St. Joseph’s College of Commerce (Autonomous)

END SEMESTER EXAMINATION –  APRIL 2011

M.Com. – IV SEMESTER

International Accounting

Time: 3 hours                                                                                          Max Marks: 100

Section-A

 

1. Answer ALL the following questions.     (2X10=20)

 

1. Define international accounting.
2. What do you mean by environmental reporting?
3. Give the meaning of comparable uncontrolled price method of transfer pricing.
4. Highlight on the role of financial reporting council.
5. What do you mean by code-law and common-law countries?
6. Give the meaning of Reportable Segment.
7. Differentiate between Transaction, Translation and Economic Exposure.
8. Give the meaning of foreign currency exposure.
9. 9. Elucidate on the three approaches to currency translation.
10. Explain resale price method of transfer pricing.

 

Section-B

 

1. Answer any FOUR of the following questions:      (4X5=20)

 

11. Highlight on the importance of international accounting.
12. Write a note on the functioning of the IASC.
13. Highlight on the Non-traditional methods of transfer pricing.
14. Elucidate on IFRS-8-Operating Segment.
15. Write a note on the management on foreign exchange risk.
16. Goodwill arising on the acquisition of a foreign operation and fair value adjustments are treated as assets / liabilities of the foreign operation and are expressed in the functional currency of the foreign operation-Discuss.

 

Section-C

III. Answer any THREE of the following questions:                           (3X15=45)

 

17. Briefly explain the ten environmental factors affecting the international accounting.

 

18. What do you mean by harmonisaton? How can harmonisaton be measured? And also explain the pressure from different parties to incorporate harmonisaton in financial reporting.

 

 

 

 

 

 

 

19. Briefly explain the Financial Reporting in any of the following two countries (Each carrying 7.5 Marks)
20. a) US
21. b) Germany
22. c) France
23. d) Australia

 

20. All entities that have a different functional currency from the group presentation currency must translate their financial information into the group presentation currency-discuss from inflationary and hyperinflationary economy angle.

 

21. Differentiate between:
    1. segment assets and segment liabilities
    2. segment revenue and segment expenses
    3. Business segment and geographical segment.

 

Section-D

 

1. Answer the following question: (1X15=15)

 

22. Aaron Duley, the CEO of Nickel Corporation, was discussing with his CFO, Michael Cucciare, whether the company should adopt international accounting standards for financial reporting purposes. Nickel Corporation is based in a country that permits the use of either international accounting standards or domestic GAAP.

“Michael, reporting under our domestic GAAP is much more costly to the company than reporting under International accounting standards. I understand that fewer disclosures are required under international accounting standards. Moreover, international accounting standards provide more choices when it comes to applying accounting methods to our financial statements to produce the most favorable results. And, to be honest with you, the company is going to have to report under our current domestic GAAP. I certainly don’t want that to happen while I’m CEO.”

“I hear you, Aaron, but converting to international accounting standards might look bad to investors. What if the public finds out that we were trying to hide the operating loss or switched to international accounting standards to manipulate the Bottom line? That could prove even more costly in the long run, while saving the company pennies now.”

 

 

 

 

 

 

1. Referring to the conversation above, should Nickel Corporation prepare this year’s financial statements in accordance with its domestic GAAP, or use international accounting standards? Justify your recommendations and address any concerns.

 

2. Assume you are the CFO of Nickel Corporation. How would you reply to the CEO’s suggestion? Summarize your response including why you opted for or against the adoption of international accounting standards.

 

 

3. In your opinion, is there anything ethically wrong with the CEO’s rationale fro the adoption if international accounting standards? Explain.

 

4. As Nickel Corporation’s auditor, would you agree to the switch to international accounting standards?

 

 

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