Taxation of Foreign Source Income 469

U.S. Taxation of Foreign Source Income 471

Tax Effects of Foreign Exchange Gains and Losses 475

Tax Incentives 477

Tax Dimensions of Expatriates 478

Intracorporate Transfer Pricing 479

Tax Planning in the International Environment 482

Summary 483

Case: Transfer Pricing

Case: Midwest Uniforms

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Name and Company Index 489

Subject Index 493