Reference no: EM13340466

PART A

(Maximum 1000 Words)

"Measurement is arguably the most important concept in the discipline of accounting, since without measurement; there would be no need for accounting. The second most important concept is historical cost because it provides a critical evidentiary perspective to the discipline of accounting. This also means that for financial reporting purposes, historical cost helps to ensure reliability and credibility of the financial statements. "

REQUIREMENTS

You are required to critically evaluate the above statements. Your answer should include a comparative analysis of the significant measurement models in accounting. As a minimum, this should encompass a detailed discussion of historical cost accounting (outlining the advantages and disadvantages of the cost model), and at least six(6) alternative measurement models that have been adopted in current accounting standards.

PART B
(Maximum 750 Words)

Assume that you have been appointed as a consultant to Intellec-Morph Design Limited (IMDL), a successful firm in the computer software business, to develop a management compensation scheme that will motivate managers to maximize the value of the firm for shareholders. You are permitted to construct individual agreements for the senior executives of IMDL.

REQUIREMENTS

You are required to write a brief report to the firm's remuneration committee covering the following issues:

1. How (and why) individual remuneration packages of executives can be structured to motivate managers to maximize equity value?
2. The extent to which different forms of compensation can be structured to suit the individual attributes/characteristics of managers
3. The various mechanisms that might be employed to monitor the performance of managers and thus provide assurances to the IMDL committee that incentive schemes are working.
4. The potential forms of ex-post opportunistic behaviour that managers may still engage in despite the existence of performance contracts?

Your report must include explanations of relevant theories which might support the basis of your conclusions/recommendations.