Fair Value Accounting And Financial Reporting - 2166 Words

Introduction In today’s businesses, there has been an increase in the demand for financial reporting and also, the need to have reliable measurements of fair value and its disclosures. The need for reliable information has caused continuous change to accounting policies which has posed a challenge not only to management of companies, but also to auditors. The frequent changes in accounting principles pose a challenge for managers in measuring accounting estimates accurately and are an exceedingly difficult task. Fair value accounting is a financial reporting approach in which companies are required to measure and report on an ongoing basis certain assets and liabilities at estimates of the prices they would receive if they were to sell the assets or would pay if they were to settle their liabilities. Under fair value accounting, companies report losses when the fair values of their assets decrease or liabilities increase. Those losses reduce companies’ reported equity and may also reduce companies’ reported net income. The International Financial Reporting Standards (IFRS) also defines fair value as â€Å"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 notShow MoreRelatedAdvance Issues In Accounting1743 Words   |  7 PagesAdvance Issues In Accounting Introduction Accounting is the art of measuring and communicating financial information. To maintain uniformity and consistency in preparing and maintaining books of accounts, certain rules or principles have been evolved. These rules or principles are classified as concepts and conventions. One of the important concept in accounting is â€Å"Measurement† (Mattessich, 1977) The IASB Framework states: â€Å"Measurement is the process of determining the monetary amountsRead MoreThe Financial Accounting Standards Board1621 Words   |  7 PagesThe Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157: Fair Value Measurements (FAS 157) to provide guidance about how entities should determine fair value estimations for financial reporting purposes. These guidelines coincide with the conceptual framework and provide a baseline for accounting professionals to gauge the true worth of an asset. The goal of the conceptual framework to provide clear concise information across the accounting professionRead MoreUniform accounting standards produce uniform financial reporting. Discuss and evaluate the above statement in the context of the International Financial Reporting Standards (IFRS)1064 Words   |  5 Pageswhat the phrases â€Å"accounting standards† and â€Å"financial reporting† refer to. Accounting standards refer to th e accounting methods used in an accounting system like the IFRS. Financial reporting refers to the representation of financial information, in order to be uniform the financial reporting must be based on a fixed set of rules, invole complete objectivity and no bias. The IFRS (International financial reporting standards) has indeed helped the uniformity of financial reporting. However, in someRead MorePreparation of a Financial Statement844 Words   |  3 PagesIntroduction In preparation of financial statements, it is important that an appropriate method is adopted for asset measurement within the financial reporting framework. Asset measurement has been in existence and practiced for years immemorial, for Vehmanen(2013, p.132) measurements involve assigning numeral to objects or events in accordance to a set of rules or standards. The gradual sophistication in financial reporting and evolution of global investment markets together with the increasingRead MoreHistorical Development Of Fair Value Measurement1400 Words   |  6 PagesFair value measurement is one of the models which provide guidance on how entities should determine the fair value of financial instruments for reporting purposes. This paper discusses the Financial Accounting Standards Board (FASB) Exposure Draft issued on December 3, 2015 which proposed amendments to Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements. The paper analy zes some of the key points of the exposure draft, among other things, the history andRead MoreNoted In Their Critical Accounting Estimates Section Of937 Words   |  4 PagesNoted in their critical accounting estimates section of their footnotes, they claim that their financial statements conform with U.S. generally accepted accounting principles and with general practices within the banking industry. It is believed that in connection with the application of those principles, Pinnacle Financial Partners have made assumptions, judgments and estimates which, in the case of the determination of their allowance for loan losses, the valuation of other real estate owned,Read MoreIfrs And Gaap : Ifrs Vs Gaap1176 Words   |  5 Pagesimplement and apply the generally accepted accounting principles, also known as GAAP, within their respective countries. GAAP regulations are in place to preserve a level of uniformity between the reports of each of their individual firms; however, this can be an issue when the parent company has subsidiaries in foreign countries. In order to alleviate these issues, the International Accounting Standards Board (IASB) created the International Financial Reporting Standards, also known as IFRS. IFRS regulationsRead MoreFair Value vs. Historical Cost Accounting1188 Words   |  5 PagesDifference between historical cost and fair value accounting In order to make the most profitable and rational decisions entity’s stakeholders have to evaluate organisation’s financial statements. Today’s world of rapidly changing prices has made it difficult to estimate what something is actually worth. Thus leading to debates at what price – historical costing price or market value – assets and liabilities should be reported. Therefore, before making any evaluations about reported transactionsRead MoreEssay about Gators Electronic1411 Words   |  6 Pageslikely than not that the fair value of a reporting unit is less than its carrying amount and proceeded with Step 1 of the quantitative two-step goodwill impairment test for all reporting units. On the basis of the valuation prepared by Management’s Expert, Gator estimated that the fair value of all of the reporting units exceeded their respective carrying values and no Step 2 analysis was required or prepared. The focus of this case study will be on the U.S. reporting unit. The engagement partnerRead More The Need for Regulation in Financial Reporting Essay1539 Words   |  7 PagesThe Need for Regulation in Financial Reporting Discuss: Since 1990 the Accounting Standards Board has produced Financial Reporting Standards (FRSs) It has been performing a very important role in the economics market as the published accounts are the essential sources of information about the organizationsÂ’ performance which is available of the both internal and external user group in large organizations. l Financial Reporting Regulations in UK Regulators that establish requirements