Index PDF

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INDEX
Note: The letters ‘A’, ‘E’, and ‘n’ denotes Appendix entries, Exhibits, and notes cited in the text.
Accounting Alternative Investment Market international financial analysis,

contemporary perspective, 3–4 (AIM)/London, 18 288–292
and efficient functioning of Alternext/France, 18 prospective analysis, 292–295
capital markets, 19–20 Americas, capital markets, 15–16 Business modeling, 341
history, 2–3, 30 Are Classifications of Accounting
processes, 1 Outmoded? (Case 2–1), 44–45 Capital budgeting, 343–344
role in society, 1 Arm’s-Length Principle, 453–454 Capital markets
Accounting analysis, 285–287 Asia, capital markets, 17 Americas, 15–16
evaluation process, 286 “Asian Tiger” nations, growth of, 17 Asia, 17
suggestions for analyst, 287 Assessing Foreign Subsidiary cross-border listings and
Accounting contributions/transfer Performance In A World Of issuance, 18–19
pricing, 453 Floating Exchange Rates efficient functioning of and
Accounting For Foreign Inflation: A (Case 10–2), 389–390 accounting, 19–20
Case Analysis (A7–1), 238–241 Asset valuation methods, 53 factors in selection of, 19E
Accounting measurements, Attest function, 304 internationalization of, 13–16,
IFRS, 53–54 Auditing, 1, 51 14–15E, 24–25(A1–2)
Accounting organizations See also Global accounting Western Europe, 16–17
promoting accounting and auditing standards Cases
convergence, 255–256 internal (evolving role of), Are Classifications of Accounting
Accounting orientations, 34 315–316 Outmoded? (Case 2–1), 44–45
Accounting practice, and accounting Auditing and financial statement Assessing Foreign Subsidiary
standards, 51 analysis, 303 Performance In A World Of
Accounting principles. See GAAP attest function, 304 Floating Exchange Rates (Case
(generally accepted accounting audit report, 304, 305E, 306E 10–2), 386–387
principles) auditing and credibility, 307–309 Casino Capital (Case 4–2),
Accounting role in financial risk coping mechanisms, 309–310 116–118
management, 392 internal audits, 310–312, Continental A.G (Case 9–2),
See also Floating exchange 313–314E, 315–316 331–339
rates/risk management professional organization, 312 Do the Differences Really Matter?
accounting for hedge products, Average rate method to translate (Case 3–2B), 83
407–413 foreign currency balances, 172 E-Centives, Inc.-Raising Capital
identifying market risks, in Switzerland (Case 1–1),
392–394, 393E Balance of payments, 395 28–29
quantifying tradeoffs, 394 Balance of trade, 395 Exposure Identification
Accounting standards, 51 Balance sheet hedges, 407 (Case 11–1), 426
and accounting practice, 51 Bank of America, 407 Foreign Investment Analysis:
Accounting value dimensions, Bear Stearns, 407 A Tangled Affair (Case 10–1),
35–36, 36E Benchmarks/benchmarking, 12, 452 384–385
conservatism vs. optimism, 36 reporting systems, 423 Global Benchmarks: Infosys
professionalism vs. statutory BG Group financial statements, Technologies Limited
control, 35 audit opinion, 75E (Case 1–2), 29
secrecy vs. transparency, 36 Big Bang (China), 104 Icelandic Enterprises (Case 7–2),
uniformity vs. flexibility, 35 BMW financial statement, audit 246–247
Achievement orientation, 35 opinion, 63E In the Green, (Case 5–1), 162
Advance pricing agreements Border taxes, 433 Kashmir Enterprises (Case 7–1),
(APAs), 459, 459E Brazil, perspective on inflation 245–246
AIG, 407 accounting, 230–231, 231E, Managing Offshore Investments:
AKZO Nobel 232–233 Whose Currency? (Case 6–2),
accommodations for foreign Business analysis framework, 206–209
financial statement readers, 10 283–285 Muscle Max:Your Very
operating statistics by region, accounting analysis, 285–287 Own Personal Trainer
6, 6E impacting factors, 295–303 (Case 12–2), 470
Alcan, performance report international business strategy Old Habits Die Hard (Case 3–1),
perspectives, 166–167 analysis, 283–285 81–82
469
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470 Index
Cases (Continued) Casino Capital (Case 4–2), 116–118 Currency options/accounting

