International Accounting: Business Strategies, Regulations, and Cases

This assignment delves into key aspects of international accounting, examining the business strategies of companies like Harvey Norman and Bunnings Warehouse, and the regulatory environment in Malaysia. It explores the adoption of transnational and multi-domestic strategies, and analyzes the global business environments of the selected companies. The assignment further addresses regulatory and taxation considerations for businesses exporting to Malaysia, including operational considerations and foreign currency movements. It provides detailed accounting entries for foreign currency transactions, including forward contracts and spot deals. Finally, the assignment discusses transfer pricing regulations, focusing on the Australian Taxation Office's (ATO) scrutiny and the implications of the Chevron case, emphasizing the importance of arm's length pricing and compliance with tax avoidance standards.

International Accounting

Contents
MAIN BODY..............................................................................................................................................3
Question 1...............................................................................................................................................3
Question 2...............................................................................................................................................4
Question 3...............................................................................................................................................6
Question 4...............................................................................................................................................7
Question 5...............................................................................................................................................8
Question 6.............................................................................................................................................10
REFERENCES..........................................................................................................................................13

MAIN BODY
Question 1
International business strategy adopted by Harvey Norman (Family business):
Transitional business strategy- The transnational market approach is one of the most complex
approaches that companies can use while expanding globally, and can be used as a mixture of the
multinational and multinational strategies (Peterson, Arregle & Martin, 2020). While this
approach maintains a business’s headquarters and key technology in its country of origin, it also
helps an organization to develop full-scale operations in international markets. The choice,
manufacturing and distribution obligations of each plant in these different markets are equally
divided, allowing businesses to have independent marketing, research and innovation divisions
to satisfy local customers ' needs. In the context of above business this approach has been applied
because it is quite helpful for a family business. By help of this approach, they are able to
manage their business in different nations. The key element of this approach is that under it
companies do not need to operate from other nation. It can be operated and managed in own
nation.
International business strategy adopted by Bunnings Warehouse:
Multi domestic strategy- For companies to follow multi-domestic business strategies, they have
to spend and customize their goods or services to local client bases to develop their position on
the international market. Companies change their services and reposition their selling strategies
in order to comply with international customs, cultural characteristics and practices rather than
marketing new goods for clients who cannot initially identify them or appreciate them. Multi-
domestic corporations also retain. Although their offices are based in their place of origin, they
normally create oversea headquarters, known as subsidiaries, best suited to deliver regional
variations of the goods and services of international customers. They often lease buildings often
abroad as distribution, development or storage facilities for housing services operations. In
regards to above company they might have adopted this approach for their international business.

Global Business environment of both Harvey Norman and Bunnings Warehouse:
Both business entities have different business environment. In the context of Harvey Norman,
this can be found out that their business environment is favorable for operating the business. It is
so because Australia is nation which supports to family businesses for expanding the business in
different nations. There is not so much restriction for operating the family business (Rathore,
2019).
On the other hands, Bunnings Warehouse is a warehouse company. This company planned to
operate in UK and Ireland. In relation to warehouse business, there are different kinds of rules
and regulation which need to be followed by companies.
Advice due to which there is international success of Harvey Norman over Bunnings Warehouse:
The rationale due to which Harvey Norman is successful over Bunnings Warehouse is due to
different business environment of both entities. Like Harvey Norman is a family based business
which has support of government to expand. On the other hands, Bunnings Warehouse is a
company that faces issues of different regulations due to business nature. Bunnings Warehouse
needs to comply with a form of strategy which can contribute for success in different nations.
Question 2
Regulatory requirements- Usually, ad valorem Malaysian tariffs are levied with an applied rate
of 6.1 percent on industrial products on a simple average. Malaysia pays special responsibilities
which are highly efficient prices on such products such as beer, wine, chickens, salmons and
pigs. Tariff tracks, where local development is important, also have risks require. The Good and
Service Tax (GST) has been scrapped, with potential changes to the former Sales and Service
Tax (SST) beginning in September 2018. In the context of Rebecca’s “Sea Farmed Salmon” they
should consider these requirements before moving to Malaysia. It is so because in this nation,
there are different regulatory requirements in order to export the business of Salmon. In the
absence of proper following of these regulations, there can be difficult for above business in
order to operate in Malaysia.

