Besserbrau AG Besserbrau AG is a German beer producer headquartered in Ergersheim, Bavaria.

The company was founded in 1842 by brothers Hans and Franz Besser and is publicly traded with shares listed on the Frankfurt Stock Exchange. Brewing in strict accordance with the almost 500-year-old German Beer Purity Law, Besserbrau uses only four ingredients in making its products: malt, hops, yeast, and water. While the malt, yeast, and water are obtained locally, Besserbrau imports hops from a company located in the Czech Republic. Czech hops are considered to be among the worlds finest. Historically, Besserbraus products were marketed exclusively in Germany. To take advantage of a potentially enormous market for its products and expand sales, Besserbrau began making sales in the Peoples Republic of China three years ago. The company established a wholly-owned subsidiary in China (BB Pijio) to handle the distribution of Besserbrau products in that country. In the most recent year, sales to BB Pijio accounted for 20% of Besserbraus sales and BB Pijios sales to customer in China accounted for 10% of the Besserbrau Groups total profits. In fact, sales of Besserbrau products in China have expended so rapidly and the potential for continued sales growth is so great that the company recently broke ground for the construction of a brewery in Shanghai, China. To finance construction of the new brewery, Besserbrau negotiated a listing of its shares on the London Stock Exchange to facilitate an initial public offering of new shares of stock. Required: Discuss the various international accounting issues confronted by Besserbrau AG. Answer : Some issues about international accounting that confronted by Besserbrau AG, those are: 1. Sales to Foreign Customer. As we have known, Besserbrau do export its products to China, it means Besserbrau does not sell their products only at their country in German anymore, but Besserbrau expand their sales to foreign customer. The problem that arise from sales to foreign customer is the different currency that is used by Besserbrau (Euro) and BB Pijio in China (Yuan). Besserbrau can not account sales transaction directly with different currency. It must translate Chinas currency to be Germany currency. It will be happened, if between the two countries have no rules to use one currency. 2. Hedges of Foreign Exchange Risk We assume that BB Pijio does not want to pay the products by same currency with Germany. Besserbrau became exposed to foreign exchange risk the risk that the foreign currency will decrease in Euro value over the life of the receivable. The obvious way to avoid this risk is to require foreign customers to pay for their purchases in Euro. Another way to avoid it is by hedging of foreign exchange risk. Hedge of foreign exchange risk can do with two ways, those are foreign currency option, options are a type of derivative financial instrument, the accounting for which can be quite complicated and foreign currency forward contracts, it is commonly used to hedge foreign exchange risk. 3. Foreign Direct Investment In this case, Basserbrau look their sales growth rapidly in China, so Besserbrau wants to establish new facility in there. In international accounting we know it as foreign direct investment, especially Greenfield investment. It means Besserbrau invests in China by establishing new manufacture or branch. And there are primary issues if Besserbrau do foreign direct investment, first it must convert standard accounting in foreign country into local standard accounting and translate foreign currency (Yuan) into local currency (Euro). 4. Financial Reporting for Foreign Operations 5. International income taxation in order by making import and export from each country, China, Germany, and Czech also put a tax on it. Their sales also have a taxes on it. To reduce and to avoid the double taxes, the countries should make a rule about it. The tax rate in china has a high tariff rather than in germany. It will make the revenues from china lower than germany if the germany also put the tax on the sales in china. 6. Performance Evaluation of Foreign Operations By measuring the return on investment of each country, there will be arise a different result. If the ROI of each country measure by using Euro, BB Pijio ROI percentage will be smaller than Basserbrau ROI because the fluctuative Yuan on Euro.

7. Cross-listing on Foreign Stock Exchange Besserbrau listed their stock ot only in Frankfurt Stock Exchange, but also in London Stock Exchange in addition to build their facilities in China. There would be advantages to having the stock listed and traded on several foreign stock exchanges. Brasserbrau must convert their annual report into london accounting standard. Brasserbrau doesn;t have to convert it because both of the country adopt IFRS in their accountign standard rules. Brasserbrau must transalate their currencies from Euro into Pundsterling currency because LSE use Poundsterling in showing the financial statement. 8. International Trade International trade consist of export or import. In this case, Besserbrau has imported hops from Czech Republic, Germany neighbour. Then, Besserbrau import their ingredients and exports their beer to China as its target market. 9. International Harmonization of Accounting Standard BB Pijio doesnt have to translate their currency into Euro in making the consolidated financial statement. It because Peoples Republic China and Germany has ad opt the IFRS in each accounting standard of their country. Beberapa masalah tentang akuntansi internasional yang dihadapkan oleh Besserbrau AG, yaitu: 1. Penjualan ke Pelanggan Luar Negeri.

