From this and earlier chapters, explain how financial reporting profit can differ from taxable income, and how this varies internationally.
> The following data were extracted from the 2018 financial statements of Penske Automotive Group, Inc. This company operates automobile dealerships, mostly in the United States, Canada, and Western Europe, and commercial truck dealerships in Australia, Ne
> The accounting records of Blue Bird Co. showed the following balances at January 1, Year 2. Transactions for Year 2 were as follows. Required a. Organize the class into three sections, and divide each section into groups of three to five students. Assign
> Complete ATC 5-5 using an Excel spreadsheet Data from ATC 5-5: Domino’s Pizza, Inc. had 5,486 franchised restaurants in the United States and 85 in international markets as of December 30, 2018. Signet Jewelers Limited claims to be the
> Obtain Target Corporation’s annual report for its 2019 fiscal year (year ended February 1, 2020) at http://investors.target.com using the instructions in Appendix B, and use it to answer the following questions: a. What was Target’s inventory turnover ra
> The following accounts, balances, and other financial information are drawn from the records of Vong Company for Year 2. The Cash account revealed the following cash flows. Required: Build an Excel spreadsheet to construct a multistep income statement, s
> The Kroger Co. was founded in 1883 and is one of the largest retailers in the world, based on annual sales. Publix Super Markets, Inc. operates 1,167 grocery stores throughout the southeastern and mid-Atlantic United States. It is employee owned, and its
> Bloomin’ Brands, Inc. is the corporation behind five restaurant chains: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, Fleming’s Prime Steakhouse and Wine Bar, and Roy’
> Presented here is selected information from the 2018 fiscal-year 10-K reports of four companies. The four companies, in alphabetical order, are: Advance Micro Devices, a global semiconductor company; AT&T, Inc., a company that provides communications
> At the end of Year 1, the following information is available for Short and Wise Companies. Required: a. Set up the spreadsheet shown here. Complete the income statements by using Excel formulas. b. Prepare a common size income statement for each company
> What is the difference between a multistep income statement and a single-step income statement?
> Obtain Target Corporation’s annual report for its 2019 fiscal year (year ended February 1, 2020) at http://investors.target.com using the instructions in Appendix B, and use it to answer the following questions: a. What was Target’s gross margin percenta
> The following data were taken from the 2018 annual reports of Biogen, Inc. and Amgen Inc. Both companies are leaders in biotechnology. All dollar amounts are in millions. Required: a. For each company, compute the debt-to-assets ratio, return-on-assets r
> The following data were taken from Netflix, Inc.’s 2018 annual report. All dollar amounts are in millions. Required: a. For each year, compute Netflix’s debt-to-assets ratio, return-on-assets ratio, and return-on-equit
> Consider the following brief descriptions of four companies from different industries. Michaels Companies, the parent company of Michaels craft stores, claims to be the largest arts and crafts specialty retailer in North America. It operates over 1,250 r
> At the end of the accounting period, Adams Company’s general ledger contained the following adjusted balances. Required: 1. Set up the preceding spreadsheet format. 2. Record the closing entries in the Closing Entries column of the spre
> Obtain Target Corporation’s annual report for its 2019 fiscal year (year ended February 1, 2020) at http://investors.target.com using the instructions in Appendix B, and use it to answer the following questions: a. What was Target’s debt-to-assets ratio
> a. Use an Excel spreadsheet to construct the required financial statements. To complete Requirement b, use formulas where normal arithmetic calculations are made within the financial statements (in particular the statement of changes in stockholders&acir
> The following data are based on information in the 2018 annual report of YUM! Brands, Inc. YUM! Brands is the parent company of KFC, Pizza Hut, and Taco Bell. As of December 31, 2018, the parent company owned or franchised over 48,000 restaurants in 140
> a. Enter the following headings for the horizontal statements model onto a blank spreadsheet. b. Under the appropriate headings, record the effects of each of the following accounting events for the first month of operations. The first event has been rec
> The following data are based on information in the 2019 annual report of Cracker Barrel Old Country Store. As of August 2, 2019, Cracker Barrel operated 660 restaurants and gift shops in 45 states. Dollar amounts are in millions. Required: a. Calculate t
> How is net sales determined?
> Is it easier to reach agreement on international standards on auditing than on international accounting standards? If so, why?
> Is there a single best method of currency translation?
> Are gains on unsettled foreign currency balances realized? When should they be recognized as income?
> Discuss how different attitudes to prudence can affect foreign currency translation policies.
> Does accounting translation exposure matter? Explain your reasoning.
> Discuss the view that the individual company financial statements in Germany are useful only for tax purposes.
> Compare the influence of tax law on financial reporting in the United Kingdom with its influence in Germany.
> Using the numerical reconciliation shown in this chapter and the information in Chapter 2, comment on the adjustments necessary when moving from German accounting to US or IFRS accounting.
> ‘German accounting rules for individual companies are ideal for domestic companies with no international connections.’ Discuss.
> The formats in the appendices to this chapter, relating to three EU countries, all comply with the EU Fourth Directive. Comment on the differences between them.
> Explain how international differences in the ownership and financing of companies could lead to differences in financial reporting.
> Why are leased assets accounted for differently in individual company financial statements in the United Kingdom and France?
> Is it useful to regulate, as for example in France, the keeping of accounting records, as well as the preparation of financial statements?
> Why has the FRC in the United Kingdom decided to converge (partially but not completely) UK standards for individual companies with IFRS for SMEs?
> Compare the composition and the roles of the FRC in the United Kingdom and the ANC in France.
> ‘The UK accountancy profession no longer has any influence on the accounting rules relating to individual financial statements.’ Discuss.
> What are the arguments for and against a national accounting plan?
