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subsidiaries operate throughout the world. Maintaining separate sets

of books to meet separate U.S. and local requirements --- and then

converting foreign bookkeeping to U.S. requirements --- involves

substantial expenditures of time and effort. To the extent international

companies are permitted to prepare the financial statements of the

parent and all its subsidiaries in accordance with harmonized

international standards, these expenditures could be reduced.

An additional benefit of increased international harmonization of

accounting standards would be that it could help reduce adverse effects

on U.S. competitiveness that may be caused by disparities in accounting

standards. The standard most commonly mentioned in this regard is

accounting for goodwill. 11/ Business men and women tend to agree

that the U.S. requirement that goodwill must be written off against

income makes it easier for foreign companies to make acquisitions than

for U.S. companies to make the same acquisitions. The U.S. goodwill

accounting requirement can cause major differences in the post-

acquisition reported income of U.S. companies compared to that of

foreign companies, since many foreign companies are permitted to

1.1/ ~ generally Groves, 'Where Has All the Goodwill Gone?", Internationalization of the Securities Markets: Business Trends and Regulatory Policy 591-99 (ALI-ABA 1989).

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