International Accounting

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1. Why is it important that, in countries with high inflation, financial statements be adjusted for inflation? 2. What are the major differences in the calculation of income between the historical cost (HC) model and the general purchasing power (GPP) model of accounting? 3. Which balance sheet accounts give rise to purchasing power gains, and which accounts give rise to purchasing power losses? 4. What are the major differences in the calculation of income between the historical cost (HC) model and the current cost (CC) model of accounting? 5. Why is return on assets (net income/total assets) generally smaller under current cost accounting than under historical cost accounting? 6. In what ways do International Financial Reporting Standards (IFRS) address the issue of accounting for changing prices (inflation)? 7. What is a group? Compare and contrast the different concepts of a group. 8. To which specific type of business combination does the concept of a group relate? 9. Define control. When does control exist in accordance with IAS 27? 10. Explain why the legal concept of control may be appropriate in some countries, such as Japan. Exercise 7: Horace Jones Company consists of six business segments. The consolidated income statement as well as information about each of the segments for Year 1 as reported to the chief executive officer is as follows: HORACE JONES COMPANY Consolidated Income Statement Year 1 Revenues Cost of goods sold Depreciation and amortization Other operating expenses Operating income Interest expense Income before tax Income tax Net income $ 1.790 ( 1.060) ( 230 ) ( 380 ) 120 ( 30 ) 90 ( 30 ) $ 60 Summary of business segment and general corporate activity for Year 1 General Corporate Segment A B C D E F ______ 1,030 350 20 140 130 120 intersegment sales revenue Expenses: Cost of goods sold ______ 30 20 200 10 0 0 ______ 600 300 130 90 60 80 Depreciation and amortization Other operating expenses . Interest expense 10 80 100 10 20 5 5 50 120 150 10 30 5 15 ______ 10 5 5 0 5 5 Income taxes ______ 20 ( 40 ) 20 5 20 5 Assets: Current assets 10 450 150 100 80 150 70 Property, plant, and equipment (net) Purchases of property, plant, and equipment Intangibles 90 1,200 500 400 200 150 50 10 200 50 50 25 20 30 5 100 30 20 30 10 5 Liabilities ______ 750 300 250 170 140 90 Revenues: External sales revenue Additional information: At December 31, Year 1, consolidated total assets were $3,800 and consolidated total liabilities were $1,700. There were no significant noncash expenses other than depreciation, and no unusual items included in income. There were no investments in equity method associates or joint ventures. Required: The company uses International Financial Reporting Standards (IFRS) to prepare its financial statements. Prepare the note to financial statements in accordance with IFRS 8, Operating Segments. ...
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School: Boston College

Whats up buddy?๐Ÿ˜€ I completed the assignment and I used APA style for formatting and referencing.๐Ÿ˜Ž Everything should be clear but if you have any questions..hit me up and I will explain..๐Ÿ˜‡ Otherwise if the work is satisfactory, go ahead to complete and review the question below..๐Ÿ‘‡


Answers to Accounting Questions
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Answers to Accounting Questions
1. Inflation is the percentage that defines the increase of the costs of goods and services; hence
weakening the purchasing power of a currency. It is essential to accounting for inflation since
when preparing financial statements we mostly use historical costs to account for assets. This
means there is an excellent change in prices of same assets when compared with the current
prices of the same commodities. This means a significant amount will understate the value of
assets. If fixed assets and inventory are underestimated, then depreciation and cost of goods will
be underestimated leading to overcast profits and shareho...

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