scholarly journals The Use of Fair Value and Historical Cost Accounting for Investment Properties in China

2014 ◽  
Vol 8 (1) ◽  
pp. 101-113 ◽  
Author(s):  
Ross Taplin ◽  
Wei Yuan ◽  
Alistair Brown
Keyword(s):  
Cost Accounting ◽  
Fair Value ◽  
Historical Cost ◽  
Historical Cost Accounting

Banks' Asset Reporting Frequency and Capital Regulation: An Analysis of Discretionary Use of Fair-Value Accounting

2018 ◽  
Vol 94 (2) ◽  
pp. 157-178 ◽  
Author(s):  
Carlos Corona ◽  
Lin Nan ◽  
Gaoqing Zhang
Keyword(s):  
Cost Accounting ◽  
Fair Value ◽  
Capital Requirements ◽  
Capital Adequacy ◽  
Critical Determinant ◽  
Historical Cost ◽  
Accounting Choices ◽  
Reporting Frequency ◽  
Value Changes ◽  
Historical Cost Accounting

ABSTRACT This paper examines banks' choice between fair-value and historical-cost accounting when reported accounting information is used in capital requirement regulation. We center our analysis on a key difference between fair-value and historical-cost accounting: the frequency with which asset value changes are reported. We show that the elasticity of banks' loan returns to aggregate lending is a critical determinant of the interaction between capital adequacy requirements and accounting choices. If lending returns are inelastic, then higher capital requirements reduce fair-value usage. By contrast, higher capital requirements encourage fair value if capital requirements are low and lending returns are sufficiently elastic. In equilibrium, banks may elect different accounting choices, and we find that mandating uniform adoption of historical cost (fair value) is desirable when capital requirements are loose (tight). Our study offers many other implications about fundamental links between accounting and prudential choices.

scholarly journals Conceptual framework and measurement: A survey on the international debate

2015 ◽  
Vol 12 (4) ◽  
pp. 24-37
Author(s):  
Giusy Guzzo ◽  
Massimo Costa
Keyword(s):  
Conceptual Framework ◽  
Financial Reporting ◽  
Cost Accounting ◽  
Fair Value ◽  
Policy Implications ◽  
Mixed System ◽  
Fair Value Accounting ◽  
International Debate ◽  
Historical Cost ◽  
Historical Cost Accounting

In response to the ‘2011 Agenda Consultation’, the IASB launched in July 2013 a call for a new Discussion Paper on the ‘Conceptual Framework for Financial Reporting’. This article aims to offer a contribution to the debate on the effectiveness of the theme of ‘Measurement’, by investigating the use of the current evaluation models in the literature and practice of Financial Reporting. The article proposes at first a historical survey both of the international debate on Fair Value Accounting vs. Historical Cost Accounting and of the Italian theories on the valuation. Later the paper proposes some considerations about the key questions related to Measurement and the possible policy implications of the main research finding, by conceptualising a ‘mixed’ system combining fair value Accounting and historical cost Accounting to try giving a more rational base to the financial reports.

scholarly journals Penerapan Fair Value dan Historical Cost Terhadap Kualitas Laporan Keuangan Pada Entitas Mikro Kecil Menengah (EMKM)

2018 ◽  
Vol 2 (1) ◽  
Author(s):  
Devica Pratiwi
Keyword(s):  
Cost Accounting ◽  
Fair Value ◽  
Fair Value Accounting ◽  
Historical Cost ◽  
Historical Cost Accounting

Laporan keuangan merupakan sumber informasi atas kondisi keuangan suatu perusahaan yang diperlukan untuk memenuhi kebutuhan berbagai pihak, baik internal maupun eksternal perusahaan yang keputusannya dipengaruhi oleh laporan keuangan yang dihasilkan oleh perusahaan. Di Indonesia, baru-baru ini telah diterbitkan Standar Akuntansi Keuangan untuk Entitas Mikro Kecil Menengah atau dapat disebut SAK EMKM. Variasi dalam komitmen perusahaan untuk meningkatkan kualitas pelaporan keuangan berdasarkan IFRS diharapkan dapat mempengaruhi manfaat positif dalam perbandingan laporan keuangan perusahaan skala besar, menenga, kecil, dan mikro. Oleh sebab itu, penelitian ini akan meneliti apakah Fair Value layak diterapkan bagi Entisas Mikro Kecil Menengah. Prosedur yang digunakan dalam penelitian ini dengan cara kualitatif-deskriptif dan menggunakan teknik komparatif untuk membandingkan konsep fair value accounting dan konsep historical cost accounting. Hasil dari beberapa penelitian yang diolah, mengatakan bahwa keberadaan fair value accounting cukup memberatkan bagi EMKM, karena membutuhkan waktu, tenaga, dan biaya besar dalam penyelenggaraan fair value accounting. Kata Kunci: Nilai Wajar, EMKM, nilai wajar, harga perolehan, standar akuntansi

scholarly journals The shift of accounting models and accounting quality: The case of Norwegian GAAP

2017 ◽  
Vol 14 (4) ◽  
pp. 289-300 ◽  
Author(s):  
Tonny Stenheim ◽  
Dag Øivind Madsen
Keyword(s):  
Financial Reporting ◽  
Value Relevance ◽  
Balance Sheet ◽  
Cost Accounting ◽  
Fair Value ◽  
Accounting Quality ◽  
Historical Cost ◽  
Ifrs Adoption ◽  
Conservative Accounting ◽  
Historical Cost Accounting

This paper investigates the change in accounting quality when firms shift from a revenue-oriented historical cost accounting regime as Norwegian GAAP (NGAAP) to a balance-oriented fair value accounting regime as International Financial Reporting Standards (IFRS). Previous studies have demonstrated mixed effects on the accounting quality upon IFRS adoption. One possible reason is that the investigated domestic GAAP to a large extent has been adjusted to IFRS prior to IFRS adoption. This is not the case in NGAAP where IFRS adoption led to significant changes in the recognition and measurement rules. To investigate the change in accounting quality, the paper makes use of a panel design with 640 firm-year obserations from 2001 up to the financial crisis year 2008, including four years of pre-IFRS NGAAP observations and four years of IFRS-observations. The paper employs four commonly used approaches to investigate accounting quality: test of value relevance of net earnings and book values, accrual quality of net earnings, incidence of small positive net earnings and test of timely loss recognition. The paper demonstrates that the adoption of IFRS increases the relevance accounting information has for valuation purposes. IFRS requires recognition of intangible assets and off-balance sheet liabilities not allowed under NGAAP. Moreover, IFRS allows the use of fair value to a larger extent than NGAAP. The paper also demonstrates that NGAAP leads to timelier recognition of losses than IFRS. This supports the notion that historical cost accounting, which is the basic accounting principle under NGAAP, provides more conservative accounting numbers. Overall, this suggests that IFRS provides information more useful for valuation purposes, but to a lesser extent stewardship purposes which generally favours conservatism. NGAAP on the other hand, provides information less relevant for valuation purposes, but more relevant for stewardship purposes.

scholarly journals Fair Value Accounting vs. Historical Cost Accounting

2012 ◽  
Vol 17 (1) ◽  
pp. 1-6
Author(s):  
Paul Jaijairam
Keyword(s):  
Balance Sheet ◽  
Financial Statements ◽  
Cost Accounting ◽  
Fair Value ◽  
Fair Value Accounting ◽  
Historical Cost ◽  
Income Statement ◽  
Accounting Reports ◽  
The Impact ◽  
Historical Cost Accounting

This paper reviews fair value accounting method relative to historical cost accounting. Although both methods are widely used by entities in computing their income and financial positions, there is controversy over superiority. Historical cost accounting reports assets and liabilities at the initial price they were exchanged for at the time of the transaction. Conversely, fair value accounting quotes the prevailing price in the market. Nevertheless, while both methods of accounting affect financial statements, the impact of fair value accounting on the balance sheet and income statement is extreme due to the potential volatility of the method. Fair value accounting is deemed superior when compared to historical cost accounting because it reflects the current situation in the market whereas the later is based on the past. In addition, in relative terms, fair value accounting provides users with more current financial information and visibility.

scholarly journals Fair value accounting versus historical cost accounting: a theoretical framework for judgment in financial crisis

2013 ◽  
Vol 11 (1) ◽  
pp. 147-153 ◽  
Author(s):  
Massimo Costa ◽  
Giusy Guzzo
Keyword(s):  
Financial Crisis ◽  
Cost Accounting ◽  
Fair Value ◽  
Theoretical Framework ◽  
Mixed System ◽  
Accounting System ◽  
Fair Value Accounting ◽  
Historical Cost ◽  
Value Measurement ◽  
Historical Cost Accounting

Since the 2008 global economical and financial crisis, the fair value measurement has acquired a controversial position both within the accounting regulatory committees and the accounting theory. The literature generally examines two opposite central paradigms of evaluation, namely the Fair Value Accounting (FVA) and the Historical Cost Accounting (HCA). The paper, after a literature review through both these opposite sides, suggests a theoretical framework, using the basic concept of “accounting system”, for the choice between the opposite paradigms, considered noteworthy in times of crisis as it should allow to conceptualize a ‘mixed system’, combining FVA and HCA in different ways according to the different contexts and entities reported by the financial statements.

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