Reference no: EM131781510

Please summarize below writing in a four or five bullet points. each bullet points need only one or two sentences.

Introduction

The Introduction succinctly explains to the reader why you selected the country or MNC and highlights the three international topics that will be discussed in detail in the report. Hopefully the Introduction will entice the reader to continue reading your research (delete description).

The company selected for research for this group MNC project is Facebook, Inc., (NASDAQ: FB). Facebook's founder and CEO is Mark Zuckerberg. Facebook, Inc., is a multinational corporation operating in over (blank countries). According to its website Facebook was founded in 2004, in (blank California). Facebook was incorporated in Delaware in July of 2004. Facebook turned 12 this year. Facebook's initial public offering was in May of 2012 on the NASDAQ, under the symbol "FB". As of December of 2015, Facebook had 12,691 employees.

Facebook has more than 1 billion active users, making it the largest social networking site on Earth. Facebooks mission is "to give people the power to share and make the world more open and connected." People from all over the world use Facebook regularly to connect with friends, family, and associates. Facebook is also used as a means of entertainment, watch / read news media and for people to share and express things that matter to them. Facebook began as a mobile application and website that enabled users to connect, share, and communicate with each other on mobile devices, laptops and desktops, and other personal electronic devices such as tablets. Facebook's Sec 10-K noted that the website has over 1.04 billion worldwide users that use the application on a daily basis.

Research

The Research section details the research you conducted. Each research section should be no shorter than one page (delete description).

Translation of Foreign Currency in Financials

The FASB/IASB Revenue Recognition Accounting Project standards on Revenue Recognition Principle will definitely have an impact on Facebook's current revenue recognition, especially since they specifically state that revenue recognition has a greater impact on consolidated financial statements. The translation of foreign currency in financials plays a significant role in the preparation of consolidated financial statements of an international organization like Facebook. The act also impacts revenue recognition in a particular international company. The FASB/ IASB Revenue Recognition Accounting Project standards have a great impact on current revenue recognition of Facebook. According to Financial Accounting Standards Board and the International Accounting Standard Board standards, revenue is recognized when it is earned, or the service has been rendered to the customer.

Facebook being an internal company has to comply with all these standards in preparing its consolidated financial statements. The company should ensure that the revenues of the company are recognized when they are realized and are earned. This is to mean that the revenues should be recognized when the company renders the services to its clients no matter when the cash will be received. More so, the principles have impacted the financial statement of Facebook because it has enabled the company to report only useful information of financial statement about the nature, timing and uncertainty of the revenue from the customers (Cazier, 2015).

Revenue Recognition

"Facebook is exposed to market risks, including changes to foreign currency exchange rates, interest rates, and inflation. Facebook has foreign currency risks related to its revenue and operating expenses denominated in currencies other than the U.S. dollar, primarily the Euro." (Facebook SEC 10-K, page 52, 2015).

Revenue is a crucial item in the financial statements of the companies. This called for the proper recognition of revenue to enable the company to prepare financial statements that may show the fair view of the organization. In relation to Facebook, the market risks like changes to foreign currency exchange rates, interest rates, and inflation have impacted the financial statement of the company (Srivastava, 2014). These risks have given the company challenge in recognizing its true revenue in the process of reporting its financial statements.

Facebook has foreign currency risks related to its revenue and operating expenses denominated in the currencies other than the U.S dollar, primarily the Euro. This is because the currencies denominated in other currencies fluctuate as a result of inflation and foreign exchange changes making an adverse effect on the revenue and operating expenses hence minimal profit will be realized in the organization. Furthermore, currencies other than a dollar are highly affected by the market risks thereby making the valuation of revenue and expenses negatively influenced.

IAS 12 Accounting for Taxes on Income (1979) Income Taxes (1996)

Is Facebook using "base erosion and profit-shifting" techniques to shift international profits around? Base erosion and profit-shifting" is the practices used by many global firms to minimize their tax liabilities by recording profits in low-tax jurisdictions.

Facebook being multinational company uses base erosion and profit shifting techniques to shift international profits around as a tax avoidance strategy. This strategy ensures that the profit of the company is shifted from the jurisdiction of high taxes thereby making the company to register high-profit margin which may be in turn used in financing the profitable operations of the company (Christensen, 2014). The strategy in the UK is not executed with the purpose of countering the tax advantage instead is to ensure that the company pays a little amount of corporation tax.

Base erosion and profit shifting is the practices used by many global firms to minimize their tax liabilities by recording in low tax jurisdictions. The low tax liabilities recorded by the global companies which help them to record high profits that may be used in financing the operations of the company efficiently and effectively