Keeps plan current Makes rulings and recommendations on
accounting issues
CRC – Accounting Regulation Committee
Converts CNC rulings and recommendations into binding regulations
Business combinations – purchase accounting
Goodwill – annual impairments test
Investments in associates – equity methial statements of foreign
International Accounting, 6/e
Frederick D.S. Choi Gary K. Meek
Chapter 3: Comparative Accounting: Europe
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Learning Objectives
Understand how financial reporting is regulated and enforced in five European countries: France, Germany, the Czech Republic, the Netherlands, and the U.K.
Generally, IFRS consolidated statements are permitted for non-listed companies.
Requirements for individual company financial statements vary – IFRS may be required, allowed, or prohibited.
LIFO （Last in, First out ）not allowed
Finance leases – capitalized; operating leases – expensed
Provisions – recognized when probable and estimable
Deferred taxes – recognized in full, using the liability method, for temporary differences between the carrying amount and tax base
Other influences on French accounting rules
Commercial legislation (Code de Commerce)
Tax laws
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France (contin)
Accounting regulation and enforcement CNC – National Accounting Board
operations – functional currency concept
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Assets valued at historical cost or fair value
Research costs – expensed; development costs – capitalized
Describe the audit-oversight mechanisms in these five countries.
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IFRS in the European Union
Starting in 2005, all EU-listed companies must follow IFRS in their consolidated financial statements.
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France
Overview
“The Plan” – national uniform chart of accounts (national accounting code)
Objectives and principles of financial reporting Definitions of elements Recognition and valuation rules Standardized chart of accounts Model financial statements
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IFRS (contin)
IFRS are based on fair presentation principles
IFRS may be overridden in rare circumstances to achieve fair presentation
Accounting measurements
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AMF – Financial Markets Authority Supervises securities markets
OEC – Institute of Public Accountants Represents the accounting profession Members prepare financial statements, and provide tax, information systems, and management advisory services
Describe the key similarities and differences between the accounting systems of these five countries.
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Identify the use of International Financial Reporting Standards at the levels of the individual company and the consolidated financial statements in these five countries.