Investments at market value

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Hardly a day goes by without an article appearing on the crises affecting many of our financial institutions in the United States. It is estimated that the savings and loan (S&L) debacle of the 1980s, for example, ended up costing $500 billion ($2,000 forevery man, woman, and child in the United States). Some argue that if the S&Ls had been required to report their investments at market value instead of cost, large losses would have been reported earlier,

which would have signaled regulators to close those S&Ls and, therefore, minimize the losses to U.S. taxpayers. Explain how reported accounting numbers might affect an individual's perceptions and actions. Cite two examples.

Reference no: EM13491810

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