Solution Manual For International Accounting 4th Edition by Timothy Doupnik, Hector Perera Chapter 1-15 (Complete And Verified Study material) (307pages) LEARNEXAMS

INTRODUCTION TO INTERNATIONAL ACCOUNTING Chapter Outline I. International accounting is an extremely broad topic. A. At a minimum it focuses on the accounting issues unique to multinational corporations, especially with respect to foreign operations. B. 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. C. This book 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. II. There are several accounting issues encountered by companies involved in international trade. A. 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. B. 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. III. 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. A. 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. B. 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: (1) restate foreign GAAP financial statements into parent company GAAP and (2) translate foreign currency amounts into parent company currency. Determining the appropriate translation method and deciding how to report the resulting translation adjustment are important questions. C. Complying with host country income tax laws, as well as home country tax laws related to income earned in a foreign country (foreign source income). Double taxation of income is a potential problem, and foreign tax credits are the most important relief from this problem.