The Impact Of Fair Value On Financial Reporting Essay

The most controversial topic of today’s time in the world of accounting is fair value. However, one common point of confusion is the scale of businesses affected by fair value, and when fair value came onto the scene. According to Robert Herz and Linda MacDonald â€Å"...the use of fair value in financial reporting is not new. In fact, it has been in place for decades, principally for financial assets. But even then, fair value is not required for all assets.† (2008) The idea of using fair value measurements goes back at least to the 1930’s when Kenneth MacNeal wrote Truth in Accounting. It wasn’t until 1993, however, until the FASB released SFAS 115. SFAS 115 addresses the accounting and reporting for investments in equity securities that have readily determinable fair values and for all investments in debt securities. (FASB 1993) In 2006 the FASB released SFAS 157, which established a framework for measuring fair value. SFAS 157 also requires significant ly more disclosures about fair value estimates than ever before. (FASB 2006) Finally the FASB issues SFAS 159, which permits entities to choose to measure many financial instruments and certain other items at fair value. (FASB 2007) These statements set the stage for the discussion of the advantages and disadvantages of fair value. Also discussed, will be the problems with implementation of a full fair value measurement system. That discussion will be followed by a brief summary. II. Methodology The foundation of this paperShow MoreRelatedThe Debt And Equity Securities952 Words   |  4 Pageslosses reported in earnings. After examining the history of available for sale reporting standard and running pro forma scenarios of Yahoo! Inc.’s financial statements, the forthcoming evidence indicates that is better reflects the true risks taken by the company for the unrealized gains and losses on equity securities to appear in earnings rather than other comprehensive income. FASB issued Statement of Financial Accounting Standards No. 115 in May of 1993, which supersedes FASB Statement NoRead MoreAccounting Treatment Adopted By The Elements Of The Financial Statement Influences Accounting Information Produced Essay1669 Words   |  7 Pagesmeasuring the elements of the financial statement influences accounting information produced. The high quality information presented in the financial report should be able to represent characteristics of financial statements such as relevant and faithfulness representative, to reduce the information asymmetry. The appropriate method applied by a company would influence not only the external party but also management decisions regarding future corporate actions. The global financial crisis (GFC) has grownRead MoreThe Debt And Equity Securities1064 Words   |  5 Pagesforthcoming evidence indicates that the financial statements better reflect the true risks taken by the company when the unrealized gains and losses on equity securities to appear in earnings rather than other comprehensive income. FASB issued Statement of Financial Accounting Standards No. 115 in May of 1993, which supersedes FASB Statement No. 12, Accounting for Certain Marketable Securities. The statement requires securities, with readily determinable fair values, be placed into one of three classifications:Read MoreMajor Differences Between Us Gaap and Ifrs1062 Words   |  5 Pagesinstitutions whose accounting standards are used for financial reporting, Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS). The IFRS, whose rules are established and maintained by the International Accounting Standards Board (IASB), is the most widely used of the two institutions but the primary choice for the United States continues to be GAAP, whose standards are established and maintained by the Financial Accounting Standards Board (FASB). AlthoughRead MoreHistorical Development Of Fair Value Measurement1400 Words   |  6 PagesFair value measurement is one of the m odels 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 analyzes some of the key points of the exposure draft, among other things, the history andRead MoreThe Impact Of Fair Value Accounting On Real Estate Companies1497 Words   |  6 PagesTHE INFLUENCE OF FAIR VALUE ACCOUNTING ON REAL ESTATE COMPANIES : BASED ON HONG KONG LISTED COMPANIES (PROPOSAL) BY ZHANG MUDI DEBBIE 12250511 ACCOUNTING CONCENTRATION GAO JIAYI CINDY 12250295 ACCOUNTING CONCENTRATION An Honours Degree Project Submitted to the School of Business in Partial Fulfillment of the Graduation Requirement for the Degree of Bachelor of Business Administration (Honours) Hong Kong Baptist University Hong Kong January 2016 Table of Content Read MoreThe Financial Reporting Council ( Frc )986 Words   |  4 PagesThe Financial Reporting Council (FRC) has recently released four new standards: FRS 100 Application of Financial Reporting Requirements; FRS 101 Reduced Disclosure Framework; FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland; and FRS 103 Insurance Contacts. FRS 100 basically describes who does what with the new UK GAAP. It describes which principles apply to which type of business; when a business can apply the reduced disclosure framework; and when a businessRead MoreHow Ifrs Defines A Contingent Liability And Provide An Example Essay1373 Words   |  6 Pagesdominant standards were the IFRS (International Financial Reporting Standards) and U.S. GAAP (Generally Accepted Accounting Principles). Thus, both the standard setters namely; FASB (Financial Accounting Standards Board) and IASB (International Accounting Standards Board) launched a convergence project prior to the IFR S being essentially adopted by several countries. Measures are being taken to reduce likely impacts the frameworks would have on financial statement and reduction of last minute changesRead MoreAccounting Research: Advantages of Cash Flow1720 Words   |  7 Pagesand concepts/principles * Cash flow reporting satisfies the needs of all users better since cash flow is more direct with its messages. Some of the interested user parties are: * Creditors   -repayment of debts, overdue accounts * Management -cash flow reporting provides the type of information which decision should be taken re: relevant costs ( decision based on future cash flow) * Shareholders amp; Auditors -cash flow accounting and reporting can provide a satisfactory basis for stewardshipRead MorePositive Accounting Theory Perspective And Examining A Case Study Foster s : Less Goodwill, Higher Earnings1561 Words   |  7 PagesIn the contemporary studies, it can be seen that the new accounting standard significantly impacts on profits of the firm. Simultaneously, the value of the firm is also affected by the new accounting standard. Secondly, when it is taken to account of the imposition of a particular accounting method, this imposition provides implications for the efficiency of the organization. This essay will clarify those two issues by using a Positive Accounting Theory perspective and examining a case study ‘Foster’s: