International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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Which of the following is not a potential problem caused by differences in financial reporting practices across countries?a. Consolidation of financial statements by firms with foreign operations is more difficult.b. Firms incur additional costs when attempting to obtain financing in foreign countries.c. Firms face double taxation on income earned by foreign operations.d. Comparisons of financial ratios across firms in different countries may not be meaningful.
Which of the following historical reasons for accounting diversity could explain why accounting standards would be more detailed in some countries than in others?a. Different rates of inflation across countries.b. Different legal systems across countries.c. Differences across countries in the extent to which financial statements are the basis for taxation.d. Political and economic ties between countries.
ASSIGNMENT
Explain briefly how these factors can influence the adoption of IFRS by a country.
Extent of economic development
Nature of domestic business ownership and financing systems
Colonial inheritance
Cultural differences
Legal systems
Tax policies or laws
Sources of funding
Huge cost of developing own standards
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- Which of the following is not a potential problem caused by differences in financial reporting practices across countries? Choose the correct.a. Consolidation of financial statements by firms with foreign operations is more difficult.b. Firms incur additional costs when attempting to obtain financing in foreign countries.c. Firms face double taxation on income earned by foreign operations.d. Comparisons of financial ratios across firms in different countries may not be meaningful.arrow_forwardA. Capital flows B. Direct foreign investment C. Indirect foreign investment occurs when a company from one country makes a physical investment, such building a manufacturing facility, in another countryarrow_forwardWhich of the following historical reasons for accounting diversity could explain why accounting standards would be more detailed in some countries than in others? Choose the correct.a. Different rates of inflation across countries.b. Different legal systems across countries.c. Differences across countries in the extent to which financial statements are the basis for taxation.d. Political and economic ties between countries.arrow_forward
- .Discuss how you would expect the financing choices of the following firms to differ and explainthe reasons for the differences. Include international and Caribbean examples where possible. A sole trading firm, compared to a conglomerate.arrow_forwardPlease compare and contrast the corporate structure of United States and Japan. What are the advantages and disadvantages of each?arrow_forwardOne of the ways to analyze a company’s financial performance is to compare its performance with those of Multiple Choice foreign governments. manufacturers producing their products. its competitors. the U.S. government.arrow_forward
- Direct foreign investment into the United States represents a ____. capital outflow trade outflow capital inflow trade inflowarrow_forwardWhat are the primary challenges that arise in accounting for and analyzing international transactions? Illustrate how differences in accounting standards, currency exchange rates, cultural factors, and regulatory requirements can impact the financial reporting and analysis of multinational companies operating in various countries.arrow_forwardQuestion What does International transfer pricing generally entail ? Select an answer: ( A ) the premium (ar tax) charged when products are moved across international borders ( B ) factoring in the various tax rates of the jurisdictions from where a product is coming from and where it is going to ( C ) a corporation selling products a different prices in different countries ( D ) a corporation selling products from one division of the corporation to another division of the corporation located in a different countryarrow_forward
- How important of international trade (imports and exports) to the world economy? What accounting issues arise for a company as a result of engaging in international trade (imports and exports)? Why might a company be interested in investing in an operation in a foreign country (foreign direct investment)?arrow_forwardGenerally, is the cost of capital for investing in international countries more or less than investing in domestic countries and explain whyarrow_forwardMatch each term in Column A with its related definition in Column B. Column A 1. ____________ Maquiladora 2. ____________ Import 3. ____________ Joint venture 4. ____________ Export 5. ____________ MNC Column B a. A company that does business in more than one country in such volume that its well-being and growth rest in more than one country. b. A company purchases materials or parts from another company that is located in a foreign country. c. A company sells its product to purchasers located in foreign countries. d. A type of partnership in which investors from one country co-own the enterprise with investors from another country. e. A manufacturing plant located in Mexico that processes imported materials and reexports them to the United States.arrow_forward
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