Does it Matter Who Serves on the Financial Accounting Standards Board? Bob Herz's Resignation and Fair Value Accounting for Loans

2013 ◽  
Author(s):  
John (Xuefeng) Jiang ◽  
Isabel Yanyan Wang ◽  
Yuan Xie
Keyword(s):  
Accounting Standards ◽  
Fair Value ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Fair Value Accounting

scholarly journals An Evaluation Of The Implementation Of Fair Value Accounting: Impact On Financial Reporting

2011 ◽  
Vol 9 (1) ◽  
Author(s):  
Karen T. Cascini ◽  
Alan DelFavero
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Fair Value ◽  
The United States ◽  
Financial Accounting ◽  
Financial Assets ◽  
Financial Accounting Standards Board ◽  
Continuous Change ◽  
Fair Value Accounting ◽  
The Cost

<p class="MsoNormal" style="text-justify: inter-ideograph; text-align: justify; margin: 0in 0.5in 0pt; mso-pagination: none;"><span style="color: #0d0d0d; font-size: 10pt; mso-themecolor: text1; mso-themetint: 242;"><span style="font-family: Times New Roman;">The accounting industry is in a state of continuous change.<span style="mso-spacerun: yes;">&nbsp; </span>In the United States, the historical cost principle has traditionally been the foundation of accounting.<span style="mso-spacerun: yes;">&nbsp; </span>Until recently, assets and liabilities have been required to be recorded at their acquisition prices, with the exception of designated financial assets and financial liabilities.<span style="mso-spacerun: yes;">&nbsp; </span>However, the Financial Accounting Standards Board (FASB) has now created accounting standards that are distant from the cost principle.<span style="mso-spacerun: yes;">&nbsp; </span>Statement of Financial Accounting Standards No. 157: Fair Value Measurements, issued in September 2006 (FAS157, now codified as ASC 820) and Statement of Financial Accounting Standards No. 159: The Fair Value Option for Financial Assets and Financial Liabilities, created in February 2007 (FAS159, now ASC 825-10-25), significantly increases the viability of fair value accounting. The purpose of this paper is to illustrate the benefits and pitfalls of fair value and the corresponding affects on various stakeholders. <span style="mso-spacerun: yes;">&nbsp;&nbsp;</span></span></span></p>

scholarly journals Fair-value-accounting, inactieve markten en procycliciteit

2010 ◽  
Vol 84 (1) ◽  
pp. 7-26
Author(s):  
Bert-Jan Bout ◽  
Ralph Ter Hoeven ◽  
Henk Langendijk
Keyword(s):  
Best Practices ◽  
Accounting Standards ◽  
Fair Value ◽  
Financial Accounting ◽  
Advisory Panel ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Fair Value Accounting ◽  
Expert Advisory ◽  
Mate Waarin

In deze bijdrage besteden wij aandacht aan de gevolgen van inactiviteit van de markten voor de wijze waarop de fair value van financiële instrumenten wordt bepaald. De bestaande IFRS hieromtrent en de aanvullende guidance van de door de Financial Accounting Standards Board (FASB) en International Accounting Standards Board (IASB) opgerichte Expert Advisory Panel (EAP) worden in dit kader behandeld. Tevens bespreken wij de vermeende procyclische werking van waardering tegen fair value aan de hand van een aantal onderzoeksrapporten die nader ingaan op de achtergronden en oorzaken van de invloed van fair-value-accounting (FVA) op het financiële systeem. In een jaarrekeningonderzoek onder alle banken en verzekeraars binnen de ‘FTSE Eurofirst 300’-index, wordt nagegaan in hoeverre de financiële activa en financiële verplichtingen op fair value zijn gewaardeerd; de gevoeligheid voor fair-value-veranderingen wordt daarbij op netto-basis beoordeeld. Daarnaast is onderzocht of er een verband bestaat tussen de grootte van een bank en de mate waarin financiële activa en financiële verplichtingen op fair value zijn gewaardeerd. Ook wordt onderzocht, aan de hand van de fair-value-hiërarchie, in hoeverre marktinactiviteit invloed heeft gehad op de wijze waarop de financiële instrumenten zijn gewaardeerd. Tevens geven wij enkele best practices op een aantal toelichtingsgebieden. Het artikel sluiten wij af met een nabeschouwing.

