Professional Documents
Culture Documents
key question
These
Investors
Corporations concerned with foreign direct
investment
Many
Inventory measurement
Generally based on
lower of cost or
market with market
defined as either
Construction contracts
Wide usage of
percentage-ofcompletion method
Completed contract
method Switzerland,
China, Japan
Measurement basis
used
Depreciation
accounting
R&D costs
Expensed immediately in
Anglo-American and
Germanic countries
Brazil has a more flexible
approach
Some countries allow
capitalizing the borrowed
cost of assets
Retirement benefits
Taxation
Accounting income
strongly influenced by
the tax system in France,
Germany, Brazil,
Switzerland
Business Combinations
Foreign
Currency Translation
Big
Example 2
U.K. earnings
110 million
U.K. earnings
90 million
U.S. earnings
100 million
U.S. earnings
100 million
Index
1 [100-100]/100 = 1.1
Index
1 [100-90]/100 = 0.9
120
1 [-15/100] = 1.15
1 [-5/100] = 1.05
(15)
(5)
(100)
1.2
A Global Perspective on
Earnings Management
A Global Perspective on
Earnings Management
Japan
Factors Influencing
Measurement Differences
U.S.
and U.K.
Factors Influencing
Measurement Differences
Continental
Factors Influencing
Measurement Differences
Continental
Global Accounting
Convergence