Unit: ACC307 – Accounting Theory Weighting
The assignment is worth 40% of the total unit weight. Instructions:
1. Students are required to complete three case studies. 2. Your answer must be both uploaded to Moodle in word file and handed over a printed copy with signed coversheet. 3. You need to support your answers with appropriate Harvard / APA style references where necessary. 4. Only include information in your appendixes that has been directly referred to in the body of your document. 5. Include a title/cover page containing the subject title and code and the name, student id numbers. 6. Please save the document as ACC307AT1_first name_Surename _Student Number
As noted in the chapter, the boards have issued and received comments on an exposure draft relating to Phase A Objectives and Qualitative Characteristics.
A discussion paper relating to Phase D Reporting Entity had been issued and work is continuing on Phase B Elements and Recognition and Phase C Measurement. Source: Excerpts from Halsey G. Bullen and Kimberley Crook, 'Revisiting the concepts: A new conceptual framework project', M<1y 200'), FASB and 11SB, www.fasb.org or www.idsh.org.
Questions 1. Explain why principles-based standards require a conceptual framework
. 2. Why is it important that the IASB and FASB share a common conceptual framework?
3. It is suggested that several parties can benefit from a conceptual framework. Do you consider that a conceptual framework is more important for some parties than others? Explain your reasoning.
4. What is meant by a 'cross-cutting' issue? Suggest some possible examples of cross•cutting issues. Case Study 2 (1000 words) The trend toward fair value accounting by J Russell Madray, CPA The Debate Critics contend that GAAP is seriously flawed. Some in the accounting profession go so far as to pronounce financial statements almost completely irrelevant to the financial analyst community. The fact that the market value of publicly traded firms on the New York Stock Exchange is an average of five times their asset values serves to highlight this deficiency. Many reformers, including FASB chairman Robert Herz, believe that fair value accounting must be part of the answer to making financial statements more relevant and useful.* Advocates of fair value accounting say it would give users of financial statements a far clearer picture of the economic state of a company. But switching from historical cost to fair value requires enormous effort. Valuing assets in the absence of active markets can be very subjective, making financial statements less reliable. In fact, disputes can arise over the very definition of certain assets and liabilities. The crux of the fair value debate is this: Each side agrees that relevance and reliability are important, but fair value advocates emphasize relevance, while historical cost advocates place greater weight on reliability. Relevance versus Reliability The pertinent conceptual guidance for making trade-offs between relevance and reliability is provided by
FASB Concepts Statement No.
Characteristics of Accounting Information. It provides guidance for making standard-setting decisions aimed at producing information useful to investors and creditors. Concepts Statement No. 2 states: The qualities that distinguish "better" (more useful) information from "inferior" (less useful) information are primarily the qualities of relevance and reliability ... The objective of accounting policy decisions is to produce accounting information that is relevant to the purposes to be served and is reliable. Critics of fair value generally believe that reliability should be the dominant characteristic of financial statement measures. But the FASB has required greater use of fair value measurements in financial statements because it perceives that information as more relevant to investors and creditors than historical cost information. In that regard, the FASB has not accepted the view that reliability should outweigh relevance for financial statement 3
Around the world, companies are being required to meet higher levels
of disclosure of environmental liability ... In the United States, for example, the US Financial Accounting Standard Board (FASB) issued provisions in 2002 for accounting for environmental liabilities on assets being retired from service. The provision for accounting for asset retirement obligations required companies to reserve environmental liabilities related to the eventual retirement of an asset if its fair market value could be reasonably estimated. The intent of the ruling was disclosure, but the conditional nature of estimating a fair market value caused corporations to take the position that they could defer their liability indefinitely by 'mothballing' a contaminated property. Companies effectively postponed the recognition of their environmental liabilities in the absence of pending or anticipated litigation.
Earlier this year, FASB clarified its intention by providing an interpretation that said companies have a legal obligation to reserve for environmental and other liabilities associated with the eventual retirement of manufacturing facilities or parts of facilities, even when the timing or method of settlement is uncertain. Among examples given by FASB:
• An asbestos-contaminated factory cannot simply be 'mothballed' without adequate reserves to cover the eventual cost of removing the asbestos
• Reserves must be established today for the eventual disposal of still-in-use, creosote•
soaked utility poles As a result of what may seem like a minor technical re-interpretation, companies may have to recognise immediately millions of dollars in liabilities in their income statements to comply with this change. In Europe, regulators have also initiated efforts to promote disclosure. In 2001, the European Commission promulgated tougher, non-binding guidance for disclosing environmental costs and liabilities, and various countries in Europe have issued additional requirements related to environmental disclosure. In 2002, the Canadian Institute of Chartered Accountants published voluntary guidance that stressed the importance of disclosing all material risks, including environmental liabilities, in companies' annual reports. Some financial institutions have also pledged to adhere to tenets of international initiatives such as the Equator Principles, which factor environmental and social considerations into assessing the risk of a project. Also, a group of pension funds, foundations,
European investors and
US state treasurers have endorsed UN efforts to promote a minimum level of disclosure on environmental, social and governance issues. Recognition of environmental liabilities may also soon emerge as an issue for companies in Asia. While environmental issues may have taken a back seat to rapid economic development over the past 20 years, that situation may change as legislation and regulation catch up with development. The responsibility for disclosing future environmental liability is clearly a growing issue for companies around the world. However, accurately estimating cleanup costs is not an easy task due to unknown contaminants, legacy liabilities related to formerly operated property, regulatory changes or unexpected claims related to natural resource damage.
. The article states that the US standard setter FASB requires companies to record a provision in relation to environmental costs of retiring an asset ('to reserve environmental liabilities') if its fair value could be reasonably estimated. How do you think companies would go about estimating such a provision?
accounting homework help, accounting homework, financial accounting assignment help, financial accounting assignment, management accounting assignment, cost accounting assignment help, accounting homework help online, accountancy assignment, managerial accounting assignment help, accounting assignment help online, management accounting assignment help, managerial accounting homework help, cost accounting assignment, business accounting assignment help, cost accounting homework help, financial accounting homework help, accounting homework solutions, college accounting homework help, accounting assignment solution, corporate accounting assignment help,
Holding a PhD degree in Finance, Dr. John Adams is experienced in assisting students who are in dire need...
55 - Completed Orders
Canada, Toronto I have acquired my degree from Campion College at the University of Regina Occuption/Desi...
52 - Completed Orders
Even since I was a student in Italy I had a passion for languages, in fact I love teaching Italian, and I...
102 - Completed Orders
To work with an organization where I can optimally utilize my knowledge and skills for meeting challenges...
109 - Completed Orders
JOB OBJECTIVE Seeking entry level assignments in Marketing & Business Development with an organization...
202 - Completed Orders
Current work profile Project manager- The Researchers Hub (2nd Jan 2016 to presently working) Researc...
20 - Completed Orders
Sales Assistant, Mito Marina Assigned to the Stationery dept – assisted in merchandising, stock taking...
100 - Completed Orders
Personal Profile Dedicated and highly experienced private chauffeur. High energy, hardworking, punctua...
200 - Completed Orders
I'm Lizzy, full time education specialist in English, Essay Writing, Economics and Maths. Having Assi...
109 - Completed Orders