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Internationalization of Accounting Standards for Consolidation Japan A Case StudyThe purpose of this paper will be to examine problems with internationalization of accounting standards for consolidations on methods from an international perspective - specifically in the US and Japan This is an especially timely topic as standardization of financial markets is a prerequisite to international free trade Given the trends toward greater globalization the motivations of companies for seeking a uniform accounting system are strong If companies have to prepare their accounts according to several different sets of rules in order to communicate with investors in the various capital markets in which they operate or for other national purposes they incur a considerable cost penalty and feel that money is wasted This significantly limits global opportunities for multinational businesses Thus it is important to understand what the differences are between accounting standards why they exist and what problems they pose It is worth noting that no one nation has a set of accounting rules which appears to have such clear merits that they deserve adoption by the whole world No one country can claim to have a uniquely correct set of rules The United States has the longest history of standard setting It has the largest standard setting organization which is characterized by high standards of professionalism But even the rules of the United States exhibit compromises between different interests of a kind which could have reasonably been decided otherwise Furthermore no unanimity exists among US accountants about the merits of the precise details of the compromises that have been struck For example the recent discussion memorandum on consolidation outlines three different methods which are GAAP in the US Beckman 1995 No one nation has a clear right on the basis of existing achievements to be regarded as predominant in accounting A great deal more work is needed by accountants from different countries before we can reach the point of having a well founded
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