Taxation consideration- Malaysia is a sovereign nation of southern Mediterranean States
(ASEAN) adopting the harmonized commodity Scheme (HTS) for exports and imports products
not residing in national governments (Morais, 2020). Malaysia observes the ASEAN
Harmonized Tariff terminology (AHTN) for products imported into the country from ASEAN
Member States. Malaysia charges a tariff rate of 0 to 50%, after ad valorem prices. The average
tariff paid on foreign goods to Malaysia, even so, is 6.1%. In the case of commodities with
significant domestic production as well as so-called "sinful" products such as pork and alcohol,
Malaysians' customs apply higher tariff rates. Malaysian border control either apply a discounted
amount or an allowance from a tariff on raw resources shipped to Malaysia to be used in the
production of exporting goods – especially in cases where such material cost is hard to obtain at
home. In the context of Rebecca’s “Sea Farmed Salmon” they should consider these tax values
before exporting business in Malaysia.
Operational considerations- Malaysia has been taking advantage of its area at the intersection of
trade between East and Western countries and around the world, a heritage that goes into the 21st
century. Regionally wounded, Malaysia extends along the Strait of Malacca, one of the largest
commercial vessels in the globe, in economic and social terms. By capitalizing on Malaysia’s
business, it became a comparatively competitive, high tech country in the early 1970s that was
capable of transforming its economic system from an agricultural production and mining base, in
which service providers and production account for 73% of GDP (51% in service providers and
22% in production in 2017). In the context of Rebecca’s “Sea Farmed Salmon” they should
follow these operational considerations for doing business of Salmon.
Foreign currency movements- The currency unit is the RM Malaysian Ringgit. The Malaysian
economy is mainly dependent on manufactured goods like electrical and electronics goods,
textiles, and rubber goods and on the industrial and mineral industries as a one of ASEAN's most
industrialized economies. The Ringgit (RM) has faced an inflationary pressure in recent years,
the Malaysian currency. During the first three months of 2019, the rate of exchange from
Malaysian Ringgit to the US currency was roughly RM 4.1 per dollar. In the first quarter of
2018, the slight exception to price pressure and relaxation rose to 1 USD = 3.92 RM. The
estimated yearly RM versus USD for 2018 was 4.05 (About regulatory requirement to do
business in Malaysia, 2020). It peaked at about RM4.30, averaging about 2017, and was around

US$ 1 to RM4.15 in 2016. Malaysia’s prosperity was influenced by the lower dollar, and
financial policy initiatives were taken by the policy to boost its currency. The Central Bank of
Malaysia, Bank of Negara, accepts the negative risks associated with current market conditions
and the effect on the Malaysian economy and recognizes growing growth risks as modest
shipments due to a decline in global demand. US – Chinese trade disputes are still alarming,
while some see it as a possibility.
Question 3
Part A:
Date Particulars DR CR
1st February
2020
Inventory a/c DR (100000/2.5)
To overseas customer a/c
$40000
$40000
1st June 2020 Overseas customer a/c DR
Loss a/c DR (50000-40000)
To cash a/c (100000/2)
$40000
$10000
$50000
Part B:
Forward contract: A forward contract, or literally a forward agreement, in banking, is a non -
quantitative contract between two for the acquisition or selling of an asset at a given future
period at a price negotiated upon at the time of completion of the contract, rendering it a form of
debt liabilities. The price, in whichever form, of the investment component shall be paid until the
command of the object shifts. Which is one of several categories of buy / sell transactions where
even the selling time and date is not anything like the value date on which the shares are traded
them. Forwards may, like many intangible assets, have been used as a form of leverage to
framework for measurement (usually exchange or interest rate risk) and to enable a group to take
benefit of the time-sensitive information about the underlying asset (Ai, Cunningham & Myers,
2020).

In finance, a spot deal, a spot deal, or merely a spot deal, is an agreement for the purchase or
sale, on a spot date, of a product, protection or exchange for full repayment, usually two working
days on the day of exchange. Spot pricing is considered the agreement rate.
For the corresponding foreign exchange forward contract accounting entries, the exchange
benefit is registered. The foreign exchange benefit is recognized in the income statement and a
forward transaction asset is formed at the balance sheet, reflecting the net sum owed to the
corporation under the contract. From the seller’s view, report a forward deal on the contract date
on the balance sheet. This will credit the Asset Responsibility with the spot price on the liability
side of the problem. Then user will have debit the Asset deferred revenue for the forward price
on the asset side of the problem.
Date Particulars DR CR
1st January
2020
Assets receivable a/c DR
Premium on forward contract a/c DR
To Edward enterprises a/c
145000
30000
175000
22nd march
2020
Edward enterprises a/c DR
Loss on Forward Contract Account Debit
To cash/bank a/c
145000
30000
175000
1st January
2020
Debtor a/c DR
Inventory obligation a/c DR
To loss on forward contract
145000
30000
175000
22nd march
2020
Cash a/c DR
To Loss on Forward Contract Account
To Edward enterprises a/c
175000
30000
145000
Question 4
In recent times, much attention has been invested in the transfer prices environment by the
Australian Taxation Office (ATO), firstly because of the problem being part of the current
OECD inquiry into foreign tax policies and furthermore because of the political and economic