“Unreliable Accounts: How Regulators Fabricate Conceptual Narratives to Diffuse Criticism” by Karthik Ramanna: A Comment on Ideological Capture

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Vera Palea
Keyword(s):  
Financial Reporting ◽  
Capital Market ◽  
Financial Stability ◽  
Accounting Standards ◽  
Fair Value ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Fair Value Accounting ◽  
Balance Sheets ◽  
Accounting Practice

Abstract Karthik Ramanna in ‘Unreliable accounts: How regulators fabricate conceptual narratives to diffuse criticism’ considers how the Financial Accounting Standards Board (FASB) justified a conjunctural break from historic cost accounting (HCA) to Fair Value Accounting (FVA). Karthik’s paper explores how the US Financial Accounting Standards Board (FASB) legitimized the introduction of fair value accounting (FVA). This fundamental reorientation of financial reporting practice can, he argues, be understood within a framing device: conceptual veiling. Firstly, the FASB is (suspected to be) captured by the interests of investors and capital market actors. Secondly, the FASB needed to construct new narratives to enable this reorientation in accounting practice and this was achieved with changes to the governing conceptual framework. An alternative framing device is offered in this review, that of the financialization of company financial reporting and implications for company viability as opposed to a capital market efficiency perspective. Financialized accounting facilitates the valuation of a range of asset classes to a market value. These asset valuations are speculative in nature. FVA accounting imports speculative capital market risk onto company balance sheets and this can threaten company financial stability and viability for a going concern.

scholarly journals Valuation Implications of FAS 159 Reported Gains and Losses From Fair Value Accounting for Liabilities

2021 ◽  
pp. 0148558X2110178
Author(s):  
Sung Gon Chung ◽  
Cheol Lee ◽  
Gerald J. Lobo ◽  
Kevin Ow Yong
Keyword(s):  
Stock Returns ◽  
Accounting Standards ◽  
Institutional Ownership ◽  
Fair Value ◽  
Negative Association ◽  
Financial Accounting ◽  
Fair Value Accounting ◽  
Economic Implications ◽  
Current Period ◽  
Gains And Losses

This study examines the economic implications of fair value liability gains and losses arising from the adoption of Statement of Financial Accounting Standards No. 159 (hereafter, FAS 159). We find a positive correspondence between a firm’s FAS 159 fair value liability gains and losses and current period stock returns, consistent with the notion that these gains and losses are priced by equity investors. However, further analysis indicates that fair value gains and losses from liabilities have a statistically significant negative association with future returns, suggesting that investors misprice this earnings component and subsequently correct the mispricing. We also find that the negative association for fair value gains is stronger for firms with lower levels of institutional ownership.

scholarly journals MENGUPAS PERSOALAN STANDAR AKUNTANSI KEUANGAN - GOODWIL DI BERBAGAI NEGARA : SUATU PENDEKATAN STUDI LITERATUR

2017 ◽  
Vol 2 (2) ◽  
Author(s):  
Deddy Kurniawansyah
Keyword(s):  
Research Method ◽  
Intangible Assets ◽  
Accounting Standards ◽  
Financial Statements ◽  
Fair Value ◽  
Financial Accounting ◽  
International Accounting Standards ◽  
Fair Value Accounting ◽  
Literature Study ◽  
Accounting Standard

