International Accounting Notes
Subject Overview
The first Accounting and Finance elective, covering international accounting concepts for multinational companies — accounting diversity and IFRS convergence, international taxation and transfer pricing, foreign currency translation and hedging, and a comparison of US GAAP and IFRS including ethical issues like window dressing. A 4-credit elective theory paper.
Subject at a glance
4
Units
21
Topics
4
Credits
4
Infographics
Unit-wise Syllabus
4 units — open any unit for detailed topic-wise notes, diagrams and important exam questions
- Worldwide accounting diversity
- international convergence of financial reporting
- causes of international differences
- IFRS overview
- nature and structure of the IASB/IFRSF
Legal system
Common law vs code law
Sources of finance
Equity markets vs banks
Taxation
Link between tax and accounting
Inflation
High inflation needs adjustments
Culture
Secrecy, conservatism
Politics and economic ties
Study guide
This unit covers worldwide accounting diversity, causes of international differences, convergence of reporting, an overview of IFRS and the structure of the IASB and IFRS Foundation. Learn why countries historically followed different accounting systems.
- International transfer pricing
- IFRS 10 consolidated financial statements
- IAS 27 separate financial statements
- IFRS 3 business combinations
- IAS 28 investments in associates and joint ventures
- IFRS 10
- Consolidated financial statements: control
- IFRS 3
- Business combinations: acquisition method
- IAS 27
- Separate financial statements
- IAS 28
- Associates and JVs: equity method
- IFRS 11
- Joint arrangements: operations vs ventures
- IFRS 12
- Disclosure of interests in other entities
Study guide
You study international transfer pricing, IFRS 10 consolidated statements, IAS 27 separate statements, IFRS 3 business combinations and IAS 28 associates and joint ventures. Practise a simple consolidation.
- IFRS 11 joint arrangements
- IFRS 12 disclosure of interests in other entities
- IAS 21 effects of changes in foreign exchange rates
- foreign currency transactions and hedging foreign exchange risk
- translation of foreign currency financial statements
Assets and liabilities
Closing rate
Other comprehensive income
Income and expenses
Rate at transaction date (or average)
Other comprehensive income
Monetary items in own books
Closing rate
Profit or loss
Study guide
You study IFRS 11 and 12, IAS 21 on foreign exchange rates, foreign currency transactions, hedging exchange risk and translation of foreign statements. Practise translating a foreign subsidiary's statements.
- Strategic accounting issues in MNCs
- international corporate social reporting
- principal differences between US GAAP and IFRS
- the road map for convergence
- first-time adoption of IFRS
- ethical issues in international accounting including window dressing
Approach
Principles-based
More rules-based
Inventory: LIFO
Not allowed
Allowed
Revaluation of PPE
Allowed
Not allowed
Development costs
Capitalised if criteria met
Generally expensed
Study guide
You study strategic accounting issues in multinational companies, international social reporting, the main differences between US GAAP and IFRS, the road map for convergence, first-time IFRS adoption and ethical issues such as window dressing. Make a short table of the main US GAAP and IFRS differences.
Why International Accounting Matters
Global business needs global accounting skills, and knowledge of IFRS is valuable for careers in multinational firms, Big Four audit and ACCA or CPA pathways.
How to Prepare for International Accounting
- Learn the key IFRS standards and their numbers.
- Practise consolidation and foreign currency translation.
- Compare Ind AS, IFRS and US GAAP.
International Accounting: Frequently Asked Questions
What is IFRS?
International Financial Reporting Standards are accounting standards issued by the IASB and used in many countries to make financial statements comparable.