Evaluating International Company Under National Accounting Standards in Retail Industry
Abstract
This paper analyses the international firms under the national accounting standard in retail industry. The study applies two typically firms which are Woolworths from Australia and Walmart from the United States and compare the two firms in 4 perspectives. Firstly, the different in recognition of intangible assets, revenue, tax, inventory under IFRS (Aus) and U.S.GAAP. Secondly, describe consequence of the different recognition of accounting items and how it affects to financial statement and different regulation under AISC (Aus) and SEC (US). Thirdly, describe the factors that influence the accounting practices of Walmart and Woolworths. In the end, evaluate the theoretical benefits in adopting IFRS standards for both these two companies.
Introduction
Faced with the pressure of the globalization process and, over the past century, governments set several accounting standards. Countries follow different standard 、accounting systems and also regulations. In the U.S., Generally Accepted Accounting Principles are accounting rules used to prepare, present, and report financial statements for a wide variety of entities, including publicly traded and privately held companies, non-profit organizations, and governments. But in the recent years, Accounting and financial reporting has been undergoing some changes. This change is mainly brought about by the adoption of the International Financial Reporting Standards (IFRS) accounting by companies from more than 100 counties all over the world. These 100 countries have been previously using the GAAP or the Generally Accepted Accounting Principles. (Kotabe and Helsen, 2004) After seeing the many advantages of using the accounting, these countries have abandoned the GAAP and are now using the IFRS. This paper is to examine the international firms under the national accounting standard in retail industry. Woolworths and Walmart are the two of the most famous firms in retail industry. Whats more, Woolworths from Australia follow the IFRS and Walmart of the united state follow the GAAP. Those are the most typical firms and counties to explain the topic. Thus , we began to compare those two firms in different recognition of accounting items and the how these difference influence the financial report and compare the factors which have been influential in the determination of the accounting practices of the countries within which the firms operate ,also the benefits and drawback of using the IFRS.
The variance of specific accounting item between Woolworths limit and Wal-Mart
Although the purpose of financial reporting is similar, which is to provide useful information to investors for the prediction of future cash flow? Some specific accounting items are different, Such as, intangible assets, revenue, tax,