Seperti kita tahu, Besserbrau melakukan ekspor produknya ke China, itu berarti Besserbrau tidak menjual produk mereka hanya di negara mereka dalam lagi Jerman, tetapi Besserbrau memperluas penjualan kepada pelanggan asing. Masalah yang timbul dari penjualan ke pelanggan asing adalah mata uang yang berbeda yang digunakan oleh Besserbrau (Euro) dan BB Pijio di Cina (Yuan). Besserbrau tidak dapat menjelaskan transaksi penjualan secara langsung dengan mata uang yang berbeda. Ini harus menerjemahkan mata uang China menjadi mata uang Jerman. Ini akan terjadi, jika kedua negara tidak memiliki aturan untuk menggunakan satu mata uang. 2. Lindung nilai Risiko Valuta Asing Kami berasumsi bahwa BB Pijio tidak ingin membayar produk dengan mata uang yang sama dengan Jerman. Besserbrau menjadi terkena risiko mata uang asing - resiko bahwa mata uang asing akan menurunkan nilai Euro sepanjang umur piutang. Cara yang jelas untuk menghindari risiko ini adalah untuk meminta pelanggan asing untuk membayar pembelian mereka dalam Euro. Cara lain untuk menghindarinya adalah dengan lindung nilai terhadap risiko nilai tukar. Lindung nilai atas risiko nilai tukar dapat dilakukan dengan dua cara, yaitu opsi mata uang asing, pilihannya adalah jenis instrumen keuangan derivatif, akuntansi untuk yang bisa sangat rumit dan kontrak berjangka mata uang asing, itu biasanya digunakan untuk lindung nilai risiko nilai tukar. 3. Investasi Asing Langsung Dalam hal ini, Basserbrau melihat pertumbuhan penjualan mereka cepat di China, sehingga Besserbrau ingin mendirikan fasilitas baru di sana. Dalam akuntansi internasional yang kita kenal sebagai investasi asing langsung, terutama Greenfield investasi. Artinya Besserbrau berinvestasi di Cina dengan mendirikan pabrik baru atau cabang. Dan ada isu-isu utama jika Besserbrau melakukan investasi langsung asing, pertama harus mengubah standar akuntansi di negara asing ke dalam standar akuntansi lokal dan menerjemahkan mata uang asing (Yuan) ke dalam mata uang lokal (Euro). 4. Pelaporan Keuangan Operasi Luar Negeri

5. Internasional pendapatan perpajakan agar dengan membuat impor dan ekspor dari setiap negara, China, Jerman, dan Ceko juga menempatkan pajak di atasnya. Penjualan mereka juga memiliki pajak di atasnya. Untuk mengurangi dan menghindari pajak ganda, negara-negara harus membuat aturan tentang hal itu. Tarif pajak di cina memiliki tarif tinggi daripada di Jerman. Ini akan membuat pendapatan dari cina lebih rendah dari jerman jika Jerman juga menempatkan pajak pada penjualan di cina. 6. Evaluasi Kinerja Operasi Luar Negeri Dengan mengukur laba atas investasi dari setiap negara, ada akan muncul hasil yang berbeda. Jika ROI setiap ukuran negara dengan menggunakan Euro, BB Pijio persentase ROI akan lebih kecil dari Basserbrau ROI karena Yuan fluktuatif pada Euro. 7. Cross-listing di Bursa Efek Luar Negeri

Besserbrau terdaftar saham mereka ot hanya di Frankfurt Stock Exchange, tetapi juga di London Stock Exchange di samping membangun fasilitas mereka di Cina. Akan ada keuntungan untuk memiliki saham tercatat dan diperdagangkan di beberapa bursa efek asing. Brasserbrau harus mengkonversi laporan tahunan mereka ke dalam standar akuntansi london. Brasserbrau doesn; t harus mengubahnya karena kedua negara mengadopsi IFRS dalam aturan accountign mereka standar. Brasserbrau harus transalate mata uang mereka dari Euro ke mata uang Pundsterling karena penggunaan LSE Poundsterling dalam menunjukkan laporan keuangan. 8. Perdagangan Internasional Perdagangan internasional terdiri dari ekspor atau impor. Dalam hal ini, Besserbrau telah mengimpor hop dari Republik Ceko, Jerman tetangga. Kemudian, Besserbrau mengimpor bahan dan ekspor bir mereka ke Cina sebagai target pasarnya. 9. Internasional Harmonisasi Standar Akuntans BB Pijio tidak harus menerjemahkan mereka ke dalam mata uang Euro dalam membuat laporan keuangan konsolidasi. Ini karena Republik Rakyat Cina dan Jerman telah memilih iklan yang IFRS dalam setiap standar akuntansi negara mereka.