The Fair Value Model

Decent Essays
The provision is enforced by opinion 25 that denotes the need to include various aspects such as net income and compensation costs. Through the use of the fair value model, the company is able to have a transparent structure that enhances the commitment of the stakeholders and workers. Therefore, the principles emphasize the pro-forma values and integration of various market performances to reflect in the final financial report. Compliance with the regulations gives the business a wide breadth of ideas that improve financial stability.
Financial benefits and risks
Dilution of ownership
Based on the concept of stock appreciation rights and stock option plans, the following are some of the benefits that the company is likely to accrue.
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The option is also appropriate because of the flexibility since it allows adjustment of the prodata share that might not work in stock options.
Requirements for lease reporting under GAAP and International Financial Reporting Standards (IFRS).
Lease reporting regulations are contained in the GAAP FAS 13 and IFRS, IAS 17. The primary differences entail the regulations on the leveraged assets, discount rates awarded to the lessee, leaseback transactions under capital leases and operating leases as well as the profit or losses (Ashok, 2014). Therefore, a company should explore the options to come up with a workable and convenient plan corresponds to the strategic management objectives. Taking into consideration the prevailing circumstances, the CFO should instigate a comprehensive lease policy that to guide decisions in lease assets and the effect of such in the company portfolio. The principal aim should avoid circumstances that can lead to the negative listing.
Therefore, the CFO and the CEO should perform Risk Weighted Receivable and record the information in the financial reporting. Avoiding similar incidences in future require securitization and proper accounting based on the transactions of the firm. In addition, the CFO should take note of the contractual debts of assets such as commercial mortgages, car loans and residential loans from the originator to minimize
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