BRITISH-AMERICAN MODEL Definition

Bookmark and Share

BRITISH-AMERICAN MODEL is an accounting model. There are other accounting systems which differ from the U.S. accounting model. U.S. GAAP and FASB standards are not the only accounting principles used internationally; for example, many countries reverse the U.S. debit and credit system. Many countries with high rates of inflation account for inflation in financial reports much more than the U.S. does. Also, for any company operating internationally there is the currency exchange translation problem when consolidating financial statements.

Learn new Accounting Terms

REVIEW EVIDENCE is information used by the accountant to provide a reasonable basis for the obtaining of limited assurance.

STARTUP COSTS or Organization Cost, in the U.S., is when a new corporation is created, the costs associated with the formation are not deductible. An election must be made to amortize organizational costs no later than the due date (including extensions) of the return for tax year in which the active trade or business begins. If an election is not made to amortize these costs, they must be capitalized on the books and are not subject to amortization resulting in permanent capitalization. Upon making the timely election, the corporation may recover these costs through amortization deductions over a 60 month period. Organizational expenditures include any expenditure which is:

  • incident to the creation of the corporation,
  • chargeable to capital account, and 
  • is of a character which, if expended incident to the creation of a corporation having a limited life, would be amortizable over such life.

The following are examples of organization costs:

  • legal services incident to the organization of the corporation, such as drafting the corporate charter, by-laws, minutes of organizational meetings, terms of original stock certificates, etc.
  • necessary accounting services.
  • expenses of temporary directors and of organizational meetings of directors or stockholders.
  • fees paid to state of incorporation.

Suggest a Term

Enter Search Term

Enter a term, then click the entry you would like to view.