separated and treated differently by the investor. It is an either or situation, the issuer has either a debt
security or equity securities, never both.
Another argument for treating convertible debt as straight-debt lies in the notion that it should be
goodwill is now reported at the amount purchased by the parent company plus the noncontrolling
interests share as measured by its fair value.
This treatment is consistent with the initial measurement of an asset at its fair value. At acquisition, an
The FASB not only favors the position that balance sheets should distinguish between debt and equity,
but also intends to make determinations on how to accomplish such distinctions between the components
of complex financial instrument.
The solution to this case is dependant upon the companies selected by the students. A recommended
method of checking the students solutions is to require them to turn in their downloaded financial
statements with their solutions.
The project was undertaken because many users think that operating leases give rise to assets
and liabilities that should be recognized in the financial statements of lessees. Consequently,
users routinely adjust current and future obligations in an at
d. New definitions of tax credit and investment tax credit as:
Tax credit is a tax benefit that takes the form of an amount that reduces income tax
Investment tax credit is a tax credit that relates directly to the acquisition of depreciab
Finally, we do not agree that financial liabilities should be reported at fair value. If management does
not plan to extinguish the debt in the market place, the company will never have to pay fair value.
Theoretically yes. These costs ar
equipment. The Boards purpose in revising the standard was to provide additional guidance on
IAS No. 16 indicates that items of property, plant, and equipment should be recognized as assets
when it is probable that the future economic
In IAS No. 2, the IASB held that the objective of inventory reporting is to determine the proper amount
of cost to recognize as an asset and carry forward until the related revenues are recognized. The board
stated a preference for the specific
non-current assets and liabilities that uses a one year or the operating cycle criterion. Assets and
liabilities presented within each section would be further analyzed as short-term and long-term, unless
presenting assets and liabilities in order of liqu
the requirements and guidance in IASB standards and interpretations dealing with similar
and related issues; and
the definitions, recognition criteria and measurement concepts for assets, liabilities, income
and expenses in the Framework for the Presenta
Also, there is relative certainty about the realization of the revenue in terms of cash inflow.
Either the cash has been received or a measurable amount is receivable.
In this industry, the selling price is assured by the market, hence, the critical ev
approach. In other words, deduction, based on agreed upon assumptions, is an appropriate approach to
accounting theory development. This is the normative approach.
Agency relationships involve costs to principals. Agency costs have been de
reporting even with converged standards. Whether the required reconciliation mitigates
differences in implementation or improves compliance is an open issue; however, the SEC
should understand the role of the reconciliation in mitigating differences
The greatest advantage attributed by advocates of the harmonization of accounting standards is that
international financial information would be comparable. Consequently, the concerns about the
reliability of foreign financial statement
cases might not have occurred if management were not afforded the discretion to choose accounting
procedures and practices. In short, accounting choice can result in earnings management, fraudulent
financial reporting, a lack of financial statement transp
a. The FASB had three primary goals in developing the Codification:
1. Simplify user access by codifying all authoritative US GAAP in one spot.
2. Ensure that the codified content accurately represented authoritative US GAAP as of July1