Defining "Fair Value" Essay

Future income tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. Deferred financing costs, included in other assets, are amortized on a straight-line basis over the term of the bank financing. Reitmans accounts for stock-based compensation and other stock-based payments use the fair value based method. Basic earnings per share is determined with the weighted average number of non-voting and common shares outstanding during the period. When calculating diluted earnings per share, the weighted average shares outstanding are increased to include additional shares from the expected exercise of options. The number of additional shares is calculated by assuming that the proceeds from such exercises are used to repurchase non-voting and common shares at the average market price during the reporting period. Deferred licensing revenue is amortized on a straight-line basis. The financial statements and accompanying notes have been prepared on a consolidated basis and reflect the consolidated financial position of Reitmans and its wholly-owned subsidiaries. Merchandise inventories are valued at the lower of cost, determined principally on an average basis using the retail inventory method and net realizable value. Income is recorded on the accrual basis. Capital

Taxes are unavoidable because government is needed and government operates on tax revenues. The FairTax is a tax-inclusive progressive national retail sales tax that replaces every other federal tax in America. The new national sales tax would be 23%. Although there have been some questions as to whether the sales tax rate is 23% or 30% and they stem from the meaning of tax-inclusive and tax exclusive. The sales tax in Florida is an example of an exclusive tax because it works of a preset base. If a person buys something for 1$ and pays a .30$ tax on it the sales tax is 30 percent because it is .30$ on the dollar. With the inclusive tax the item would cost 1.30 because the tax is included with the cost. The tax rate of 23% is calculated by

The Council of Ministers of the European Union approved regulation on applying IFRS for all companies, so Silic, a France-based investment property company, also faces the substantial impact on their accounting standards, needs to choose between historical-cost or fair-value accounting to report its investment properties according to IAS 40.

ASC 320-10-35-34: “The fair value of the investment would then become the new amortized cost basis of the investment and shall not be adjusted for subsequent recoveries in fair value.”

In 26 March 2009, the chairman of Harvey Norman Gerald Harvey had made an announcement, that during the economy downturn, company is not revaluating its billions property portfolio. As other listed property company had been revaluated and receive a massive wrote down. With this action that come from Harvey norman, i highly doubt the trustworthy on number that shown in property plant & equipment. Quote from AASB116 para 38’states that a class of assets may be revalued on a rolling basis provided that the revaluation of the class of assets is completed within a short period of time and provided the revaluations are kept up to date’ under an assumption that within the economy turndown, PP&Es have been wrote down for certain percent, however the firm itself didn’t provide the true current value in the report, i would

* There is an adverse change in legal factors or in the business climate that could affect value of the asset

Depreciation and depletion are two models of computing financial reports. These techniques are used as adjustments when preparing statements of cash flow within the direct or indirect method. This paper will identify and examine the methods of depreciation and depletion, describe the difference between the methods, and compare and contrast depreciation and depletion as well using scholarly references to support the points.

Implementing GAAP and IFRS will reduce huge transition cost that may occur in the future. Due to this difference between GAAP and IFRS, the transition cost from GAAP to IFRS is very high. If a company wants to change accounting reporting method, it must report the current year, pervious year or years depend on the situation and the first year started to report financial statements using the new-implemented method (Kieso Et al., Chap. 5, ETB). It cost a lot for the company to do so.

In the course of normal business operations certain transactions require specific treatment in accordance with generally accepted accounting procedures (GAAP). To properly prepare financial statements, the analysis of working papers is imperative to insuring compliance. Clarification of why information is needed about adjusting lower cost of market inventory on valuation, capitalizing interest on building construction, recording gain or loss on asset disposal, and adjusting goodwill for impairment is presented here.

In summary, IFRS is more restrictive of assets than ASPE and more encompassing of liabilities than ASPE. It results in the equity section under IFRS being reported more conservatively than under ASPE (CICA, 2011, Section 1000).

Judgment case 16-10 deals with issues related to a company’s debt to equity ratio and the effects that long-term deferred tax liabilities have on the debt to equity ratio. In this case, parts of the 2011 and 2010 balance sheets of Macy’s, Inc. are given as well as the debt to equity ratio from 2011. The main question that is presented in this case is whether or not long-term deferred tax liabilities should be included or excluded from the calculation of a company’s debt to equity ratio. The debt to equity ratio is used in determining the financial risk of a company (Spiceland, Sepe, & Nelson, 2013).

However, the tax basis of other amortizable, which was acquired in the same transaction, would be adjusted; that means the bases of the other intangible must be increased from the basis of the disposed intangible amount. Although, a taxpayer shall not recognize an immediate loss of the entire amount of the worthless intangible, the impairment of the intangible would be recognized over its remaining amortizable lives by increasing the bases of the other associated amortizable intangible. Continuing with the previous example, assuming that on December 31, 2007, Sara deemed goodwill to have a zero value. Consequently, Sara should increase the basis of going concern value by $24000, resulting in an adjusted basis of $60,000. Thus, the worthless goodwill amount continues to be amortized without any change to either the amount of amortization or the period of amortization. The only change that the amortization would be under the guise of another related intangible. On the other hand, if the worthless intangible were the only amortizable section 197 intangible acquired in the transaction, it could be written off, since there would be no basis to adjust of another existent amortizable section 197 intangible from that same purchase

Over the past several years, there has been a growing controversy over the accounting issues of fair values and historical cost. The basis of this controversy revolves around which one of these principles is the most accurate. There are many different viewpoints on this issue. Many accounting professionals believe that fair value is just as accurate as the historical cost principle, while others believe that the historical cost is more reliable. The facts about each of these valuation methods will be researched and explained throughout this research document, as well as the different viewpoint about which method is the most accurate and reliable.

The US Generally Accepted Accounting Principles (GAAP) is a set of international accounting rules which originated from the United States. US GAAP can be defined as a set of accounting principles, standards and procedures that companies use to compile their financial statements (Elliott & Elliott, 2008). The International Financial Reporting Standards (IFRS) on the other hand are accounting rules originating from the United Kingdom. International Financial Reporting Standards (IFRS) are a set of accounting rules designed with a common global language for business affairs so that financial accounts of companies are understandable and comparable across international boundaries (Devinney, Pedersen & Tihanyi, 2010).

ACC307 INDIVIDUAL ASSIGNMENT TASK 1: Contemporary Issues of Accounting Theory Fair Value Measurement Overview After the International Accounting Standards Board (IASB) released the IFRS 13 Fair Value Measurement in May 2011 for the purpose of completing its joint project with the US Financial Accounting Standards Board (FASB) on fair value, the Australian Accounting Standard Board (AASB) released the Australian equivalent - AASB 13 Fair Value Measurement in the September of the same year. This standard permitted early adoption but generally started to take effect for the financial reporting periods beginning from 1 January 2013. This new standard requires no new requirement for the adoption and but it was accompanied with the issuing of AASB 2011-8 Amendments to Australian Accounting Standards arising from the AASB 13 which has made consequential changes to 32 standards and 9 interpretations for the adoption in Australia. The new standard attempts to unify IFRS and US GAAP by specifying how entities should apply the fair value measurements that applied in previous IFRS standards. It clarifies and redefines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”, sometimes referred to as an “exit price”. It also sets out a single source guidance for a robust measurement framework to ensure that the requirements are applied consistently and have clear