Questions and Answers of Comparative International Accounting

Streep Company (a U.S.-based company) has branches in three countries: X, Y, and Z. All three branches sell goods and services in their host country. Income tax rates on branch profits in these three
Capistrano Corporation, whose reporting currency is the franc (F), establishes a foreign subsidiary, whose reporting currency is the escudo (E). On January 1, Year 1, Capistrano contributes Cash of
What procedures are used to translate the foreign currency income of a foreign operation into U.S. dollars for U.S. tax purposes?
Fullerton Company (a U.S. taxpayer) has wholly-owned subsidiaries located in Hungary and Hong Kong. The Hungarian operation purchases electric generators manufactured by Fullerton and sells them
What are the major international tax provisions in the Tax Cuts and Jobs Act that became effective in the United States in 2018?
What is the maximum amount of foreign tax credit that a U.S. company is allowed to take with respect to the income earned by a foreign operation?
Boston Beanery, a U.S.-based company, establishes a branch in Great Britain in January of Year 1, when the exchange rate is US$1.30 per British pound (£). During Year 1, the British branch
What are the methods used by the United States to reduce the double taxation of income earned by foreign operations of U.S. companies? a. Exempting some foreign source income and allowing a
King Street Bakery, Inc., a U.S. company, has a branch located in Cabo Marco and another in the Windswept Islands. The beforetax income earned by the Cabo Marco branch is $100,000, and the before-tax
Under U.S. tax law, what is a controlled foreign corporation (CFC)? What is Subpart F income?
In Year 3, how much excess foreign tax credit can Rawl carry back? a. $7,500. b. $6,000. c. $1,000. d. $0.
How are foreign branch income and foreign subsidiary income taxed differently by the United States?
For Year 3, what is the net U.S. tax liability? a. $0. b. $1,000. c. $6,000. d. $21,000.
For Year 1, Year 2, and Year 3, what is the foreign tax credit allowed in the United States? a. $8,250, $15,000, and $21,000.b. $8,250, $15,000, and $22,000.c. $15,750, $21,000, and $22,000.d.
What is the purpose of the OECD’s base erosion and profit shifting action plan?
What is base erosion and profit shifting (BEPS)?
Why might companies have an incentive to finance their foreign operations with as much debt as possible? a. Interest payments are generally tax-deductible. b. Withholding rates are lower
Worldwide United Corporation (WUC), a U.S. taxpayer, manufactures and sells products through a network of foreign branches and wholly-owned foreign subsidiaries. Relevant information for these
Doner Company Inc. established a foreign subsidiary on January 1, Year 1. The subsidiary’s financial statements in foreign currency (FC) for the year ended December 31, Year 1, appear as
TBD Corporation (a U.S.-based company) acquired 100 percent of a Swiss company for 8.2 million Swiss francs on December 20, Year 1. At the date of acquisition, the exchange rate was $1.00 per franc.
Velky s.r.o. (a Czech company) invests 1,200,000 schillings in a foreign subsidiary on January 1, Year 1. The subsidiary commences operations on that date and generates net income of 400,000
Which balance sheet accounts give rise to purchasing power gains, and which accounts give rise to purchasing power losses?
The Year 1 financial statement of the Chinese subsidiary of Singcom Limited (a Singapore-based company) revealed the following: Singapore dollar (SGD) exchange rates for 1 CNY are as
What procedures does IFRS require when translating the foreign currency financial statements of a foreign operation located in a hyperinflationary economy?
The functional currency of Garland Inc.’s Japanese subsidiary is the Japanese yen. Garland borrowed Japanese yen as a partial hedge of its investment in the subsidiary. How should the transaction
In accordance with International Financial Reporting Standards (IFRS), which translation combination would be appropriate for a foreign operation whose functional currency is the currency of the host
In accordance with U.S. generally accepted accounting principles (GAAP), which translation combination would be appropriate for a foreign operation whose functional currency is the U.S. dollar?
Which one of the following items is remeasured using the current exchange rate under the temporal method? a. Accounts payable. b. Dividends declared. c. Additional paid-in
Suggest reasons for the adoption or non-adoption of IFRS for SMEs in China, France, Japan, South Africa and the United States.
Why has the FRC in the United Kingdom decided to converge (partially but not completely) UK standards for individual companies with IFRS for SMEs?
Discuss the view that IFRS 8 ignores the needs of many stakeholders.
Compare the composition and the roles of the FRC in the United Kingdom and the ANC in France.
Why is auditor independence a problem in Central and Eastern Europe?
Explain how the IASB’s standard for private entities differs from full IFRS. In your opinion, does it differ enough?
If a translation of IFRS exists in a language with which you are familiar, assess the quality of the translation.
If it is found that large differences in IFRS practice exist systematically between countries, what implications does this have?
To what extent has the scope for different practice under IFRS declined over the past decade?
‘The influence of tax on financial reporting cannot be relevant in the context of IFRS consolidated statements.’ Discuss.
Access the website of GlaxoSmithKline (www.gsk.com) to explain the differences disclosed in its annual reports between US GAAP and IFRS and UK GAAP from 2004 to 2006. Could these differences
Explain the arguments for and against allowing the IASB and the FASB to compete in the provision of accounting standards. Which arguments are the stronger?
Discuss the high-level differences between IFRS and US GAAP. Was the SEC right to demand reconciliations of IFRS to US GAAP from foreign companies that are listed on US exchanges?
Explain the advantages and disadvantages of writing accounting standards containing principles rather than rules.
The countries listed below are not covered in any detail in the textbook. Which of the six ‘vital’ countries (see Section 4.3.1) does each most closely resemble so far as accounting and corporate
Which are the top three countries in respect of each of:(a) Share of the world’s top 100 companies;(b) Number of qualified accountants;(c) Market capitalization of stock exchange? Why is the answer

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