concerns resulting from the view that "big business" struggles to pay its "good proportion" of tax
in Australia.
For the ATO, it is an overwhelming result and the Chevron choice can have wider implications
for big global taxpaying citizens where loans is supplied either through a financial services hub
or through other organizational by affiliated companies. While the case was provably restricted
to inter group debt arrangements, it is likely that the concepts especially in relation to arms -
length costs of goods will have larger implications (Garzella, Fiorentino & Paolone, 2019). The
case illustrates a need for limited partnership transfers to be worked out in a way compatible with
the standards of tax avoidance, both in respect of arm's reach and economic terms. The
regulatory reporting criteria for taxpayers to show that their stance on transfer pricing is fair are
strict and can impose a heavy burden of enforcement on multinational businesses. However,
following the result of the Chevron ruling, the presumption must be that, with renewed energy,
the ATO will continue to apply the enforcement of the regulations on transfer pricing.
From the point of view of regulation, businesses based on a cross border basis with Australia
must examine their prices of intergroup payments in order to ensure full conformity with the
marketing and paperwork framework that supports them.
The Court dismissed CAHPL’s decision concerning the mortgage interest deduction of USD
2.45 billion (comparable to AUD 3.7 billion) of its interest payments from the Credit Facility
Agreement (About Chevron case, 2020). The Court focused on the political and financial
efficiency of the requirements found in the relevant laws in making its decision. The Court has
addressed, among other aspects, the price of the loan and the interest rate relevant to the
provisions for cross-border funding. By selling a corporate debt in the United States, CFC
collected USD2.45 billion at an interest’s average of nearly 1.25 percent and loaned those funds
to CAHPL at a considerably higher rate (nearly 8 percent) for a five-year period without
collateral or promise. The Court ruled that when deciding whether the deal is at arm's length, an
Australian division of a multinational corporation must not be regarded as a separate body.
Question 5

1. Business model of company:
A business model is the central strategy of a corporation for doing business profitably.
Star Entertainment Group consists below mentioned strategies:
Cost differentiation strategy- A differentiation strategy is a strategy which businesses
build by selling anything specific, differentiated and different to consumers from goods
that their rivals can sell in the marketplace (Gordon, 2019). Increasing competitive edge
is the primary goal of executing a differentiation strategy. In the context of above Star
Entertainment Group, they adopt such strategy in accordance of selling their services.
2. Goods and services:
The Star Entertainment Group in Queensland and New South Wales manages and runs
gaming, leisure, lodging and hotel services. The Star Entertainment organization is able
to maximising its resources, promoting the neighbourhoods wherein they reside, and
trying to capitalize on the possibilities provided by our world-class Sydney, Brisbane and
Gold Coast sites. The ambition of the Star Entertainment Empire, of becoming the
leading industrial resort corporation in Australia, is backed by multi-billion - dollar
infrastructure projects expected or in development through its property.
Source of income- The source of income for above company is sales revenues, loans,
investment etc.
3. SWOT analysis of company:
Strengths: Technology of operations brought quality coherence to the product lines of
The Star Entertainment Group Limited and helps the organization to scale up and scale
down on the basis of market growth circumstances (Ravselj & Aristovnik, 2019). They
have proven record through merger and acquisition & acquisition to integrate
complimentary companies.

Weakness: The organisation has not been able to overcome the demands of the new
entrants in the sector and has lost a limited market share in the product areas. To
overcome these problems, Star Entertainment Company Limited must create a personal
input process directly from of the sales staff on the field.
Opportunity: The growth of the industry would result in the concentration of the
competitor’s edge which will allow The Star Entertainment Group Limited to improve its
competition relative to other rivals.
Threats: The organisation has produced various products in the market, but these are
mostly a reaction to the success of other players. Lastly, the availability of new goods is
not normal, which results in high and low fluctuations over time in the amount of
transactions.
4. The source of income can be identified by tax authorities. It is so because by help of
different kinds of financial statements, this becomes feasible for tax authorities to assess
what is the source of income for a company (Lind & Nordlund, 2019).
5. In year 2018-19, this can be find out that company paid tax of 62.3 and 80.7 million.
While net income was of 148.1 and 198 million. This tax was the 42.06% and 45%.
In UK, the tax rate is of 19%, in USA, it is of 21% and in Australia it is of 30%. It shows
that there is difference in paid tax rate of Star Entertainment Group Limited as compared
to government tax rate of various nations.
Question 6
Advantages/disadvantages of having the financial reports for the company audited.
A financial audit — sometimes referred to as a financial statement audit — is the formal report
arising from a competent inspector's analysis of the firm's books — usually a registered public

