Is also the case with finnish farms combatting

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is also the case with Finnish farms combatting ongoing profitability problems (MTT Economic Research 2008). 1.2 IFRS/IAS The so-called measurement perspective, rooted in the neoclassical theory of value and income (Hitz 2007, p. 332), represents the traditional view of the information objective of financial reporting, especially financial accounting. Neoclassic economic theory requires that the accounting information provided by financial statements enable decision-making or allow the optimal allocation of resources. Because economic income requires an unambiguous definition of value, it is well defined only in a neoclassical setting (Hitz 2007, p. 348). Moreover, Ashbaugh and Pincus (2000) have documented a decrease in the absolute value of analyst forecast errors, on average, after firms adopt IAS. In order to serve the book-keeping farms better, the International Financial Reporting Standards (IFRS) International Accounting Standard (IAS) 41 Agriculture and IAS 16 Property, Plant and Equipment as well as IAS 2 Inventories have been used to construct solutions for forestry accounting. Yanou (2001) argues that agricultural land should be accounted for under IAS 16 Property, Plant and Equipment or IAS 40 Investment Property, intangible assets under IAS 38 Intangible Assets, and products after harvest under IAS 2 Inventories. However, IAS 40 Investment Property is not applied because it states that owner-occupied property belongs to the area of IAS 16. Moreover, intangible assets such as milk quotas, which are accounted for under IAS 38 Intangible Assets, but do not exist in non-industrial private forestry. Finally, IAS 20 Accounting for Government Grants and Disclosure of Government Assistance is not applied either, because accounting of government grants can be based on IAS 41 (para 34–35). In all, there is a strong demand for international accounting standards, and the International Accounting Standard Board (IASB) is attempting to meet this need by following the ultimate objective of ‘tell it the way it is’, according to Whittington (2005). Accounting quality after IFRS hinges on three factors: (i) the quality of the standards; (ii) the country’s legal and political system; and (iii) financial reporting incentives (Soderstrom and Sun 2007). The aim of enforcing all listed companies to prepare consolidated financial statements based on IFRS, beginning on 1 January 2005, was to increase its comparability and transparency (Brown and Tarca 2005). Empirical evidence shows that voluntary reported IAS earnings, in addition to the compulsory local Finnish accounting standards (LAS), were of significant relevance to foreign investors (Kinnunen et al. 2000), although, some items of IAS reconciliations are value relevant to all investors (Niskanen et al. 2000). 1 Standard-setters derive requirements for disclosures from a context-specific consideration of judgement and decisions that users of financial reports might make (Schipper 2007). IAS thus provides “better” information and support in acquiring loans and equity capital, according to Liebfried (2002). However, evidence from 1993–2002, according to Daske (2006),
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