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Unformatted text preview: Blake Joh ACC 301.03 Sam Kumar Group Assignment 1 Dan Wardle Vince Zydeck Conceptual Questions Prior to beginning this assignment we thought conceptually of how discount rates impact accounting values and what the introduction of fair value accounting means for accounting estimates, specifically: (1) As the discount rate increases, expenses and liabilities would decrease, and as the discount rate decreases, expenses and liabilities would increase. (2) Since discount rates can be an estimate (particularly for level 3 fair value), they become very susceptible to manipulation to convey more favorable account balances. (3) When scrutinized by analysts and shareholders to meet / exceed earnings benchmarks, conservative ethics fall by the wayside and management does whatever it takes to ensure success. (4) However, we feel that by way of auditors this can be mitigated and more accurate discount rates can be utilized. To facilitate this, auditors have a firm grasp on industry dynamics and can ensure rates accurate...
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This note was uploaded on 10/20/2011 for the course ACC 301 taught by Professor Anthony during the Summer '11 term at Michigan State University.
- Summer '11