Multinational Accounting and Tax Functions
TRANSLATION OF FOREIGN CURRENCY FINANCIAL STATEMENTS Even though MNEs receive reports originally developed in a variety of different currencies, they eventually must end up with one set of financial statements in U.S. dollars in order to help management and investors get an aggregate view of worldwide activities in a common currency. The process of...
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TAXATION Tax planning is crucial for any business, since it can have a profound effect on profitability and cash flow. This is especially true in international business, ^s complex as domestic taxation seems, it is relatively simple compared to the intricacies of international taxation. The international tax accountant must be familiar not only with...
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TAXATION OF FOREIGN-SOURCE INCOME When a domestic firm makes the decision to sell its products internationally, it can do so directly through the export of goods and services (including licensing agreements, management contracts, and so on), through foreign branch operations (a legal extension of the parent), and through foreign corporations in which the domestic...
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LOOKING TO THE FUTURE Although accounting standards differ significantly from country to country, the differences are beginning to narrow. As capital markets become increasingly integrated and as firms increasingly move to list their stock on different national stock exchanges, accounting differences will narrow. The stock exchanges will become an increasingly more important force in...
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SUMMARY ■ The MNE must cope with differing rates of inflation, changes in exchange rates, currency controls, customs, levels of sophistication, and local reporting requirements in performing its finance and accounting functions. ■ Some of the major factors that influence the development of accounting objectives, standards, and practices are the nature of the enterprise,...
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