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3 years ago

Critically discuss SIX causes of differences in accounting practices used in different countries.

Business

1 answer:

Liono4ka [1.6K]3 years ago

4 0

Answer:

Six causes of differences in accounting practices used in different countries is explained below with detail explanation.

Explanation:

The following are six problems of the variation in Accounting practice practiced in different nations.

Environmental Factors
Legal Systems
Cultural Difference
Taxation
Finance providers
Inflation

Legal System :

The legal system of a nation performs an essential role in the development of Accounting policies.

Taxation :

In some countries, Accounting and Taxation are dependent on each other. Whereas in other countries they are independent.

Inflation :

Inflation doesn't remain the same for every country. Uniform accounting practice cannot be followed because of this reason.

Cultural Differences/Diversity :

Cultural diversity plays a pivotal role in the Accounting practice of each country. Cultural practices lead to different practices being followed across the globe.

Environmental Factors :

Many countries have started to incorporate environmental Accounting in their financial statements.

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False

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3 years ago

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Aloiza [94]

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4 years ago

Problem 9-1 Comparing Renting and Buying [LO9-2] Rental Costs Buying Costs Annual rent $ 7,380 Annual mortgage payments $ 9,800

s2008m [1.1K]

Answer:

Computation of Rental Costs

Particulars Amount

Rent $7,380

Insurance $145

Loss of Interest on Security Deposit $39 ($650*6%)

Total Rental Costs $7,564

Computation of Buying Costs

Particulars Amount

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Taxes, Insurance and Maintenance $2,830 ($1,050+$1,780)

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Growth in Equity -$225

Annual Appreciation -$1,700

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Tax Savings from Property Taxes -$498 (1,780*28%)

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3 years ago

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Elenna [48]

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3 years ago

Read 2 more answers

A firm currently has a debt-equity ratio of 1/2. The debt, which is virtually riskless, pays an interest rate of 6%. The expecte

Svetradugi [14.3K]

Answer:

Expected return on equity is 11.33%

Explanation:

Using Weighted Average Cost Capital without tax formula, overall rate of return is given by the formula:

WACC=(Ke*E/V)+(Kd*D/V)

Kd is the cost of debt at 6%

Ke is the cost of equity at 12%

D/E=1/2 which means debt is 1 and equity is 2

D/V=debt/debt+equity=1/1+2=1/3

E/V=equity/debt+equity=2/1+2=2/3

WACC=(12%*2/3)+(6%*1/3)

WACC=10%

If the firm reduces debt-equity ratio to 1/3,1 is for debt 3 is for equity

D/V=debt/debt+equity=1/1+3=1/4

E/V=equity/debt+equity=3/1+3=3/4

WACC=10%

10%=(Ke*3/4)+(6%*1/4)

10%=(Ke*3/4)+1.5%

10%-1.5%=Ke*3/4

8.5%=Ke*3/4

8.5%=3Ke/4

8.5%*4=3 Ke

34%=3 Ke

Ke=34%/3

Ke=11.33%

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3 years ago