12 • 1

CHAPTER

12

SUMMARY OF ACCOUNTING

PRINCIPLE DIFFERENCES AROUND

THE WORLD*

William E. Decker, Jr.

PricewaterhouseCoopers LLP

Paul Brunner

PricewaterhouseCoopers LLP

CONTENTS

12.1 Introduction 1
12.2 Globalization of Financial
Decisions 2
12.3 International Accounting
Diversity 5
12.4 Consequences of International
Accounting Diversity 7
12.5 Environmental Influences on
Accounting 9
12.6 Financial Statement Effects of
Differences in Accounting
Principles 10
(a) Research and Development
Expenditures 11
(b) Fixed Assets 12
(c) Inventory 14
(d) Leases 15
(e) Pensions 16
(f) Accounting for Income Taxes 17

(g) Foreign Currency Translation 19

(h) Accounting for Mergers and

Acquisitions (Including

Goodwill) 20

(i) Consolidation 22

(j) Impairment 24

(k) Transfer of Financial Assets

and Special Purpose Vehicles 25

(l) Derivatives 27

12.7 Benefits of Accounting

Harmonization 28

12.8 Obstacles to Accounting

Harmonization 29

12.9 Internationally Accepted

Accounting Principles 30

12.10 Conclusion 32

SOURCES AND SUGGESTED

REFERENCES 32

12.1 INTRODUCTION. The major objectives of this chapter are to illustrate, by ex-
ample, how and why accounting measurement practices differ from country to coun-
try and to discuss current developments and trends in the “globalization” of account-
ing practices around the world. After reading this chapter, the reader should better
appreciate the potential significance of differences from a financial statement per-

*The authors would like to thank Samying Huie for her assistance.