international accounting, accounting homework help

User Generated

vznqnqvy

Business Finance

Description

Task 1 : (450 words)

Explain why so many international transactions require international trade credit facilitated by commercial banks?

Task 2 : (450 words)

One U.S. executive said that Europe was not considered as a location for DFI( direct foreign investment) because of the euro's value - interpret this statement.

Task 3 : (450words)

Does borrowing a portfolio of currencies offer any possible advantages over the borrowing of a single foreign currency? If a firm borrows a portfolio of currencies, What characteristics would be desirable from a borrowing firm’s perspective?

Task 4 : (450words)

Critically explain the IFRS and GAAP principles applicable for international accounting.

* Guidance Notes and Format of the Assignment :-

1- Introduction and Objectives of the report >> Short introduction to the report setting out the aims and Objectives of the report are, what the report will cover and why . ( 250 words ) .

2- Assignment Tasks >> ( 1800 words ) .

3- Conclusion and learning derived >> the conclusion should briefly and clearly synthesize the key points of your analysis and what you learn . (250 words )

4- References


* The total of assignment = 2300 words

User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Hello, kindly use the attached

1
International Accounting

International Accounting
Name
Instructor
Institutional Affiliation
Date

2
International Accounting

International Accounting
Introduction
The world has become a small village and as a result, markets have been liberalized and thus
encourage the free flow of goods and efficient allocation of resources. This has promoted the
exchange of capital, goods and services across international borders. This has also opened doors
for firms to invest in foreign countries by either acquisition of existing business or establishing
business operations. With the increase in international trade, several firms have come up with
strategies of hedging currency risks by maintaining a portfolio of different currencies in their
coffers. The accounting professional has not been left behind too as the application of
International Accounting Principles takes a center stage in reporting of this transaction as per the
International Financial Reporting Standards.
International trade exposes exporters and importers to substantial risks, especially when the
trading partner is far away or in a country where contracts are hard to enforce. The dilemma
created by exporters demanding for payment before goods are released and the importer
resistance to paying before the goods are received can only be sorted by a third party and for this
case commercial bank fills that gap. Reputable commercial banks bridge this gap that exists
between the buyer and the seller by major use of instruments like letter of credits
Explain why so many international transactions require international trade credit
facilitated by commercial banks.


Protection against risk of non-compliance

The dilemma in international trade arises once the buyer and seller agree on terms; the exporter
will prefer to retain the legal documents of title of the goods until he receives payments or unless
he is assured of payment, whereas the importer will be hesitant to pay for the goods until he
receives it or on receipt of title to it. The two parties require an assurance that each one of them
will honor their part in the transaction. The instruments used are letter of credit “sight draft” and
the bill of lading which are carefully drawn to establish who bears the financial loss if one of the
parties defaults before the expiry of the contract. In such circumstances, the exporter will request

3
International Accounting

to be guaranteed of payment by the importer through his/her bank once the good leaves his/her
destination whereas the importer will not be willing to honor payments for goods not sighted. In
this case, the bank will act as a guarantee to pay for the goods if the buyer defaults to pay once
the importer has fulfilled all the requirements in the agreement. Payments will be released to the
seller’s bank account once the bank is assured by the buyer of acknowledging the goods.


Protection against foreign exchange risk

In international trade, the transactions undertaken exposes each party to foreign ...


Anonymous
Very useful material for studying!

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags