International Versus U.S. Standards

It probably is not of any real surprise that there exists a lot of differences between the way that the US and international businesses look at finances. A book could be written about the way that we do and do not look at financial assets in regards to the rest of the world. The basic conflicts come in the manner in which the values of some assets are evaluated. Let’s say that an asset is purchased ten years ago, its value was significant. International markets look at that asset and apply the value that the asset is worth today, whereas the US would like to apply the value of ten years ago. This ensures that there will be a return on the initial investment. This argument has many sides to it and can be debated successfully by both sides as there are advantages and disadvantages on each side.

Initial argument

The most significant initial argument that favors the reassessment of assets is that simply the value of a substance years ago when it was purchased is really not relevant to the price of that product today. This is contrasted by the opposite argument that there are no comparable assets or profits available to take the place of the similar assets.

These are basically two different accounting practices and the problems that they are causing have become evident. As the world economy grows and each country is more and more interdependent than they have ever been before. So it becomes difficult to performs nay transaction between each country if each of the countries use different manners of evaluating the currency and finances involved. There needs to be a collective movement toward uniformity in accounting because it will become more efficient for business.

US companies are currently not required to conform to the international methods of accounting, which seems to be quite a short sighted method to run your business. Since more and more of the world is going to be responsible for the economy of the United States. It would seem the more uniformity there is the easier it would be to do business between industries in two different countries. Without it , there is an unnecessary obstacle to jump over.

Conclusion

As the world has moved into a more interactive economy two distinct accounting systems have developed over time and they differ in some fundamental ways. Until all countries follow the dame rules of accounting then there is going to be a problem with streamlining each transaction into a manner that is understandable and efficient. Raising the efficiency of the accounting practices, makes the countries more likely to conduct a profitable trade.

 
 

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