This literature study explains and describe the development of the concept of goodwill from the perspective of accounting by observing and describing until the development at this time, discusses differences in accounting standards of goodwill applicable in some countries, and explains the things that contradict the goodwill. This research method used qualitative with literature study. The results of this study are in some countries, the concepts and rules on goodwill accounting have undergone various changes, including international accounting standards issued by the IASC. Initially goodwill is capitalized and amortized over no more than 20 years. But, along with the increasing use of fair value accounting in accounting standards, thetreatment for goodwill also experienced a shift that is eliminated by the amortization method is replaced by doing impairment test to goodwill. The results of this study contribute as add to the treasury of financial accounting literature, especially accounting treatment of goodwill as intangible assets in the financial statements of various countries such as Indonesia, America and the England.Keyword :Goodwiil, Impairment, Financial Accounting Standard

scholarly journals A Note On Accounting For Employee Stock Options When Reporting Diluted Earnings Per Share Under The Treasury Stock Method

2011 ◽  
Vol 6 (10) ◽  
Author(s):  
David T. Doran
Keyword(s):  
Stock Options ◽  
A Priori ◽  
Market Price ◽  
Accounting Standards ◽  
Fair Value ◽  
Financial Accounting ◽  
Employee Stock Options ◽  
Financial Accounting Standards Board ◽  
Earnings Per Share ◽  
Free Environment

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">Firms must currently apply the fair value method in determining the amount of employee compensation incurred in the case of employee stock options.<span style="mso-spacerun: yes;">&nbsp; </span>Current GAAP also requires that for purposes of calculating diluted earnings per share (EPS), the treasury stock method be applied where the assumed proceeds from exercise of the optioned shares is used to purchase shares of the firm&rsquo;s stock at its average market price of the earnings period.<span style="mso-spacerun: yes;">&nbsp; </span>These incremental shares increase the denominator for purposes of calculating diluted EPS.<span style="mso-spacerun: yes;">&nbsp; </span>These requirements are consistent across the pronouncements of the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB).<span style="mso-spacerun: yes;">&nbsp; </span>This study extends the work of Doran (2005) and Doran (2008).<span style="mso-spacerun: yes;">&nbsp; </span>These previous studies found that applying the treasury stock method where shares are assumed purchased at the average for the period price (instead of end of year price) understates the number of incremental shares (the denominator), which overstates diluted EPS.<span style="mso-spacerun: yes;">&nbsp; </span>However, these previous works assumed that no shares were actually purchased for the treasury during the earnings period.<span style="mso-spacerun: yes;">&nbsp; </span>The FASB indicates one reason that the average for the period price is appropriate is because if treasury shares purchases were to occur, &ldquo;the shares would be purchased at various prices, not at the price at the end of the period.&rdquo;<span style="mso-spacerun: yes;">&nbsp; </span>This study tests the notion that the average for the period price is appropriate under circumstances where the firm actually purchases shares for the treasury at its average market price during the earnings period.<span style="mso-spacerun: yes;">&nbsp; </span>This paper employs a simple one period model that assumes a risk free environment with complete certainty.<span style="mso-spacerun: yes;">&nbsp; </span>The model allows comparison of computed EPS with an a priori known, correct amount.<span style="mso-spacerun: yes;">&nbsp; </span>Consistent with Doran (2005) and Doran (2008), the results here again indicate that assuming purchase of treasury shares at their average market price of the earnings period understates the EPS denominator which results in EPS overstatement. <span style="mso-spacerun: yes;">&nbsp;</span>Correct diluted EPS is derived when the shares assumed purchased under the treasury stock method are acquired at the higher period ending market price.<span style="mso-spacerun: yes;">&nbsp; </span></span></span></p>

scholarly journals Fair value accounting volgens de IASB en Limperg

2005 ◽  
Vol 79 (4) ◽  
pp. 125-131
Author(s):  
Henk Langendijk
Keyword(s):  
Accounting Standards ◽  
Fair Value ◽  
Financial Accounting ◽  
Fair Value Accounting ◽  
Zeer Veel