accounting or a financial accounting firm hiring competent specialists. The study states that the
provided financial statements and records are truthful and reasonable. In the context of T & T
limited, auditing of financial reports may lead to below mentioned advantages and disadvantages
which are as follows:
Advantage: Several separate people profit from a competent audit. For a company's officers, the
examination includes an external assurance of the financial stability of the company that supports
their effective management (Kieso, Weygandt & Warfield, 2020). The financial audit is a vital
way for shareholders to determine the business's valuation. For the corporate sector, annual
audits boost the image of the enterprise and make it a successful business partner. Financial
assessments are a requirement for virtually every sort of corporate loan for the company's
lenders.
Disadvantage: The benefits of an audit well outweigh the risks under certain cases, which is why
most organizations undergo routine audits and reviews are a legal necessity for any public
corporation. However, audits are not in any way free. A survey commissioned by the Financial
Officers Research Foundation (FERF) concluded that there was an estimate of more than $7
million in 2013 audit costs for public corporations. This isn't the only burden. An audit is a
required but substantial disturbance to the working of the organization and may decrease morale
for the duration of the audit when workers delay other duties to fulfill the demands of the auditor.
Borrowing of USD $30 million for expansion into a new market in Dubai UAE.
As per the given information, this is mentioned that T& T limited wants to expand its business in
Dubai. For this purpose, they want to take loan of $30 million. In this aspect, it is important for
them that they should take loan from a source whose interest rate is lower (McEnroe & Mindak,
2020).They might take loan from bank. It is so because taking loan from bank is suitable method
for each company. Banks offer loan at very low cost and there is an easy process for taking loan.
Apart from the taking the financial assistance, it is necessary for T& T limited that they should
assess Dubai’s business environment, regulations and many other aspects. This is so because
before entering in a nation for business, it is important to assess their rules and regulations so that

they can sustain in that country (Svynous, Shepel & Lytvynenko, 2019). Hence, above company
needs to assess complete PESTEL analysis of engineering steel fabrication sector in the Dubai.
In addition, above company should make proper analysis of competitive environment in that
country so that they can survive.

REFERENCES
Peterson, M. F., Arregle, J. L., & Martin, X. (2020). Multilevel models in international business
research. In Research Methods in International Business (pp. 417-432). Palgrave
Macmillan, Cham.
Rathore, S., (2019). International accounting. PHI Learning Pvt. Ltd..
Morais, A.I., (2020), January. Are changes in international accounting standards making them
more complex?. In Accounting Forum (Vol. 44, No. 1, pp. 35-63). Routledge.
Ai, X., Cunningham, L.M., Li, X. & Myers, L.A., (2020). How Can Small International
Accounting Firms Improve Audit Quality? The Role of Accounting Associations and
Networks. The Role of Accounting Associations and Networks (April 1, 2020).
Garzella, S., Ferri, S., Fiorentino, R. & Paolone, F., (2019). The (in) coherence in accounting for
goodwill: Implications for a revision of international accounting standards. Meditari
Accountancy Research, 28(2), pp.311-325.
Gordon, E.A., (2019). Advances and opportunities in international accounting research. Revista
Contabilidade & Finanças, 30(79), pp.9-13.
Lind, H. & Nordlund, B., (2019). The concept of market value in thin markets and its
implications for international accounting rules (IFRS). Journal of Property Investment &
Finance.
Kieso, D.E., Weygandt, J.J. & Warfield, T.D., (2020). Intermediate accounting IFRS. John
Wiley & Sons.
McEnroe, J.E. & Mindak, M., (2020). An empirical analysis of an application of an alternative
measurement model on international accounting standard 33, earnings per
share. Accounting Research Journal.
Svynous, I., Shepel, T & Lytvynenko, N., (2019). Methodological approaches to evaluation and
revaluation of fixed assets in the context of implementing international accounting
standards. Economics, entrepreneurship, management, (6, Num. 2), pp.89-99.
Ravselj, D. & Aristovnik, A., (2019). The Impact of R&D Accounting Treatment on Firm's
Market Value: Evidence from Germany. The Social Sciences, 14(6), pp.247-254.
Online:
About regulatory requirement to do business in Malaysia, 2020 [online] available through:<
https://2016.export.gov/malaysia/doingbusinessinmalaysia/eg_my_072633.asp>
About Chevron case, 2020 [online] available through :< https://www.klgates.com/Implications-
of-the-Chevron-Case-for-Multinational-Clients-05-16-2017>