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Author: Vera Palea
Publisher:
ISBN:
Category :
Languages : en
Pages : 23
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Book Description
Purpose - This paper aims to discuss fair value accounting and its usefulness to financial statement users. The European Commission has recently endorsed IFRS 13 on fair value measurement and is considering the endorsement of IFRS 9, which extends the use of fair value for financial instruments. Furthermore, fair value accounting has been under deep scrutiny because of its alleged role in the financial crisis. Therefore, the usefulness of fair value accounting is a key issue for standard setting purposes.Approach - This paper delineates the theoretical background for fair value accounting, it provides empirical evidence on its usefulness, it highlights some controversial issues and makes some proposals for standard setting discussion. Findings - Empirical research raises some doubts on fair value reliability. Furthermore, fair value accounting alone cannot provide information useful to evaluate stewardship. Historical cost is also needed. A dual measurement and financial reporting system could therefore deliver more complete and useful information to financial statement users. Practical implications - This paper provides the reader with a comprehensive picture of the main issues related to fair value accounting and contributes to the standard setting debate on the optimal measurement system. Originality/value - This paper reframes the debate on historical versus fair value accounting by explaining the reason why a dual measurement and reporting model should be implemented.
Author: Vera Palea
Publisher:
ISBN:
Category :
Languages : en
Pages : 23
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Book Description
Purpose - This paper aims to discuss fair value accounting and its usefulness to financial statement users. The European Commission has recently endorsed IFRS 13 on fair value measurement and is considering the endorsement of IFRS 9, which extends the use of fair value for financial instruments. Furthermore, fair value accounting has been under deep scrutiny because of its alleged role in the financial crisis. Therefore, the usefulness of fair value accounting is a key issue for standard setting purposes.Approach - This paper delineates the theoretical background for fair value accounting, it provides empirical evidence on its usefulness, it highlights some controversial issues and makes some proposals for standard setting discussion. Findings - Empirical research raises some doubts on fair value reliability. Furthermore, fair value accounting alone cannot provide information useful to evaluate stewardship. Historical cost is also needed. A dual measurement and financial reporting system could therefore deliver more complete and useful information to financial statement users. Practical implications - This paper provides the reader with a comprehensive picture of the main issues related to fair value accounting and contributes to the standard setting debate on the optimal measurement system. Originality/value - This paper reframes the debate on historical versus fair value accounting by explaining the reason why a dual measurement and reporting model should be implemented.
Author: George Louis Hunt
Publisher:
ISBN:
Category : Accounting
Languages : en
Pages : 454
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Book Description
The Governmental Accounting Standards Board (GASB) issued Statement No. 31, "Accounting and Financial Reporting for Certain Investments and for External Investment Pools", in March 1997. The standard requires governments to report most investments at fair value in the balance sheet and recognize changes in fair value as revenues in the operating statement. Fair value reporting in the public sector has received little research attention. The purpose of this study was to examine the usefulness of fair value reporting of investments in governmental fund financial statements. Three primary research questions were examined by surveying external and internal financial statement users. Do users of governmental fund financial statements (1) use fair value information when analyzing financial statements? (2) find fair value information, cost-based information, and other investment information and disclosures useful? (3) experience significant effects on analyses of financial statements or management of investments? A quasi-experimental design was developed to test the use of fair value information. Survey methodology was employed to collect user perceptions of the usefulness of fair value information, cost information, and other disclosures. Users were also asked about the effects of fair value reporting on external user analyses of financial statements and internal user management of investments. Overall, the results of the research do not support the GASB position that fair value reporting is more useful to statement users. The results were mixed and differences existed between user groups. The majority of respondents used cost information when analyzing governmental fund financial statements. However, no clear preference for fair value reporting or cost-based reporting emerged. Findings revealed that both fair value and cost information are useful to statement readers. Other investment-related disclosures would also be useful to users. Overall, the effects of fair value reporting are not significant for financial statement users. Additional research needs to be conducted to validate these findings.
Author: Gilad Livne
Publisher: Routledge
ISBN: 1317221311
Category : Business & Economics
Languages : en
Pages : 757
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Book Description
The concept of "fair value" marked a major departure from traditional cost accounting. In theory, under this approach a balance sheet that better reflects the current value of assets and liabilities. Critics of fair value argue that it is less useful over longer time frames and prone to distortion by market inefficiencies resulting in procyclicality in the financial system by exacerbating market swings. Comprising contributions from a unique mixture of academics, standard setters and practitioners, and edited by internationally recognized experts, this book, on a controversial and intensely debated topic, is a comprehensive reference source which: examines the use of fair value in international financial reporting standards and the US standard SFAS 157 Fair Value Measurement, setting out the case for and against looks at fair value from a number of different theoretical and practical perspectives, including a critical review of the merits and arguments against the use of fair value accounting explores fair value accounting in practice, involvement in the Great Financial Crisis, implications for managerial reporting discretion, compensation and investment This volume is an indispensable reference that is deserving of a place on the bookshelves of both libraries and all those working in, studying, or researching the areas of international accounting, financial accounting and reporting.
Author: Michael J. Mard
Publisher: John Wiley & Sons
ISBN: 0470933356
Category : Business & Economics
Languages : en
Pages : 307
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Book Description
Now in a third edition, Valuation for Financial Reporting provides practical implementation guidance for practitioners, auditors, and their clients in the private and public sectors. This one-stop resource clearly explains SFAS 141R, Business Combinations; SFAS 160, Noncontrolling Interests in Consolidated Financial Statements; and SFAS 157, Fair Value Measurements. The new edition furthers the elements of fair value in financial reporting in accordance with recent standards, providing primary emphasis on fair value measurements and reporting, and the valuation and impairment analysis of intangible assets and goodwill. Written by leading experts in the valuation field, the Third Edition features: Invaluable tools including flowcharts for SFAS 157 and SFAS 141R, a checklist for implementing the fair value measurement standard, and a preparer’s worksheet Discussion of the valuation aspects of the new financial reporting requirements, including how to identify and measure contingent considerations Interpretations of the accounting requirements with application of the requirements to specific facts and circumstances Specific guidance for determining fair value in a business combination Guidance for determining fair value measurement, including fair value definition, transaction costs, transportation costs, market participants, and highest and best use Now featuring an accompanying Website, Valuation for Financial Reporting, Third Edition is practical and easy to follow, with detailed examples of an impairment analysis as well as a business combination in which tangible and intangible assets are identified and valued. It is the authoritative reference every valuation professional must have.
Author: International Accounting Standards Board
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 104
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Book Description
Author: Theresa Herrmann
Publisher: Springer
ISBN: 3658248327
Category : Business & Economics
Languages : en
Pages : 181
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Book Description
Conducting an experiment Theresa Herrmann investigates why nonprofessional investors fail to incorporate disclosures on fair value estimates into their investment decision and what causes this exclusion. Differentiating between different types of disclosures and the development of the fair value (gain vs. loss) the results indicate that with a fair value gain, none of the disclosure information increases decision usefulness, irrespective of the presentation format. When a fair value loss occurs, fair value disclosures presented in a salient presentation format decrease decision usefulness. Thus, investors have varying information needs that are strongly linked to the development of a firm’s key asset.
Author: Stephen Penman
Publisher: Columbia University Press
ISBN: 0231521855
Category : Business & Economics
Languages : en
Pages : 265
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Book Description
Accounting for Value teaches investors and analysts how to handle accounting in evaluating equity investments. The book's novel approach shows that valuation and accounting are much the same: valuation is actually a matter of accounting for value. Laying aside many of the tools of modern finance the cost-of-capital, the CAPM, and discounted cash flow analysis Stephen Penman returns to the common-sense principles that have long guided fundamental investing: price is what you pay but value is what you get; the risk in investing is the risk of paying too much; anchor on what you know rather than speculation; and beware of paying too much for speculative growth. Penman puts these ideas in touch with the quantification supplied by accounting, producing practical tools for the intelligent investor. Accounting for value provides protection from paying too much for a stock and clues the investor in to the likely return from buying growth. Strikingly, the analysis finesses the need to calculate a "cost-of-capital," which often frustrates the application of modern valuation techniques. Accounting for value recasts "value" versus "growth" investing and explains such curiosities as why earnings-to-price and book-to-price ratios predict stock returns. By the end of the book, Penman has the intelligent investor thinking like an intelligent accountant, better equipped to handle the bubbles and crashes of our time. For accounting regulators, Penman also prescribes a formula for intelligent accounting reform, engaging with such controversial issues as fair value accounting.
Author: Mary E. Barth
Publisher:
ISBN:
Category : Accounting
Languages : en
Pages : 30
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Book Description
Author: Peter Walton
Publisher: Routledge
ISBN: 1136713107
Category : Business & Economics
Languages : en
Pages : 417
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Book Description
Comprising contributions from a unique mixture of academics, standard setters and practitioners, and edited by an internationally recognized expert, this book, on a controversial and intensely debated topic, is the only definitive reference source available on the topics of fair value and financial reporting. Drawing chapters from a diverse range of contributors on different aspects of the subject together into one volume, it: examines the use of fair value in international financial reporting standards and the US standard SFAS 157 Fair Value Measurement, setting out the case for and against looks at fair value from a number of different theoretical perspectives, including possible future uses, alternative measurement paradigms and how it compares with other valuation models explores fair value accounting in practice, including audit, financial instruments, impairments, an investment banking perspective, approaches to fair value in Japan and the USA, and Enron’s use of fair value An outstanding resource, this volume is an indispensable reference that is deserving of a place on the bookshelves of both libraries and all those working in, studying, or researching the areas of international accounting, financial accounting and reporting.
Author: Frank J. Beil
Publisher:
ISBN: 9781606496824
Category : Business & Economics
Languages : en
Pages : 100
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Book Description
Financial statement users are increasingly demanding that the balance sheet accounts that display a company’s financial position be communicated to investors and creditors at their fair value as of the financial reporting date. The accounting standard setter’s response has been to provide fair value frameworks for measuring and reporting asset and liability values on financial statements. These valuation frameworks apply to all accounts on the financial statements that are required to be measured at fair value. The application of these frameworks to accounting measurements can be both complicated and complex. This book will equip managers, finance professionals, and accountants with the tools and techniques necessary to understand and interpret fair value measurements used in financial statements. In addition, this book will provide companies with a blueprint on how to apply accounting guidance to balance sheet and income statement accounts that are required to be valued at fair value as of the reporting date. Through the use of examples and illustrations that interpret complex accounting guidance this book will illuminate the accounting and valuation issues involved with fair value accounting.
