17 download_doc-3.php

17 download_doc-3.php - A311(1/27/09)

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A311   (1/27/09) The fundamental accounting problem (which accounting principles and standards presumably  solve) is reliable , consistent  asset and liability valuation. 2.5  The Fundamental Accounting Problem: Asset and Liability Valuation Recall from economics, economic values are subjective : maxP i (x)       =  V i (U i (x)) maximum price       Utility individual i would pay for resource x monetary value (not necessarily actual price) to i So…It’s not generally  possible to observe economic values; they are not objective . But market  prices  are observable and objective. What would make objective prices “reliable” and “consistent” for acct. measurement? If buyer and seller both (1) have adequate information  about what is to be exchanged, and (2)  neither is compelled  to enter into the exchange, then it’s reasonable to assume  buyer and seller  agree on the value of the exchange and
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This note was uploaded on 04/18/2011 for the course BUS 311 taught by Professor Palmer during the Winter '11 term at Indiana.

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17 download_doc-3.php - A311(1/27/09)

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