PetroChina Company Limited India, 106–110 for, 411–412, 410E
(Case 8–1), 279 Japan, 96–101 Currency swaps/accounting for, 415
Regents Corporation (Case 6–1), Mexico, 91–96 Current-cost adjustments, 222–223
204–205 People’s Republic of China, Current-noncurrent method of
Sandvik (Case 9–1), 325–331 101–106 foreign currency translation,
Seeing Is Believing (Case 5–2), Standing on Principles (Case 4–1), 179–180
162–163 115–116 Current-rate method of currency
The Shirts Off Their Backs United States, 86–91 translation
(Case 12–1), 468–469 Comparative accounting/Europe, See also Single-rate method
Standing on Principles (Case 4–1), 49–50, 50E, 78E of currency translation
115–116 Czech Republic, 65–68 translating foreign currency
Value At Risk:What Are Our Do the Differences Really Matter? balances, 172–173
Options? (Case 11–2), 426–430 (Case 3–2B), 83 Czech Republic, 65–68
Volkswagen Group (Case 2–2), France, 54–60 accounting measurements, 68
45–47 Germany, 60–65 accounting regulation and
What Difference Does It Really The Netherlands, 68–73 enforcement, 66–67
Make? (Case 3–2A), 82 Old Habits Die Hard (Case 3–1), financial reporting, 67–68
Whither The Withering Standard 81–82
Setters? (Case 8–2), 280 United Kingdom, 73–77 Daihatsu Motor Company, strategic
Cash flow analysis, 291 What Difference Does It Really costing model, 367
CEMEX, statement of changes in Make? (Case 3–2A), 82 Daimler, WOTS-UP analysis
financial position, 95, 95E Competitive currency exposure, 393 example, 342E, 343, 345
CFO, evolving role, 341 Competitive factors/transfer Deferral approaches for foreign
Changing prices, definitions, 210, pricing, 450–451, 451E currency translation
211–212E, 213 Contractual hedges, 405–407, adjustments, 186
Chevron-Texaco, functional 405–406E deferral, 186
currency choice, 193 Controlled Foreign Corporations deferral and amortization,
China. See People’s Republic of (CFC) and Subpart F 186–187
China Income, 444 no deferral, 187
Classification of international Convergence, 249 partial deferral, 187
accounting systems, 30, 37–41 advantages of international Deflation, 214
Are Classifications of Accounting convergence, 350–351 Development of accounting, 30–36
Outmoded? (Case 2–1), 44–45 vs. harmonization debate, 253 culture, 34–36, 36E
empirical classifications, 37 Coping mechanisms for accounting economic development level, 33
judgmental classifications, 37 principle differences, 291–292 educational level, 33–34
legal systems, 38–39 Corporate governance assessment inflation, 33
Mueller’s four approaches, 37–38 framework, 132, 133E legal system, 31–32
practice systems, 39–41 comparison of Germany/Japan political and economic ties, 33
Coca-Cola vs. U.K./U.S., 149E sources of finance, 31
corporate disclosure policy information infrastructure taxation, 32–33
example, 421E component, 147 Volkswagen Group (Case 2–2),
Reports on Internal Control, legal environment component, 147 45–47
313–314E market infrastructure Direct taxes, 432
Code de Commerce (France), 54–55 component, 147 Disclosure, 1, 418, 418E
Code law countries, 16n, 31–32, 32E OECD fifth principle, 149E See also Reporting and disclosure
and accounting classification, regulatory environment disclosure development,
38–39 component, 147 119–120, 119n
Colgate-Palmolive Company, Volvo governance disclosure, 150E management disclosure
auditor’s report on financial Corporate income tax, 433 choices, 121
statements, 89 Cost accounting allocations, 446 prospective, 124n
Collectivism, 34 Cost-based transfer pricing regulatory requirements, 121–122
Common law countries, systems, 453 U.S. SEC financial reporting
16n, 31–32, 32E Cost-plus pricing method, 455–457 debate, 122–123
and accounting classification, 38–39 Cross-border economic voluntary, 120–121
Comparable profits method, 457 interactions, 3 Distribution, changes due to
Comparable uncontrolled price equity listing and issuance, information technology, 3
method, 454 18–19, 19E Do the Differences Really Matter?
