Share-based payment transactions, Accounting Basics

Assignment Help:

Q. Share-based payment transactions?

The fair value accounting standard SFAS 157 applies to monetary assets of all publicly-traded companies in the US as of 2007 Nov. 15. It as well applies to non-financial assets and liabilities that are recognized or disclosed at fair value on a recurring basis. Beginning in 2009 the standard will concern to other non-financial assets. SFAS 157 applies to items meant for which other accounting pronouncements require or allow fair value measurements except share-based payment transactions, such as stock option compensation.

SFAS 157 offers a hierarchy of three levels of input data for determining the fair value of an asset or liability. This hierarchy ranks the reliability and quality of information used to determine fair values with level 1 inputs being the most reliable and level 3 inputs being the least reliable.

- Level 1 is quoted prices for identical items in active liquid as well as visible markets such as stock exchanges.

- Level 2 is observable information for similar items in active or else inactive markets such like two similarly situated buildings in a downtown real estate market.

- Level 3 are unobservable inputs to be used in situations where markets don't exist or are illiquid such as the present credit crisis. At this point fair market valuation turns into highly subjective. Fair value accounting has been a contentious topic ever since it was introduced For instance banks and investment banks have had to reduce the value of the mortgages and mortgage-backed securities to reflect current prices. Those prices declined harshly with the collapse of credit markets as mortgage defaults escalated in the financial crisis of 2008-2009. Despite debate over the proper performance of fair market value accounting International Financial Reporting Standards utilize this approach a lot more than the Generally Accepted Accounting Principles of the United States.


Related Discussions:- Share-based payment transactions

What is dividend, Q. What is dividend? One idea of the statement of ret...

Q. What is dividend? One idea of the statement of retained earnings is to connect the income statement and the balance sheet. The statement of retained earnings describes the c

What is difference between super stockist and distributor, Super stockist i...

Super stockist is one who supply product to n no. of distributor in area. Distributor is one who supply to dealers in the area

Debits and Credits, When does something that is a debit becomes a credit?

When does something that is a debit becomes a credit?

Cartwright inc has $1, Cartwright inc has $1,000,000 of 10% bonds outstandi...

Cartwright inc has $1,000,000 of 10% bonds outstanding on December 31, 20x8. On January 1, 20x9 adams corp and 80% owned subsidiary of Cartright, inc purchases a $250,000 part of c

Solved questoin of account, want a question of general jouranal , t account...

want a question of general jouranal , t account ,traial balance , income statement and balance sheet

Chnages, What is the latest change taking place in the accounting world tha...

What is the latest change taking place in the accounting world that will make a big difference to the way accountants prepare accounts?

calculations indicate about your company, Market determines are useful for...

Market determines are useful for analyzing publicly traded corporations. Many of these calculates use stock price, which reflects the market's (public's) expectation for the compan

Calculate the profit using balance sheet, Part 1 (a) Name and describe ...

Part 1 (a) Name and describe the three concepts that form the basis of double entry bookkeeping, and explain how they form the basis of double entry bookkeeping. (b) How doe

What is periodic inventory procedure, Q. What is periodic inventory procedu...

Q. What is periodic inventory procedure? In the periodic inventory procedure the Merchandise Inventory account is updated periodically subsequent to a physical count has been m

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd