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    Godfrey Mbonu - Acct564 Week1 Homework.

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    Petra
    This document summarizes key points from chapters and exercises in an accounting textbook. Chapter 1 discusses how currency exchange rates can impact a subsidiary's pretax income reporting in its parent company's currency. It also lists the top 5 countries by number of companies listed on the NYSE, with Canada, China, Brazil, the UK, and Bermuda topping the list. Chapter 2 notes that accounting diversity across countries reduces comparability of financial statements and most affects international investors. It states that legal systems represent the greatest challenge to convergence because they strongly influence financial reporting within each country.

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    Godfrey Mbonu - Acct564 Week1 Homework.

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    Petra
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    This document summarizes key points from chapters and exercises in an accounting textbook. Chapter 1 discusses how currency exchange rates can impact a subsidiary's pretax income reporting in its parent company's currency. It also lists the top 5 countries by number of companies listed on the NYSE, with Canada, China, Brazil, the UK, and Bermuda topping the list. Chapter 2 notes that accounting diversity across countries reduces comparability of financial statements and most affects international investors. It states that legal systems represent the greatest challenge to convergence because they strongly influence financial reporting within each country.

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    This document summarizes key points from chapters and exercises in an accounting textbook. Chapter 1 discusses how currency exchange rates can impact a subsidiary's pretax income reporting in its parent company's currency. It also lists the top 5 countries by number of companies listed on the NYSE, with Canada, China, Brazil, the UK, and Bermuda topping the list. Chapter 2 notes that accounting diversity across countries reduces comparability of financial statements and most affects international investors. It states that legal systems represent the greatest challenge to convergence because they strongly influence financial reporting within each country.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    73 views2 pages

    Godfrey Mbonu - Acct564 Week1 Homework.

    Uploaded by

    Petra
    This document summarizes key points from chapters and exercises in an accounting textbook. Chapter 1 discusses how currency exchange rates can impact a subsidiary's pretax income reporting in its parent company's currency. It also lists the top 5 countries by number of companies listed on the NYSE, with Canada, China, Brazil, the UK, and Bermuda topping the list. Chapter 2 notes that accounting diversity across countries reduces comparability of financial statements and most affects international investors. It states that legal systems represent the greatest challenge to convergence because they strongly influence financial reporting within each country.

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    Chapter 1, Exercises 34; Chapter 1, Case 1-1 (Besserbrau AG); Chapter 2,

    Exercises 78

    Chapter 1

    Exercises3

    a. The reason for Acme Brush of Brazils pretax income became a U.S dollar pretax loss
    is that sales and expenses are translated at different exchange rates. In this case, sales are
    translated at an exchange rate of USD 0.3/BRL. On the other hand, expenses are
    translated at an exchange rate of USD 0.347368 / BRL.

    b. In this case, Acme Brush should not be paid a bonus. Because, as a subsidiary, Acme
    Brush should generate profit for its parent company. However, Acme Brush fails to do so
    and it generates a US dollar pretax loss for its parent company. As a result, the company
    should be paid bonus.

    Exercises 4

    a. As of December 31, 2015, there are 515 NYSE and NYSE MKT-listed non-U.S.
    Issuers from 46 countries.
    b. Five countries with the most companies listed on the NYSE are: Canada (140), China
    (59), Brazil (25), U.K (24) and Bermuda (20)
    c. U.S has the largest capital market and the most functional financial system in the
    world. AS a result, by listing on the U.S. stock market, foreign companies will be able
    to access much larger capital market.

    Cases 1-1

    Sales to foreign customer: Besserbrau export its product to China. As a result,


    Besserbrau needs to deal with different currency transactions.
    Hedges of Foreign Exchange Risk: Besserbrau exposed to the risk that foreign
    currency will decrease in Euro value over the life of the receivable.
    Foreign Direct investment: Besserbrau wants to establish new facilities in China.
    Financial Reporting for Foreign Operations: Different countries will have different
    requirement for the financial reporting.
    International income taxation: There are import and export taxes associated with the
    trade.
    Performance evaluation of foreign operation: If the ROI of each country measure by
    using Euro, BB Pijio ROI percentage will be smaller than Besserbrau ROI because
    the fluctuate Yuan on Euro.

    Chapter 2

    Exercises 7

    a. The greatest problem associated with accounting diversity is there is lack of


    comparability of financial statement across countries. Since different accounting
    systems have some fundamental differences, thus, it is not worth to compare different
    financial statements.
    b. International investors will be the group who most affected by worldwide accounting
    diversity.
    c. MNCs could easily deal with the problems associated with accounting diversity.
    MNCs have the internal information needed to reconcile their foreign subsidiaries
    financial statements.

    Exercises 8

    I believe Legal system represents the greatest impediment to the international


    convergence of accounting. In each country, legal system always has a strong influence
    on the financial reporting. In addition, government in different countries are not likely to
    change their legal system and laws that are associated with financial reporting.

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