U.S. Gaap And German Hgb - A Comparative Approach eBook

Essay from the year 2003 in the subject Business economics - Accounting and Taxes, grade: 1,5 (A), Oxford Brookes University (Business School), course: International Financial Accounting, language: English, abstract: This essay will compare and contrast the accounting systems of Germany and theUnited States of Amerika. First the single systems, their core concepts and purposeswill be introduced. Second, the two core concepts of conservatism and true and vairvalue will be presented. Both systems will be examined in order to show how theyincorporate these concepts and how this might affect the calculation of profits. Wheredata is available, selected examples from published company accounts will beshown. Finally some short comments on how the systems come closer to each othersince several german companies aim for crosslistings in both countries. A conclusionwill summarize the main facts. Different accounting systems might come to different results in their calculations ofprofits. This can be shown by drawing an example from the Siemens AG s annualreport 2000. In their report based on German GAAP (General Accepted AccountingPrinciples) the net income in 2000 was 7,901 million . The same calculation basedon U.S. GAAP amounts in the F-20 report for the Securities and ExchangeCommission (SEC) to 8,860 million (see figure 1). Now the Question is how comethis difference of nearly 14%? Is one system more exact? [...] As we have seen in assignment 1, accounting is not a science. It has beendeveloped to serve a purpose. Accounting systems are influenced by several socialand economic factors (Radebaugh and Gray, 1997). [...] It seems that German GAAP and US GAAP have different objectives. Therefore wewill analyze the two systems in their national contexts now.