Fair value is een belangrijk waardebegrip wat in zeer veel International Financial Accounting Standards (IFRS) is opgenomen, waarbij in bepaalde gevallen ook de ongerealiseerde waardestijgingen in de winst- en verliesrekening worden opgenomen. Limperg zag fair value (= de directe en indirecte opbrengstwaarde) niet als een waardebegrip op de voorgrond maar op de achtergrond. Waardering tegen vervangingswaarde had voor hem het primaat. Toch kan ook volgens Limperg fair value wel worden toegepast. Hierbij moet worden gedacht aan impairments van materiële vaste activa (in zijn taalgebruik extra-afschrijvingen) en waardering van vaste activa die worden aangehouden voor de verkoop (en dus niet meer dienstbaar aan de productie). Voorts is fair value voor hem ook mogelijk als waarderingsgrondslag bij zelfstandige vruchtdragers (effecten en woonhuizen), indien deze fair value gelijk is aan de vervangingswaarde. Het direct verantwoorden van de ongerealiseerde waardestijgingen van zelfstandige vruchtdragers ging hem te ver. Deze stijgingen moeten volgens hem op een herwaarderingsreserve worden geboekt. Dit is een belangrijk verschil met de IFRSs waarbij voor bepaalde effecten en voor vastgoedbeleggingen – mits als waarderingsgrondslag voor fair value is gekozen – directe verantwoording van ongerealiseerde waardestijgingen in de winst- en verliesrekening is voorgeschreven.

scholarly journals The FASBs Concepts Statement On Cash Flows And Present Value

2011 ◽  
Vol 19 (4) ◽  
Author(s):  
Stanley Martens ◽  
Thomas Berry
Keyword(s):  
Cash Flow ◽  
Accounting Standards ◽  
Fair Value ◽  
Cash Flows ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Present Value ◽  
Numerical Examples ◽  
Flow Information

In February 2000, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Concepts No. 7, Using Cash Flow Information and Present Value in Accounting Measurements.  In this document the FASB asserts without proof that a present value computation along its lines will provide a good estimate of the fair value of an asset or liability.  Using numerical examples provided by the FASB, we attempt to construct arguments in support of the FASB’s claim.  We find that such arguments require strong and not at all obvious assumptions about players in hypothetical markets.

KRITIK TERHADAP KLAIM KEANDALAN PADA HIRARKI PENGUKURAN NILAI WAJAR: Sebuah Literature Review

Wahana ◽  
2019 ◽  
Vol 21 (2) ◽  
pp. 77-87
Author(s):  
Nugroho Wisnu Murti ◽  
Indriyana Widyastuti
Keyword(s):  
Literature Review ◽  
Accounting Standards ◽  
Fair Value ◽  
Review Literature ◽  
Financial Accounting ◽  
Third Party ◽  
Financial Accounting Standards Board ◽  
Fundamental Study ◽  
Professional Assessment ◽  
Value Hierarchy

This article provide consideration for the Indonesian Financial Accounting Standards Board that requires a review of Indonesia's Financial Accounting Standards (PSAK) 68 concerning Measurement of Fair Value. Fair Value has potential misinterpretation definition between price and value. This potential misinterpretation is indicated to be the rationale put forward in the fair value hierarchy which is indicated unfair. This potential based on claims at each level which can be questioned with the existence of aggressive discretionary issues and the analogy of financial statement analysis. However, this problem had been proven getting down by involvement of independent and professional assessment. Therefore, fair value hierarchy has the same potential of reliability by the third party. If each level has the same potential, this hierarchy can be removed to avoid misinterpretation by users of financial statements. The obligation to disclose the basis of valuation is fairer to be implemented than the hierarchy which is have potensial misinterpretation. This opinion was not without foundation, because this article based on a literature review that starts from: 1) study of the relevance of the Indonesian Financial Accounting Standards concerning fair value with the Indonesian Assessment Standards; 2) fundamental study to interpret fair value based on review literature; and 3) study of allegations of the same potential submitted in the direction of fair value as regulated in PSAK 68. Keywords: fair value hierarchy, riliability, agresive discretionary, PSAK 68

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