Comparable uncontrolled mergers and acquisitions, 12–13 (Case 3–2B), 83
transaction method, 454 Currency Double-dip, 236–238
Comparative accounting/ behavior of related currencies, 395 Double taxation. See Foreign-source
the Americas and Asia, speculating in foreign currency, income taxation and double
84–85, 85E, 111E 417–418 taxation
Index 471
E-Centives, Inc.-Raising Capital in FAS No. 52 (U.S.), 175–176 types of inflation adjustments,
Switzerland (Case 1–1), 28–29 features, 189–192 217–218
Emerging markets growth, 13–17, historical cost, 193 Financial return perspectives,
14–15E income issues, 193 344–345
Enron scandal, and Sarbanes-Oxley managed earnings, 193–194 Financial risk management, 388–389
Act, 89 management information and See also Exposure management;
Entry Standard/Germany, 18 hyperinflation, 353–357 Protection strategies
Environmental risks/transfer measurement issues, 192–194 accounting vs. economic
pricing, 451–452 reporting perspective, 192 exposure, 401–407
Euronext, NYSE acquisition of, 18 translation and remeasurement, accounting role in, 392–414
European Union (EU), 265 196A benchmarks, 422
EU Commission, 256 translation flowchart, 191E derivative measurement, practical
Fourth, Seventh, and Eighth translation when foreign currency issues, 413–414
Directives, 266, 267E is functional currency, 190, 192 disclosure, 418–422
new approach and integration translation when local currency essentials, 391
of European financial markets, is functional currency, 190 exchange rate changes,
268–269 translation when parent currency forecasting, 394–396
statutory audit directive and U.S. is functional currency, 190 Exposure Identification (Case
Sarbanes-Oxley Act, and two-transaction method 11–1), 426
comparison, 267E for foreign currency hedge of net investment in a
success of harmonization efforts, transactions, 177 foreign operation, 416–417
267–268 Femininity/masculinity, 34 hedge of recognized asset or
transparency directives (2007), Financial control, 422 liability or unrecognized firm
266–267 control points, 422 commitment, 414–416
Exchange rates Financial control issues, 357–358 protection strategies, 404–407
See also Floating exchange domestic vs. multinational control reasons for, 391–392
rates/risk management system, 358–360 speculating in foreign currency,
converting foreign accounts to exchange rate changes analysis, 417–418
single reporting currency, 8 364–367 translation exposure, 396–400
Exchange-related financial operational budgeting, 360–364 terminology, 390E
instruments, 405–406E Financial futures/accounting Value At Risk:What Are Our
Exchanges, growth of listings, for, 409–412 Options? (Case 11–2), 426–430
13, 14–15E Financial innovation. See Risk Floating exchange rates/risk
Exposure management management, 394
accounting vs. economic, 401–407 Financial instruments accounting vs. economic
to exchange rate risk, 179 (exchange-related), 405–406E exposure, 401–407
measurement, 396 Financial reporting contractual hedges, 405–407
translation, 396–400 and changing foreign exchange exchange risk management, 169
Exposure Identification rates, 8 exposure measurement, 396
(Case 11–1), 426 and changing inflation rates, 10 forecasting exchange rate
Exposure management and foreign statement readers, 10 changes, 394–396
See also Protection strategies IFRS, 52 operational hedges, 404
accounting exposure Financial reporting and changing protection strategies, 404–405
