Part A
The article, “Unwieldy Rules Useless for Investors”, the audience get an insight into the critical approaches towards financial accounting standards and IFRS. The article enhances the awareness of the audience regarding the reasons behind this critiquing approach. Guidance towards investments is one of the major objectives of financial reporting. This support helps in assessing the sources through which the cash would flow from the internal environment to the external (Hoyle, Schaefer and Doupnik 2015). Consciousness in these actions is also assistance towards excavating the necessary changes, which needs to be brought about in the business operations.
Relevance is one of the essential qualitative characteristics of framework related to financial reporting. Relevance establishes accuracy within the aspect of financial reporting. This accuracy, in turn, helps the investors in taking the decisions related to the investments. Comparing the gathered value with the estimated value makes the investors aware of the similarities and differences. The similarities and differences helps in clarifying the clients about the achievements in the financial year (Robson, Young and Power 2017).
Faith is an important component for reporting the financial matters and statements. This is in terms of maintaining the stability in the relationship with the stakeholders. For reducing the arrears in the financial statements, this faith proves faithful. Prudence acts as a saviour in the process of making judgments in an ambience of uncertainty. Time management enables the investors to take appropriate decisions with due consideration of the needs, demands and requirements. Within this, focus needs to be on the grasping capability of the users. Negligence in this direction would add negativity into the task of financial reporting.
Unsatisfactory results achieved by the respondents of the article add an interrogative parameter to the practices adopted for reporting financial statements (Macve 2015). Irrelevant IFRS adjustments create discrepancies, aggravating the complexities of the investors regarding the reporting of financial statements. Irrelevance in the financial statements has made the comparison process difficult for the companies and organizations. Incapability towards making the investments has increased the instabilities in the financial parameter.
Conceptual framework helps in gaining an insight into the approaches towards fulfilling the identified objectives related to financial reporting. Inclusion of the objectives within the conceptual framework aids in evaluating the approach towards serving the stakeholders (Ghanbari and Sarfia 2016). Development of this framework helps in assessing the feasibility of the plans in terms of the specific tastes and preference of the stakeholders.
Part B
Public Interest Theory
A.C. Pigou proposed the public interest theory in the year 1932. It deals with the sensitive nature of the markets. This sensitivity is a deviation from the usual functions, which a market needs to perform. Here, the focus is on the needs of the buyers rather than social welfare. Government intervention is crucial in terms of manage the market operations. Legislations are crucial for mitigating the wrong means for carrying out the marketing tasks. Complying with the standards and codes of these legislations assists the marketers to cater to the public interest (Dutta and Patatoukas 2016). This aspect contradicts the true essence of this theory. Social welfare is the main duty of the regulatory body, which includes prevention of the malpractices, which destroys the true purpose of marketing.
Stigler proposed a theory in 1972, which catered to the search of unemployment. This can be contrasted with the public interest theory. Employment is an issue of public interest and unemployment opposes the aspects of regulation and equal distribution of resources, as proposed by Stigler in his theoretical concepts. Countering this, regulations can modify the fate of the candidates in search of enhancing their professionalism. Regulations attain a backseat in the statements of Stigler in comparison to the effectiveness of regulation in the fair marketing practices in the private enterprises. Along with this, regulations is considered as an agent for dealing with the new entrants, which might add vulnerability into the market position of the companies and organizations in a competitive ambience (Weygandt, Kimmel and Kieso 2015). In the process of disclosing the financial information, security is maintained in terms of not disclosing the secret and confidential statements. Consciousness in this direction creates an impact of the society as a whole.
Taking strict steps is necessary for reducing the marketing activities, which is affecting the public interest. For this, legislations play an important role. The private enterprises are ought to provide the details of the activities to the statutory bodies for restoring justice. Developing plans for gaining the lost respect is an innovative means towards gaining the trust, loyalty and dependence from the clients. Typical example can be online survey forms (Beams, Brozovsky and Shoulders 2017). Providing access to the people regarding the legislations would aid in gaining an insight into their approaches towards the undertaken steps. Taking the help of social media would help the personnel to engage with a large mass of audience. Panel supervision would act as a further assistance towards assessing the effectiveness, feasibility and appropriateness of the plans and programs.
Capture Theory
Capture theory deals with the actions performed by the workers for taking the industry to the peak of success. Provision of a safe and comfortable workplace along with quality resources helps the workers to enhance the productivity (Bushman 2014). Consistency in the performance provides them with the power to ensure social wellbeing along with the thoughts of achieving industrial success. Capture theory reflects the relationship between the government agencies and the industries. Governmental interventions into the central, state and local level results in developing flexible legislations for mitigating the malpractices. These aspects contradict the propositions of capture theory. Some of the marketers, in order to grab the hot seat, bribe the government agencies. This is in order to defend them from getting indulged in the wrong marketing practices (Libby 2017). This type of mentality is against the standards and codes of Employee Protection Act and raises doubts over the marketing operations. Hiring skilled and efficient people in the agencies would maintain the transparency and fairness within the marketing transactions.
The industries possess workers, who are skilled and efficient in carrying out the allocated duties and responsibilities. If plans are made for including the former employees of the industries into the agencies, it would be beneficial for the industry in terms of extracting productive labor from the industrial employees. This is in terms of their prior experience, skills, abilities and competencies (Warren, Moffitt and Byrnes 2015). Herein lays the true essence of the word, “capture”.
Economist interest group theory of regulation
The main proposition of this theory is the formation of flexible groups for catering to the needs, demands and requirements of the public. The created groups struggle against each other for exposing their skills and abilities. Pressurizing the government agencies for passing relevant legislations is one of the common characteristics of this theory. This is against the standards and codes of the marketing legislations. Elections are the means by which the groups attain promotion in their current position. This promotion is the only concern of the groups, which comprises the aspect of public interest. The regulators possess the power to convince the groups, which increases the chance of getting re-elected (Maynard 2017). Financial flexibility of the groups lure the government agencies, pushing the weaker sections down the societal hierarchy. This theory is not applicable to the corporations, violating the rules and regulations. This contradicts the assumption that the legislations are developed in accordance with the industrial requirements. All these aspects can be correlated with the cycle, representing the consistency in the relationship between the government agencies and the industries (Ramirez 2015).
Part C
FASB Statement no. 144 Accounting for Impairment or Disposal of Long lived Assets imposes restrictions on the valuation of the assets. However, allowance is granted for considering the impairment costs and non-current assets. Guidance of the US Corporate helps in the establishment of relevant financial statements. Impairment costs bring noticeable reductions in the profit margins, which hardly affects the net cash balance. Clarity in this direction provides the users with an easy grasp towards the prevalent financial practices. Exclusion of historical facts is maintained in the process of developing the financial statements. Depreciation of the assets are simultaneously adjusted with the changing value of the assets. Adjusting with the depreciating value is the main attribute for the preparation of relevant financial reports (Vasarhelyi, Alles and Kogan 2018). Herein lays the importance of the role of US Financial Accounting Standard Boards in terms of supporting the private corporate.
Part D
a : Exemption from re-valuing the assets
Revaluation of the assets helps in identifying their true value. Here time management play an important role. Fair evaluation is crucial in terms of establishing accurate and reliable values. Along with this, display of the current capital returns is the major drive behind execution of the evaluation. Here, negotiations are important before deciding the price of the assets. These negotiations help in preventing the illegal instances before the occurrence of merger and acquisitions. Evaluation is also vital for selling the assets to the clients and the customers (Larson, Lewis and Spilker 2017). Decrease of the debt-equity ratio also makes evaluation compulsory. In recent times, most of the companies oppose the process of evaluation. This is because of the consideration of property, plants and the resources, which is complicated in terms of the executing the activities within the stipulated time. Instead, cost model is adopted by the start ups. The major drive behind this is satisfying the requirements of the investors. Revaluation of the assets reduces the profit margin of most of the firms. This reduction aggravates the complexities of the investors in terms of increasing the profit margin (Vasarhelyi, Alles and Kogan 2018).
Restoring the historical perspective is one of the other reasons for adopting the cost model. Lowering value of assets is an inevitable issue within a financial year, which brings noticeable transformation in the net profit. This reduction heavily influences the sustainability and traditionalism of the firm. Volatility of the assets results in mass fluctuation of the values. This fluctuation aggravates the complexities in calculating the income and losses.
b : Impact of the decision not to revalue the assets of financial statements
Not valuing the assets of the financial statement heavily affects the finance and accounts. One of the immediate outcomes is the concealment and unfair results. This includes unreal capital employment value. Along with this, debt equity ratio would be higher than the original value (Maynard 2017). One of the most striking effects is the compromise with the rights of the stakeholders. Inflated net margins add to the complexities in establishing the financial statements of the firms. These complexities depreciate the values of the assets, leading to surplus dividends.
c : Impact on the shareholders
Share prices enhance the awareness regarding the inefficiency of the capital market. Decreasing value of the assets and non-assets heavily influence the share prices. This can be handled if focus is placed on the profit margin. This is assistance because expected value of the profit margin is higher. Efficient conditions of the capital market produce minimal impact on the share prices, adding value to the wealth of the shareholders. Based on this, revaluation of the asset can be considered productive for reporting the financial statements (Libby 2017).
References
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download