> What effect, if any, has harmonization in the European Union had on non-member states in Europe?
> Discuss the choice of national charts of accounts in post-communist Russia and Romania.
> Compare the importance of the influences of Anglo-Saxon accounting and continental European accounting in Eastern Europe during the 1990s.
> One of the original aims of the Seventh Directive was to assist with the supervision of multinational enterprises by their host countries. Examine and discuss arguments for and against such a desire for supervision.
> Why is English the leading language of international corporate financial reporting?
> To what extent did the EU Seventh Directive harmonies consolidation accounting between Germany and the United Kingdom?
> ‘The EU Seventh Directive was a much more useful harmonizing tool than the Fourth Directive was.’ Discuss.
> Compare the importance of the influences of Anglo-Saxon accounting and continental European accounting in Eastern Europe and China in the 1990s.
> Which was more successful at harmonization until 2001: the IASC or the European Union?
> Why, and to what extent, has post-Communist Romania adopted Anglo-Saxon rather than French-style corporate financial reporting?
> Why is auditor independence a problem in Central and Eastern Europe?
> Suggest reasons for the adoption or non-adoption of IFRS for SMEs in China, France, Japan, South Africa and the United States.
> Explain how IFRS for SMEs differs from full IFRS. In your opinion, does it differ enough?
> Imagine that you are a financial analyst used to US or IFRS company statements; what difficulties would be met when assessing Japanese companies?
> Why are some EU companies listed on non-European (especially North American) stock exchanges?
> ‘Japan is unique, so Japanese accounting is unique.’ Discuss.
> Discuss the causes of differences in financial reporting and its regulation (giving relevant examples of the effects) between your own country and Japan.
> Compare and contrast the roles of the JICPA and the AICPA.
> Why did Chinese accounting develop differently from Eastern European accounting in the 1990s?
> From your knowledge of Japanese accounting, what characteristics do you think it has in terms of Gray’s (1988) model?
> Discuss the classification of Japanese accounting in Nobes’ (1998) model (see Figure 3.4). Which features give rise to this classification, and what have Japanese accounting and its environment in common with other countries in this group?
> Discuss the view that political lobbying could and should be reduced by giving preparers more say in the setting of accounting standards.
> Give examples of political lobbying of the IASC/B, explaining why and how lobbying has increased over the years.
> Why might it be expected that there would be more examples of political lobbying relating to the United States than to any other country?
> Discuss the role of a conceptual framework as a defense against political lobbying.
> Why are there more accountants per head of population in New Zealand than in France?
> Is there a connection between the amount of political lobbying in a country and the degree of independence of the standard-setter from (a) government departments and (b) the accountancy profession?
> Discuss the causes of differences in financial reporting and its regulation (giving relevant examples of the effects) between your own country and the United States.
> Which US accounting practices seem out of line with those of many other countries? What explanations are there for this?
> Would you describe the differences between IFRS and US GAAP as ‘major’? Will it be easy for the standard-setters to remove these differences?
> As pointed out in this chapter, the United States and the United Kingdom are reasonably similar with respect to the causes and nature of differences of financial reporting. Identify and discuss factors that may account for the existing differences in pra
> ‘The most important influence on US accounting has been and remains the SEC.’ Discuss.
> 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.
> 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?
> Which countries historically have been the home countries of MNEs? Are they the same countries from which international accounting firms have originated?
> Compare, as between US GAAP and IFRS, the consolidation of subsidiaries and the calculation and treatment of goodwill on consolidation.
> Explain how the scope of things included in consolidated statements has gradually grown over time under IFRS and US GAAP.
> Outline all the ways that one could in principle include a joint venture in a venturer’s financial statements. Which is the best?
> Explain the alternative uses of the equity method and how these differ as between US GAAP and IFRS.
> Explain how assets are measured under IFRS. How could this be improved?
> Are intangible assets recognized sufficiently under IFRS and US rules?
> Under what circumstances should next year’s wages and next year’s repair expenses be charged as expenses this year?
> Examine whether a deferred tax liability arising from temporary differences on the revaluation of an asset meets the IFRS definition of a liability.
> Explain, using various examples, the causes of deferred tax assets and deferred tax liabilities.
> Compare the degrees of prudence found in accounting for employee benefits in Germany, Italy and the United States.
> What factors have led to the establishment of multinational enterprises (MNEs)?
> Explain the differences between an allowance, a liability, a contingent liability, an obligation, a provision, an accrual, a fund and a reserve. State which set of accounting rules you have been using as the context for your answer.
> Explain the difference between ‘hedging’ and ‘hedge accounting’. In each case, what are the arguments in favor of doing them?
> ‘In recent years, the IASB has clearly been moving towards the use of current values rather than historical costs.’ Discuss.
> Explain why it is necessary to define either ‘asset’ or ‘expense’ from first principles, but not both. Why has the IASB chosen to define the former?
> ‘Substance over form is a recipe for failing to achieve comparability between financial statements of different enterprises.’ Discuss.
> Is it necessary and useful to have different valuation bases for different assets?
> Explain the various types of gains and losses included in OCI? Is it possible to identify a principle behind this?
> 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 (summarized in Tables 1.1 and 1.2) have been smaller if the com
> 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?
> Explain the advantages and disadvantages of writing accounting standards containing principles rather than rules.
> What factors have made possible the ‘internationalization’ of the world’s stock markets?
> Is worldwide application of IFRS going to solve the problems of international financial analysis?
> Two approaches to measuring conservatism are discussed in the chapter: the comparison of profit figures under different GAAPs; and asymmetric recognition of good and bad news. What are the advantages and disadvantages of each approach?
> How do preparers and users of annual financial statements of listed companies cope with international differences?
