Abstract While there are calls to internationalize business courses, using financial statements of foreign firms in introductory and even intermediate financial accounting courses (undergraduate or MBA) can hamper learning. This is because foreign companies can employ different accounting standards and forms of financial statement presentation from those of United States (U.S.) firms, obscuring basic accounting principles. The attached case includes comparative balance sheets, income statements, statements of cash flows, and footnotes excerpted from the annual report of a well-known United Kingdom (UK) firm, The British Petroleum Company. Generally accepted accounting principles in the UK are not too alien relative to U.S. GAAP, and financial statement format and terminology are similar-although they differ in interesting and instructive ways. The case (a) reinforces students' understanding of basic financial statement relations and forms of presentation, and (b) highlights the fundamental difference between using FIFO and LIFO inventory costing methods on the in- come statement by illustrating the use of both historical and replacement cost bases. I find students appreciate an assignment utilizing a foreign company, successfully deal with presentation and terminology differences, and ably apply accounting relations to a set of non-U.S. financial statements.
Morton Pincus (1996) studied this question.