Global Finance 393also recorded in other comprehensive income (see Becton Coulter Inc. in Ex-
hibit 12.23 for an example of this treatment).
The review of current accounting requirements has not explored a num-
ber of technical points related to hedging. These matters go beyond the goals
of this chapter. However, many of these items are included in more technical
and comprehensive treatments of hedging and derivative instruments.^39
U.S. AND INTERNATIONAL GAAP DIFFERENCES
A variety of new financial, accounting, tax, and managerial issues faced
Fashionhouse when it acquired a Danish subsidiary. The issues of statement
translation and currency risk-management were discussed above. Recall
that the requirement to consolidate the Danish subsidiary into the dollar-
based statements of Fashionhouse, the parent, requires translation. In addi-
tion, to the extent that Danish accounting practices differ from those in the
U.S., adjustments must be made so that the subsidiary’s statements conform
to U.S. GAAP.
International GAAP Differences and the IASC
A review of the statements of companies located in different countries will
reveal cases of both agreement and disagreement between foreign and U.S.
GAAP. In order to address the high level of international disagreement found
in accounting practices, the International Accounting Standards Committee
(IASC) was formed in 1973. The IASC, which was comprised initially of rep-
resentatives from the leading professional accounting bodies of Australia,
Canada, France, Germany, Japan, Mexico, the Netherlands, the United King-
dom, Ireland, and the United States, began working toward the harmoniza-
tion of accounting standards internationally. Today, the IASC represents
accounting bodies from over 70 countries. Each member body has agreed to
work towards the compliance of accounting standards in their home countries
with the standards issued by the IASC. In fact, a number of countries, such
as India, Kuwait, Malaysia, Singapore, and Zimbabwe, either adopt IASC
standards as their own generally accepted accounting principles or place
heav y reliance on them in developing their own accounting standards.
To date, 39 international accounting standards and several exposure
drafts have been issued. The IASC has also issued a document that both
identifies major differences in international accounting practices and catego-
rizes them in terms of their being, (1) the required or preferred treatment,
(2) the allowed alternative treatment, or (3) the treatment eliminated.^40 The
immediate goal of the proposal is to eliminate most of the choices in account-
ing treatment now available in standards issued by the IASC. The IASC enu-
merated the expected benefits of this harmonization in financial reporting as
follows:^41