Current Topics in Accounting: Relevant Issues CURRENT TOPICS IN ACCOUNTING: RELEVANT ISSUES 1A. DESCRIBE THE IMPACT THAT IMPLEMENTING FAS 157 HAD ON EMC'S FINANCIAL STATEMENTS, BASED ON THE FOOTNOTE INFORMATION PROVIDED. CAN YOU TELL IF THE CURRENT ECONOMIC CONDITIONS INFLUENCED THE VALUATION OF THEIR FINANCIAL ASSETS AND LIABILITIES FROM THIS DISCLOSURE? IF YES, WHAT INFORMATION TOLD YOU THIS, IF NOT, WHAT INFORMATION DO YOU FEEL IS MISSING? AS AN INVESTOR, WOULD THIS DISCLOSURE GIVE YOU ENOUGH INFORMATION TO BE SATISFIED THAT THIS IS A TRULY FAIR VALUATION? WHY OR WHY NOT? Fair value is an important accounting concept that is used in determining the value of liabilities and assets to be reported in the financial statements. It is …show more content…
Therefore, the company is awaiting a good responce from the market, and this will influence how interest rates will change. Finally, under note F, the company indicates that the fair value of the investments in the public market is determined by the quoted prices as per the market activity. In conclusion, the information provided on the fair value of the company is enough to satisfy that the EMC Corp. provides a true fair valuation of it position in regards to the year ending December 31st 2008. Although some matters are not done in the same way as they were done in the previous year, the consistency concepts in regards to the financial statements of the company have been met by fully disclosing this information. For instance, according to the company, long and short-term investments that were available for sale, including the securities that are based on the auction rate were realized at their fair value as dictated by the market prices. In 2008, however, the long and short term investments, excluding securities based on auction rates, were realized using fair value. Auction rate securities were determined using a discounted cash flow model. Despite the differences in the approach of realizing the auction rate securities, enough information regarding the alternatives have been sufficiently provided. Hence, the information shows the fair value of the position of investments in EMC Corporation. B. FROM THE DISCLOSURES AND COMPUTATIONS FOR THE PENSION PLANS THAT EMC HAS
If some research is undertaken that provides evidence that capital markets do not always behave in accordance with the Efficient Market Hypothesis, does this invalidate research that adopts an assumption that capital markets are efficient?
Week 1 – Introduction – Financial Accounting (Review) Week 2 – Financial Markets and Net Present Value Week 3 – Present Value Concepts Week 4 – Bond Valuation and Term Structure Theory Week 5 – Valuation of Stocks Week 6 – Risk and Return – Problem Set #1 Due Week 7* – Midterm (Tuesday*) Week 8 - Portfolio Theory Week 9 – Capital Asset Pricing Model Week 10 – Arbitrage Pricing Theory Week 11 – Operation and Efficiency of Capital Markets Week 12 – Course Review – Problem Set #2 Due
The assets and liabilities being obtained were recorded by the buyer at fair value as of the date of acquisition
Family Finance Co. (FFC), a publicly traded commercial bank, invests in a variety of securities in order to enhance returns greater than interest paid on bank deposits and other liabilities. The primary investments of FFC are collateralized debt obligation, mortgage-backed securities, auction-rate securities, equity securities in nonpublic companies, interest rate swaps, and a fuel swap for gasoline. FFC measures the derivative at fair value, presenting the portion of the fair value change by using the fair value hierarchy. This memo will present the appropriate classification in the fair value
a. Trading securities. Investments in debt securities that are classified as trading and equity securities that have readily determinable fair values that are classified as trading shall be measured subsequently at fair value that are classified as trading shall be included in earnings.
The internal and external factors of an organization can affect the stock prices, which leads to perceived valuation of the company. The valuation of an organization’s worth compared to its financial statements is useful to introduce company changes if necessary. There are various factors that can lead to the valuation of a company influenced by the external and internal factors. Proceedings are some internal and external factors that may influence the investor’s decisions to invest in any organization.
In 1973, the Financial Accounting Standards Board (FASB) was created and their mission is “to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information.” (FASB.org, 2009a). The FASB is a private, not-for-profit organization whose primary purpose is to develop generally accepted accounting principles (GAAP) within the United States. The Securities and Exchange Commission (SEC) designated the FASB as the organization responsible for setting accounting standards for public companies in the U.S. Therefore, the FASB plays a vital and important role in protecting the financial well being and the overall stability of our
Morris Mining Corporation owns and operates mining facilities that are located in the United States, and Canada. This company primarily distributes extracted ores and minerals to their customers. Recently, in January 2015, Morris Mining acquired the mining company King Co. Once the company has been acquired, Mining Morris plans to record the difference of the purchase price and identifiable net assets as goodwill. The identifiable assets and liabilities of King Co. are going to be recorded at fair value on Morris Mining 's books. There has been discussion as to how the company is going to report the fair value for the patent that is part of the assets they acquired from King Co. Rob, an audit manager on the Morris Mining engagement, and Gabriela, the audit senior, are trying to evaluate if the method of the fair value estimate it reasonable.
When it comes to the risk of investment, the valuation of the firm was requested to be estimated at a high level. However, the market could not respond aggressively
QuickBooks and Sage 50 Accounting are both great options for small business accounting. These programs help manage business finances which can drastically save time that may have been spent creating Excel spreadsheets and more. However, while both programs are sufficient for small businesses, the programs differ based on what they can offer your company.
The fair value of an asset is defined as ‘the price that would be received to sell an asset paid to transfer a liability in an orderly transaction between market participants at the measurement date” (Kieso, Weygandt, & Warfield, 2012). It is a market based measure (Averkamp, 2014). Over the past few years, Generally Accepted Accounting Principles has called for the use of fair value measurement in a company’s financial statements. This is what is referred to as the fair value principle (Kieso, Weygandt, & Warfield, 2012). The fair value of an asset or liability is based on an estimate of what the asset should be worth at the time of sale. This gives rise to some conflict among accounting professionals. It is believed that fair value may not be as accurate
Financial world is at the pace when the accountants are moving their steps towards fair value accounting, moreover FASB and IASB is motivating accountants to increase the use of fair value accounting by establishing new rules. Most of the people concur that fair values are the most reliable measure for financial assets and liabilities that an entity strongly trades, on the other hand some believes if management wants to hold an asset or liability till their maturity then historical method is best for measuring financial assets.
Feedback: Management accounting is the preparation and use of accounting information systems to achieve the organization's objectives by supporting decision makers inside the enterprise. LO 4
Question 1: The situation in this case study revolves around Sally, a member of the Board of Sally Susie's Donut Shop, Inc. (SSDS). SSDS uses an accrual method of accounting and over the past three years has seen volatile sales. Sally is unhappy with her previous tax advisor and wants new advice. Our task is to outline a preliminary interview with Sally to ensure that we ask the right questions.
The use of fair value measurement attribute to enterprise's development has a profound impact. However, the use of fair value is faced with many challenges. Mainly embodied in the following aspects: