Search results for "Historical Cost"
showing 7 items of 7 documents
Conceptual framework and measurement: A survey on the international debate
2015
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 implicatio…
Fair Value Accounting versus Historical Cost Accounting: a theoretical framework for judgment in financial crisis
2013
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 accord…
Have IFRS Changed How Stock Prices Associate with Earnings and Book Values? Evidence from Norway
2012
Firms listed on European, Australian and an increasing number of other stock exchanges are required to report according to International Financial Reporting Standards (IFRS). We use a Norwegian sample to examine whether the adoption of IFRS in 2005 has changed the value relevance of earnings relative to book values. IFRS are balance sheet-oriented and emphasize measurement at fair value. In contrast, Norwegian GAAP (NGAAP) are earnings-oriented and focus on measurement at transactional (historical) cost. IFRS also differ by recognizing more intangible assets, which further contributes to making IFRS less conservative than NGAAP. We find that more fair value accounting increases the value re…
Economic income, historical costing income and conservatism
2020
The paper intends to contribute at the debate on the ‘Evolutionary Advantage of Cost Accounting and Conservatism’ ( Accounting, Economics and Law: A Convivium, 2019. 9. issue) , founded on Braun’s study (2016) about The Ecological Rationality of Historical Costs and Conservatism. Moving from the IASB Conceptual Framework (2013) it stresses the renewed interest in income concept. The economic financial crisis of 2008-9 stimulated discussions between the traditional ‘received view’ of ‘cost-revenue approach’ (historical cost accounting) and ‘balance-sheet approach’ (‘current values’ and ‘present values’, that is ‘economic values’). Revaluations of assets, liabilities and owners’ equities are …
Have IFRS changed how stock prices are associated with earnings and book values?
2015
Purpose – The purpose of this paper is to examine how the mandatory shift from Norwegian Generally Accepted Accounting Principles (NGAAP) to International Financial Reporting Standards (IFRS) in Norway affected the valuation weights of earnings and book values, with the aim of gaining insights that are relevant for standard setters, investors and other users of accounting information. Design/methodology/approach – The authors extend the IFRS literature on structural shifts between the pre- and post-adoption periods by comprehensively controlling for factors that vary between the IFRS sample and the domestic Generally Accepted Accounting Principles (GAAP) sample. Moreover, the tests are des…
Hedge Effectiveness Testing as a Screening Mechanism for Hedge Accounting
2014
Accounting for financial instruments has been subject to much controversy, particularly accounting practices related to derivatives held for hedging purposes. For cash flow hedges, poor matching may result when fair-value accounting is prescribed for the hedging instrument and historical cost is prescribed for the assets that generate the “highly probable forecast transaction” to be hedged. Fair-value accounting may therefore induce excess variations in earnings, which could make a firm appear to be more risky than it actually is. The alternative to fair-value accounting offered by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) to fi…
Valeur boursière versus valeur comptable
2011
International audience; Cet article a pour objet d’apporter une explication à l’écart constaté entre la valeur comptable et la valeur boursière des sociétés. Nous avons supposé qu’il peut être expliqué par l’irrationalité et « l’auto-référentialité » du marché, ainsi que par l’incapacité du modèle comptable traditionnel à traduire la valeur de la firme. Nos résultats corroborent la majorité de nos hypothèses et montrent que la distorsion entre la valeur comptable et la valeur boursière est une conséquence directe de la comptabilité au coût historique, de la prudence comptable, de la non-activation des certains éléments immatériels, ainsi que de la mauvaise évaluation (mispricing) des titres…