illustration, 398E prices, 210–212 translation exposure, 396–400
accounting vs. economic Accounting For Foreign Forecasting, 292
exposure, 401–407 Inflation:A Case Analysis Foreign currency considerations,
budgeted cash flows by (A7–1), 238–241 298–302
country, 402E changing prices defined, 210–216 Foreign currency translation, 164,
income statement exposure current-cost adjustments, 222–225 178–188, 178E
forecast, format, 399E general price-level adjusted adjustments, 185–187
multicurrency transaction current costs, 225–227 adjustments and objectives, 187
exposure, 401E general price-level adjustments, appropriate current rate, 185
potential foreign exchange loss 218–222 background and terminology,
calculation, 398E IASB, 233 169–172, 171–172E
translation exposure, 396–400, 397E Icelandic Enterprises (Case 7–2), elsewhere, 195
Exxon-Mobil Oil, functional 246–247 exchange rates, balance sheet, 178E
currency choice, 193 inflation issues, 234–238 FAS No. 52, 175–176, 177,
Kashmir Enterprises (Case 7–1), 189–192, 196A
Fair presentation 245 financial statement effects,
vs. legal compliance accounting, national perspectives on inflation 181–187, 182E, 183E
34, 39–41 accounting, 227–233 financial statement effects of
and substance over form, 40 potential for misleading financial alternative translation rates,
Fair value asset valuation method, 53 statements, 216–217 172–173, 174E
472 Index
Foreign currency translation General Electric Company, currency swaps, 412

(Continued) accounting for foreign financial futures, 409–411, 410E
foreign currency transactions, inflation, 238–241A FX forward contracts, 409, 410E
174–176, 175E General price-level, 210 practice issues, 413–414
glossary of terms, 171–172E General price-level adjustments, Hedges, 403
IAS 21, 189–192 218–222 balance sheet hedges, 404
and inflation, 194–195 inflation-adjusted income contractual hedges, 405–407,
Managing Offshore Investments: calculations, example, 220 405–406E
Whose Currency? (Case 6–2), object of, 219–222 hedging strategies, 183
206–209 price index, usage, 218–219 of net investment in a foreign
measurement issues, 192–194 Germany operation, 416–417, 417E
method and circumstance accounting measurements, 64–65 operational hedges, 404–405
considerations, 183–185 accounting practices, 286–287 of recognized asset or liability
multiple-rate methods, 179–181 accounting regulation and or unrecognized firm
problems due to currency enforcement, 61–62, 63E commitment, 414–416, 415E
movements, 172 changes and characteristics in Heineken, geographic distribution
Regents Corporation (Case 6–1), accounting environment, 60–61 of sales, 6
204–205 financial reporting, 62–64 Hewlett-Packard (H-P), outsourcing
single-rate method, 178–179 Global accounting and auditing example, 3, 4E
single-transaction perspective, standards, 249, 275 Historical cost asset valuation
176–177 criticisms of international method, 53
translation reasons, 168–169 standards, 252 Historical rate method to translate
Foreign direct investment, 6 harmonization/convergence foreign currency balances,
Foreign equity option prices, 395 debate, 253 172–173
Foreign exchange (taxation) international organizations Holding gains/losses, 235
considerations, 443 promoting convergence,
Foreign Investment Analysis: 255–256, 257–259E IAS 21, 189–192
A Tangled Affair (Case 10–1), key historical events, 253–255 See also FAS No. 52 (U.S.)
