National Accounting Standards in Retail Industry

Topics: Balance sheet, Financial statements, International Financial Reporting Standards Pages: 12 (3440 words) Published: August 12, 2012
national accounting standards in retail industry

Evaluating International Company under

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.

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. What's 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, inventory and so on. Because the accounting standard which the companies used is not the same, it can be proved by the data which shows in their own annual reporting. The variance performance is the following aspects, the recognition, measurement and the disclosure. As the following context, comparing with the annual report of Wal-Mart and Woolworths limits, much more detail about variance of intangible asset, income tax and revenue will be discussed. First of all, the recognition and impairment of intangible asset, such as goodwill, research and development cost and so on, is different shown in these two companies’ annual report. It is tight under the US GAAP, in other words, the A-IFRS which Woolworths limit used is more flexible. As known, the intangible asset is likely to property, plant and other equipment, which must be valued at their historical cost, identify their useful lives and amortized over those lives. According to the annual reporting supplied by two companies, they all test the lives of their indefinite goodwill and intangible assets and calculate...
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