The Debt And Equity Securities

One major criticism of the equity method is that the method does not consider market values. As of now the equity method uses book value which is based on original cost plus a portion of the investee’s adjusted income minus dividends cite?. The equity method’s book value

2. Which of the following is not an objective of financial reporting described in FASB Concepts Statement No. 1? 
a. To provide information about how management of an enterprise has discharged its stewardship responsibility to owners.
B. To measure the current market value of the business enterprise.
c. To provide information so potential investors or creditors can make their own predictions of future

The information reflected in the financial statements actually is expected to be of high quality and useful to support the quality decision-making of market stakeholders due to the far-reaching and very costly consequences. It is important in this context to properly identify and discuss the user needs and thereby we refer to the actual requirements of all information users amongst them the management, which uses the financial information to steer, regulate and co-ordinate the business.

It is reasonable to say that fair value of reporting units have fallen significantly in pace with market capitalization, and it has possibly fallen below book value of the reporting units. Therefore, above analysis raises substantial doubt on management’s action to carry forward the 09 fair values of Fitness and Hockey. They should not carry forward the previous fair value estimates and should revalue Fitness and Hockey for 2010.

In fully investigating all of our calculations we are fully invested in using the Net Present Value figures we calculated as a means of ranking the eight projects. In doing so we found reasons in which why the Net Present Value was our benchmark for ranking the projects and why we did not use the Payback Method. The Payback Method ignores the time value of money, requires and arbitrary cutoff point, ignores cash flows beyond the cutoff date, and is biased against long-term projects, such as research and development and new projects. When comparing the Average Accounting Return Method to the Net Present Value method we found that the Average Accounting Return Method is a worse option than using the Payback Method. The Average Accounting Return Method is not a true rate of return and the time value of money is ignored, it uses an arbitrary benchmark cutoff rate, and is based on accounting net income and book values, not cash flows and market values. Plain and simply put, the Net Present Value method is the best criterion to use when ranking these eight

Furthermore, management using Fair Value Accounting may intentionally over-value assets to improve the financial position of the company, as asset appreciation is recorded as revenue. Watts' (2003, 2) points out that Enron's ability to manipulate 'fair values' and WorldCom's capitalisation of unverifiable unused capacity, were factors in those particular accounting scandals.

Fair value accounting utilising market value as a benchmark to value company’s assets has drawn a lot of controversy.

The framework for measuring fair value is easy to understand and follow, and relates to the conceptual framework. As stated earlier the preferred measure of fair value is the market approach, because the prices are observable. For this reason the standard recognizes the need for relevant, reliable, and comparable information in order for users to make better decisions about the current financial position of a company. Financial readers are aware of the valuing measurement used to calculate the fair value, whether the measurement were derived from an observable or unobservable input. The measurement establishes the existence of reliable and relevance qualitative factors that make accounting information useful for decision making (Barbera, 2007). If it were observable then the value derived can be researched and verified. However, if it were unobservable then the user must read the disclosures which will be discussed later in the research paper, and determine the reliability of the internally generated measurement. In return it can be understood that the level 1 inputs are more reliable and relevant than the other two levels.

The impairment-only accounting model for goodwill was initially brought to the table in 2004, to replace the previous amortization-based model. Over the years, research supported the idea that impairment charges improved the fundamental economic attributes of goodwill than systematic amortization charges. Research also revealed that such annual changes had minor information value to users. According to KPMG (2014), this was the key reason why the US Financial Accounting Standards Board (FASB) “replaced straight-line amortization of goodwill with this model that was based exclusively on impairment testing” (p. 4). The FASB argued that this approach provides

The International Financial Reporting Standards (IFRS) also defines 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”. According to these definitions, fair value is an unrealistic, idealized qualitative value. The current market value is a quantitative value and it does not fully reflect the value of assets when the markets are not

The consolidated financial statements include the accounts of Yahoo! Inc. and its majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. The equity and loss from operations attributable to the minority shareholder interests which related to the Company 's foreign and domestic

The one of the advantages is the historical cost can be verified. The cost of purchases at date of acquisition is documented with contracts, invoices and payments. It is useful in matching the changes in profits or expenses relating to the asset purchased, as well as determining the past opportunity costs. With historical cost accounting, managers have the resources to forecast the future operational costs. On the other hand, FASB has decided to use the historical cost principle because it is reliable and objective. It is also easy to use and understand. The disadvantages of historical cost accounting include that it does not evaluate the current market value. It does not really tell the financial users how much the assets are currently worth. Furthermore, historical cost accounting does not record the opportunity cost of using the old assets. It does not record the loss in real value of assets as a result of inflation or the gain in real value of assets as a result of deflation. It is claimed that it is not useful for financial information users to compare the corporate’s performance over time. Lastly, the financial information in historical cost concept presents an old interest rate and outdated

KPMG – Financial Sector Audit and Consulting (ACA); Barclays Capital – Finance followed by Trading and Structuring; RBS – Finance followed by DCM Origination.

Using the return regression, where the dependent variable is raw returns and independent variables are raw earnings and earnings surprises, this study will test the association between fair value FV and intangible assets. Moreover, the IAD variable in equation (1A) is added to assess the degree of value

Also referred to as a Profit and Loss (P&L) statement, income statements illustrate a company’s revenues and expense, operating and non-operating income and expense, which is generated and incurred within an accounting period. “The analysis of income can create a picture of the quality of operations in the composed profit and loss account period” (Jeletic, 2012, pg. 325). In addition, income statements also inform external users of net profits or losses from the corporation 's equity position during an accounting period. These data are valuable to a company’s stakeholders, respectively. Some external stakeholders may utilize this information to highlight potential risks, financial strength, the yield on investment and operational abilities of a company (Carrahera & Auken, 2013).