384–385 PetroChina Company Limited Icelandic Enterprises (Case 7–2),
Foreign operations. See Performance (Case 8–1), 279 246–247
evaluation of foreign reconciliation and mutual ICI performance evaluation
operations recognition, 252–253 practices, 374–377
Foreign-source income taxation and survey of international foreign currency effects, 376–377
double taxation, 439–443 convergence, 250–253 Independent discipline approach
foreign exchange Whither The Withering Standard to accounting development, 37
considerations, 443 Setters? (Case 8–2), 280 India, 106–108
foreign tax credit, 439–441, 441E Global Benchmarks: Infosys accounting measurements,
tax credits limits, 441–442 Technologies Limited 109–110
tax treaties, 442 (Case 1–2), 29 accounting regulation and
Foreign tax credit, 439–441, 441E Global competition, 12, 9E, 340 enforcement, 108–109
Forward exchange quotations, 395 Global Reporting Initiative (GRI), 132 financial reporting, 109
Forward-looking information, 124 Global retail hedge fund Indirect taxes, 432
Forward market, 170 investments, projected Individualism, 34
Forward rate, 409 growth, 13 Inflation, 214
France Goldman Sachs, 407 See also Management information
accounting measurements, Grail Partners, 13 and hyperinflation
59–60, 59E “Green-washing,” 130 Accounting For Foreign Inflation:
accounting regulation and Greenwich Associates, 13 A Case Analysis (A7–1),
enforcement, 55–57 Grupo Modell S.A., changing prices 238–241
advocacy of national uniform example, 210–212, 211E, accounting (national perspectives
accounting, 54–55 226–227 on), 227–233
financial reporting, 57–59 accounting terms (glossary),
Functional currency, 174, 175E, 189 Harmonization, 249 214–215E
FX forward contracts/accounting vs. convergence debate, 253 differentials, 395
for, 409, 410E Hedge fund investments. See Global “double-dip” avoidance, 236–238
retail hedge fund investments, foreign, 235–236
GAAP (generally accepted projected growth and foreign currency translation,
accounting principles), 49 Hedge products/accounting 194–195
coping mechanisms for for, 407–413 gains and losses, 234–235
accounting principle accounting treatments, 412–413 holding gains/losses, 235
differences, 291–292 currency options, 411–412, 410E issues, 234–238
Index 473
transaction-based reporting and local GAAP and institutional J.P. Morgan Chase, 392n
model, 357 arrangements, 49 risk-mapping cube, 392–393, 393E
types of adjustments, 217–218 SEC response, 264–265
Information access, International financial statement Kaizen cost concept, 368
295, 296–298E, 298 analysis, 281 Kashmir Enterprises (Case 7–1), 245
Information technology, impact on See also Auditing and financial Keiretsu business model (Japan), 97
economics of production and statement analysis
distribution, 3 accounting analysis, 285–287 LaFarge, disclosure examples, 125,
Information timeliness, 295 business analysis framework, 126–128E
Infosys, 29 283–285 Language and terminology
benchmarking example, 12, 9E challenges and opportunities, barriers, 303
Financial Statements/Selected 281–283 Legal compliance, 41
notes, 25(A1–3) factors impacting business vs. fair presentation accounting,
Global Benchmarks: Infosys analysis framework, 295–303 34, 39–41
Technologies Limited international financial analysis, Legal systems and accounting
(Case 1–2), 29 288–292 classification, 38–39
Risk Management Report, prospective analysis, 292–295 London Stock Exchange (LSE), 15
388, 389E Sandvik (Case 9–1), 325–331 Long-Term Capital Management, 406
Inland Steel Company, comptroller’s International monetary reserves and
reporting philosophy, 236 debt capacity, 395 Macroeconomic approach to
Interest rate differentials, 395 International Organization of accounting development, 37
International accounting Securities Commissions Management information and
defined, 1 (IOSCO), 255, 261, 260–261E, hyperinflation, 353–357
diversity, 3 269–270, 270–272E sales revenue, 357–360
