Essay on Volkswagen Adopt IAS

“Recognition of an impairment loss and the recognition of a gain on the extinguishment of debt are separate events, and each event should be recognized in the period in which it occurs. The Board believes that the recognition of an impairment loss should be based on the measurement of the asset at its fair value and that the existence of nonrecourse debt should not influence that measurement.” (Statement 144, paragraph B34)

ASC 320-10-35-35: “In periods after the recognition of an other-than-temporary impairment loss for debt securities, an entity shall account for the other-than-temporarily impaired debt security as if the debt security had

A deferred tax liability is recognized for temporary differences that will result in taxable amounts in future years. In Packer, Inc’s case, depreciation has been recognized as deferred tax liabilities. Packer uses straight-line depreciation, for tax purposes, the cost of the depreciable recourses may have been deducted faster than that for financial reporting purposes.

The company also provides the following disclosure relating to the useful lives of its depreciable assets

Deferred tax amounts that are related to specific assets or liabilities should be classified as current or noncurrent based on

1. Current liabilities 2. Usual valuation of long-term liabilities 3. Disclosure notes 4. Long-term liabilities 5. Commercial paper

The deferred taxes reported are a temporary difference. The deferred taxes were calculated based on what needed to be reported versus what has been posted to the corporations’ books. The “temporary difference is the difference between the tax basis of an asset or liability and its reported (carrying or book) amount in the financial statements, which will result in taxable amounts or deductible amounts in future years” (Kieso, el. 2007,

CLASSIFICATION AND UNDERSTANDABILITY- FINANCIAL INFORMATION IS APPROPRIATELY PRESENTED AND DESCRIBED AND DISCLOSURES ARE CLEARLY EXPRESSED .

The value of a deferred tax asset is calculated by taking the financial reporting standards for book income and the jurisdictional tax authority’s rules for taxable income. (Investopedia. 2007) A deferred tax liability arises when a company’s balance

* Unrealized loss/gain on derivative instruments Operating derivatives is not a core activity of the company. (These are used to hedge and diminish potential risks)

Requirement 1: What is the rationale for the argument that long-term deferred tax liabilities should be excluded from liabilities when computing

Long-term liabilities are different from current liabilities because it is not due within one year of the balance sheet. Some of the examples of long-term liabilities are bonds payable, long-term loans, capital leases, pension liabilities, postretirement healthcare liabilities, deferred compensation, deferred revenues, deferred income taxes, and derivative liabilities. It is important to keep current liabilities separate from long-term liabilities in order to get an accurate view of your current asset and to keep track of which liabilities should be accomplish first. Knowing which liabilities are due with a year and the amount of assets turning to cash within one year are import to lenders, financial analysts, owners, and executives of the company.

Derivatives, embedded derivatives (in certain contracts) and non-financial derivatives measured at fair value. If the non-financial derivatives are exempt from derivative treatment based upon expected purchase, sale or usage requirements the management will be the one to decide on what kind of measurement they will use, as they need to classify what kind of financial asset or liabilities is that and purpose of it.

technology project. The BPTO produced weekly status reports and monthly budget reviews helping the company gauge where it was heading towards. Thus the alignment started advancing (Austin, 2007).

The main weakness in the current accounting standards was the delayed recognition of credit losses on loans. The existing model called the incurred model lead to delay in recognition of loss