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The argument among accountants and ?nancial statement users over the proper valuation procedures for assets and liabilities resulted in the release of SFAS No. 115 (see FASB ASC 320-19). The statement requires current-value disclosures for all investments in debt securities and for investments in equity securities that have readily determinable fair values and for which the investor does not have signi?cant in?uence. The chairman of the Securities and Exchange Commission termed histor-ical cost valuations “once-upon-a-time accounting.” Historical cost accounting also has been criticized as contributing to the savings and loan crisis of the 1980s. During that period, these ?nancial institutions continued to value assets at historical cost when they were billions of dollars overvalued. Critics of current-value accounting point out that objective market values for many assets are not available, current values cannot be used for tax purposes, using current values can cause earnings volatility, and management could use current value to “manage earnings.” Required:
a. Determine how current values might be determined for investments, land, buildings, equipment, patents, copyrights, trademarks, and franchises.
b. How might the use of current values in the accounting records cause earn-ings volatility?
c. Discuss how management might manage earnings using current cost data.
d. How do the requirements originally established by SFAS No. 157 affect the use of fair value measurement in ?nancial statements?
Compute the correct net income figure for each of the four years after taking into account the inventory errors.
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laura, the conrolling shareholder and an employee of southwest corporation, recives an anual salary of 750000. Based on several factors including the size of the corporation's operations and comparision of salary received by officers of comparably-si..
Prepare journal entries to record (a) the issuance of bonds on Jan. 1, 2011; (b) the first interest payment on June 30, 2011; and (c) the second interest payment on Dec. 31, 2011.
as the representative from your accounting firm or practice you are in charge of stock market analysis that will be
Is involved in a situation with the controller. Assume that your organization is facing a similar situation and your supervisor has asked for your help in resolving it. You have been asked to present your recommendations at the next meeting with your..
Calculate break even in pounds if the sales price increases by 10% and fixed costs increase by £12,000. Calculate break even in pounds if total sales increase by 10% and fixed costs increase by 10%. Calculate sales to achieve £600,000 after tax.
Advice to the business owner on how their business has performed for the month with particular focus on the profitability of the business.
Compute the correct amount for the ending inventory. Explain the basis for your treatment of each of the preceding items.
Red Bush and Green Tree are equal partners in Arbor Partnership. Each partner has contributed capital of $60,000 to the partnership and this is also their adjusted cost base for the partnership interest. Blue Grass wants to join the partnership as an..
the records of filippis company indicate a march 31 cash balance of 10806.05 which includes undeposited receipts for
ABC Co. has three issues related to revenue recognition that they are concerned about the application of the proper accounting procedures. Each of these issues are independent of each other. Briefly describe the accounting issue involved for each of ..
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