International Accounting Standards International Ratio Analysis (A9–2), transaction-based reporting
Board (IASB), 8, 41, 50, 255, 320–322 model, 359–360
256–265 International taxation and transfer Management information systems,
See also Global accounting and pricing, 11, 431 350–353
auditing standards See also Transfer pricing framework for systems
core standards and IOSCO future, 460 design, 351E
Agreement, 261–262, 260–261E initial concepts, 432 information issues, 352–353
corporate transparency issues, 282 international transfer systems issues, 350–353
and EU Directive, 10 pricing/complicating Managerial planning and
new structure, 262–263 variables, 448–452 control, 340
recognition/support for, 264 Muscle Max:Your Very Assessing Foreign Subsidiary
SEC (U.S.) response to, 264–265 Own Personal Trainer Performance In A World
International business (Case 12–2), 470 Of Floating Exchange Rates
and liberalized national controls, 3 national tax systems diversity, (Case 10–2), 386–387
International business strategy 432–439 business modeling, 341
analysis, 283–285 The Shirts Off Their Backs capital budgeting, 343–344
information availability, 284 (Case 12–1), 468–469 financial control issues, 357–367
recommendations for analysis, tax planning dimensions, financial return perspectives,
285, 284E 443–448 344–345
International Federation taxation of foreign-source income financial statement format for
of Accountants (IFAC), and double taxation, 439–443 control (local currency), 371E
255, 272–274 trade-off, strategy, 452 Foreign Investment Analysis:A
International financial analysis, transfer pricing methodology, Tangled Affair (Case 10–1),
288–292, 289E 453–459 384–385
cash flow analysis, 291 transfer pricing practices, 460 management information and
coping mechanisms, 291–292 Investor-oriented markets hyperinflation, 353–357
ratio analysis, 288, 291 four principles of operation, 122 management information
International Financial Reporting investor protection objective, 122 systems, 350–353
Interpretations Committee market quality objective, 122 measuring expected returns,
(IFRIC), 8 345–348
International Financial Reporting Japan, 96–97 multinational cost of capital,
Standards (IFRS), 8, 10, 40, accounting measurements, 348–350
261–263 100–101 performance evaluation of foreign
accounting measurements, 53–54 accounting regulation and operations, 369–374
in the European Union, 52, 52E, enforcement, 98–99 performance evaluation practices:
268–269 “bubble economy,” 97 ICI, 374–377
financial reporting, 52–53 financial reporting, 99–100 performance standards, 377–379
474 Index
Managerial planning and accounting regulation and Power distance, 34

control (Continued) enforcement, 69–71 Practice systems and accounting
planning tools, 341–343 financial reporting, 71–72 classification, 39–41
strategic costing, 367–368 New York Stock Exchange Price indexes, 218–219
unit vs. managerial performance, (NYSE), 15 Price-level-adjusted-current-cost
370–371 Euronext acquisition, 18 model, 225–227
Managing Offshore North American Free Trade Production, changes due to
Investments:Whose Currency? Agreement (NAFTA), 93 information technology, 3
(Case 6–2), 206–209 Norway, diversity of audit opinions, Profit-split methods, 457
Market-oriented transfer prices, 453 306E Prospective analysis, 292–295
Market risk, 389n Novartis, 18n Protection strategies, 404
Masculinity/femininity, 34 balance sheet hedges, 404
Measurement, 1 Offshore holding companies, 445 contractual hedges, 404–405
exposure measurement, 396 Old Habits Die Hard (Case 3–1), exchange-related financial
measuring expected returns, 81–82 instruments, 405–406E
345–348 Operational budgeting operational hedges, 404–405
Merrill Lynch, 407 issues/financial control
Mexico, 91–93 exchange rate variances, Qualified business unit, 443
accounting measurements, 96 three-way analysis, 363E
accounting regulation and local currency (LC) to parent Ratio analysis, 288, 291, 289E
enforcement, 93–94 currency (PC)/translations, International Ratio Analysis
financial reporting, 95–96, 95E 360–363 (A9–2), 320–322
Microeconomic approach to short-range planning, 360 Regents Corporation (Case 6–1),
accounting development, 37 Operational hedges, 404 204–205
Monetary-nonmonetary method Orange County, 407 Reporting and disclosure, 119
of foreign currency translation, Organization for Economic See also Disclosure
180–181 Cooperation and Development annual report disclosures in
Monetary policy, 395 (OECD), 253, 275 emerging market countries,
Morgan Stanley, 13, 407 Principles of Corporate 158–159, 159E
Multinational company (MNC) Governance, 275 corporate governance disclosures,
defined, 1 Outsourcing, 3–4, 4E 132–139
global scope of, 4 Over-the-Counter (OTC) market development of disclosure,
and management control (U.S.), impact of SEC reporting 119–123
issues, 10–11 requirements, 123 of forward-looking information,
Multinational cost of capital, 124–125
348–350 Pension fund investment, 17n implications for financial
Multinational operations, growth People’s Republic of China, 101–102 statement users and
and spread, 4, 5–6E, 6, 7E, 8, 10 accounting measurements, 106 managers, 159
Muscle Max:Your Very Own Personal accounting regulation and Internet business reporting and
Trainer (Case 12–2), 470 enforcement, 103–105, 104E disclosure, 157–158
Big Bang, 104 In the Green, environmental
NASDAQ, 15 financial reporting, 105–106, 287 disclosure (Case 5–1), 162
National budget, 395 global economic emergence, 17 practices, 124–158
National cultural dimensions, 34 Performance evaluation Seeing Is Believing (Case 5–2),
National tax systems considerations/transfer 162–163
diversity, 432 pricing, 452 segment disclosures,
foreign tax incentives, 437–438 Performance evaluation of foreign 125, 126–128E
international harmonization, operations, 369–374 social responsibility reporting,
438–439 consistency, 369–370 130, 131–132, 133–138E,
tax administration systems, measurement issues and 139–145E, 146–148E
436–437 changing prices in Resale price method, 454–455
tax burdens, 435–436, 434E evaluation, 374 Restatement algorithm, 292
tax competition, 438 performance criteria, 372–374 Restatement of Japanese GAAP
types of taxes, 432–433, 433E practices (ICI example), 374–376 Financial Statements to a U.S.
Nestlé unit vs. managerial performance, GAAP Basis (A9–1), 291, 292,
accommodations for foreign 370–371 316–320
financial statement readers, 10 Performance standards, 377–379 Return on capital employed
foreign operations, 6, 6E, 8 value reporting, 379–380, 380E (ROCE), 457
The Netherlands PetroChina Company Limited Risk management, 11
accounting measurements, 72–73 (Case 8–1), 279 See also Financial risk management
accounting practices/paradoxes, Planning tools, 341–343, 342E risk-mapping cube, 392–393, 393E
68–69 Plan Comptable, 33, 54 terminology, 390E
Index 475
Roche, 18n Tax credits Unisys, geographic distribution of

auditor’s report on sustainability foreign, 439–441, 441E services, 4
reporting, 146–148E limits to, 441–442 United Kingdom
employment disclosure, 133–138E pooling, 446 accounting legacy, 73
safety and environmental Tax-planning dimensions, 443–448 accounting measurements, 77–79
disclosure, 139–145E Controlled Foreign Corporations accounting regulation and
Russel, 13 (CFC) and Subpart F Income, enforcement, 73–76, 75E
444–445 auditing reports, 305E
Saint-Gobain, financial reporting cost accounting allocations, 446 financial reporting, 76–77
example, 59, 59E financing decisions, 445 perspective on inflation
Sandvik (Case 9–1), 325–331 integrating international tax accounting, 229–230
Sarbanes-Oxley Act (U.S.), planning, 447–448 United Nations Intergovernmental
16, 88–89, 123 location and transfer pricing, 447 Working Group of Experts
and investor confidence, 311 offshore holding companies, 445 on International Standards
statutory audit directive organizational considerations, 444 of Accounting and Reporting
in European Union, tax credits pooling, 446 (ISAR), 256, 275
comparison, 267E Tax treaties, 442 United States, 86–87
Schering AG Taxation. See International taxation accounting measurements,
disclosure policy, 119n and transfer pricing; National 90–91
forecast disclosure example, 125 tax systems accounting regulation and
Seeing Is Believing (Case 5–2), Temporal method of foreign enforcement, 87–90
162–163 currency translation, 180–181, auditing reports, 305E
SFAS No. 33, 227 198–200A, 199E financial reporting, 90
SFAS No. 89, 228 Transfer pricing, 11, 431 perspective on inflation
The Shirts Off Their Backs complicating variables/ accounting, 227–228
(Case 12–1), 468–469 international transfer pricing, Unocal, functional currency
Single-rate method of currency 448–452 choice, 193
translation, 178–179, 184, location and transfer Unofficial rates, 395
197–198A, 197E pricing/international tax
Single transaction perspective, considerations, 447 Valuation, 292–294
176, 176E methodology, 453–459 Value-added tax, 433, 435E
Socialist market economy, 85, 102 practices, 460 Value-at-risk, 389n
Societal values, 34–35 Transfer tax, 433 Value At Risk:What Are Our
Specific price change, 214 Translation, 168 Options? (Case 11–2),
Speculating in foreign currency, See also Foreign currency 429–433
417–418 translation Value-drivers, 393
Spot market, 169 Translation accounting Value reporting, 379–380, 380E
SSAP No. 16, 229–230 development, 188–189 VESTEL, inflation-adjusted income
and effects of inflation, 234 Translation adjustment statement example, 221,
Stakeholders, 130 approaches, 185 221–222E, 233
Standard setting, 51 deferral, 186 Volkswagen Group (Case 2–2),
Standing on Principles (Case 4–1), deferral and amortization, 186–187 45–47
115–116 no deferral, 187 Volvo
Statement format differences, partial deferral, 187 geographic distribution of
302–303 Translation exposure, 396–403, 397E, services, 4
Stock exchange web sites, 398E, 399E, 400E, 401E governance disclosure,
24–25(A1–2) Translation gains and losses. 150–157E
Strategic costing, 367–368 See Translation adjustment
“Sustainability” reports, 130 approaches Western Europe, capital markets,
Swap transaction, 171 Translation gains and losses vs. 16–17
Sweden, diversity of audit transaction gains and losses, What Difference Does It Really
opinions, 306E 173, 174E Make? (Case 3–2A), 82
Swiss Exchange New Market Transparency, 282 Whither The Withering Standard
(SWX), 28 “Triple-bottom-line” reporting, Setters? (Case 8–2), 280
and biotechnology companies, 18n 130, 131 Withholding taxes, 433
Switzerland, diversity of audit Two-transaction perspective, World Federation of Exchanges
opinions, 306E 177, 177E (WFE), 256
World trade by region, 4, 5E
Tariff considerations/transfer UBS, 407 World Wide Web
pricing, 450 Uncertainty avoidance, 34–35 country information, 284, 284E
Tax considerations/transfer pricing, Uniform approach to accounting Internet business reporting and
448–451, 449E development, 37–38 disclosure, 157–158
476 Index
World Wide Web (Continued) WorldCom XBRL (eXtensible Business

sites for company research, and accounting quality Reporting Language), 157–158,
296–298E analysis, 286 351–352
stock exchange web sites, scandal and Sarbanes-Oxley
24–25(A1–2) Act, 88 Yamaha, concerns about
universal financial reporting WOTS-UP analysis, methodology for changing
computer language, 157–158 341, 341n, 342E, 346 prices, 8

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To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.

Accounting Alternative Investment Market international financial analysis,

Cases (Continued) Casino Capital (Case 4–2), 116–118 Currency options/accounting

Foreign currency translation General Electric Company, currency swaps, 412

Managerial planning and accounting regulation and Power distance, 34

Roche, 18n Tax credits Unisys, geographic distribution of

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