309). Conservatism, anarchism and feminism all have attributes of political ideology and are relevant to modern American politics when it comes to the issues they are concerned with such as political, economic, social and individual views. Each ideology can be very different when it comes to their beliefs and solutions, but they each also have some similar characteristics. Conservatism is a political ideology that favors a smaller government, and less government regulations. Conservatism can be
The Role of Conservatism in Financial Reporting Table of Contents Introduction 3 Applications of Conservatism in Accounting 4 Advantages associated with Conservatism 7 Disadvantages associated with Conservatism 11 Recommendations and conclusions 14 References 17 Introduction This report investigates the application of conservatism in accounting and its role in financial reporting. We also examine and compare the advantages and disadvantages associated with conservatism and provide our opinion
Notably they find different results for the one information quality measure they have in common, conservatism of financial statements. Francis et al (2004) find it has no relationship with
are illustrated on how they are applied in the financial statements of YTL Hospitality REIT. Define five accounting concepts Prudence Do not overestimate the amount of revenues recognized or underestimate the amount of expenses under the prudence/conservatism concept. You should not underestimate liabilities and
(GFC), the quick spread of bad events offers valuable information to the users and enables the participants to anticipate future risks which helps the vulnerable market recover in a high speed (Wilson, 2011). Take street earnings as an example, the advantages are accuracy, timeliness and insight.
the cost of debt and the capital structure of the company differ from Cohen’s analysis that gave her a discount rate of 8.4%. Cohen’s discount rate would also put the current price as undervalued just more so than our analysis would predict. Conservatism of outlook regarding discretionary usage of models could be an important consideration also. Our Calculations Cost of Debt: YTM of Nike Bonds PV = -95.6 FV = 100 N= 40 20 yr * 2 for semi-annual parts PMT= 6.75/2 (semiannual) =7.1627%
various accounting concepts such as Consistency Concept, Realisation Concept, Prudence Concept, Business Entity Concept, Materiality Concept, Periodicity Assumption, Historical Cost Principle, Revenue Recognition Principle, Objectivity Concept, Conservatism Concept, Full Disclosure Concept, Cost Benefit Concept. Without these concepts, the rule of accounting will not be visible in making financial statements. It is necessary to have these sorts of concepts so that there can be a proper function in
and hierarchical approaches to accounting system classification? Illustrate your arguments with example. Inductive classification: started with the data about the facts of accounting practices and generate the groups by statistical analysis. Advantages: 1. Supposed to be more objective; 2. Appropriate to detect changes; 3. Replicable. The inductive approach to identifying accounting patterns based on an analysis of individual practices, which supposes to be more objective. According
Recommendation: Optimal Amount of Debt is 70% As Mr. Laporte approaches retirement, American Home Products (AHP) has an important decision to make with respect to adopting a more aggressive capital structure policy. Use of debt carries with it advantages and disadvantages. In accordance with value-based management, we recommend that AHP adopts a capital structure consisting of 70% debt. The following points justify such action: • The hallmark of value-based management is to choose strategies that add
contracts that have the purpose to mitigate the gap between managers and shareholders and managers and debt holders. It also elaborates on the way that financial reports are used in debt and stewardship contracting. It also examines the advantages and disadvantages of conservatism and fair value accounting in the debt and stewardship contracts. Contracts are now more than ever widely used due to the agency problems facing the firms. Myers (1977) points out that “equity holders have an incentive to underinvest