Supporters said that, fair value are usually claim for the facts of the market price or estimate price on current situation and sometimes they have admit there will be no active market or no market at all, thus no real price. Moreover, fair value accounting also means as which lowers its value in the market and at the same time it decline the quality of a company’s own debt. Fair value accounting is an additional momentum to a destructive downside overshoot. From the FASB framework concludes that, “Fair value reflects losses that have been incurred, it does not cause losses.” In a downward cycle, this appears untrue. I believed that there are many solutions or approach that we have beside fair value accounting that can be used to solve the problem arise in the financial accounting such as based on historical cost, current cost, realisable value and present value.
This method can be very effective when dealing with new product or new technologies 2. Time series: Time series forecasting method is done by using historical demand information. The basic concept of the time series method is that the past demand is good indicator for doing forecast of future demand. This method is very effective for the products with steady demand and when the demand pattern does not vary that much from one year to the next year. These are one of the simplest methods to implement in practical field and can provide good starting point to do forecasting (Chopra & Meindl 2007, 186-190) (Emmett & Granville 2007,
The treatment of intangibles (quantification) and the problem of equity have been discussed above. These issues represent limitations of the method in the sense that neither is addressed ‘automatically’ in the cost-benefit process. If the decision-maker is to be in a position properly to take account of intangible considerations and equity concerns, the analyst must, in a sense, go beyond the ordinary requirements of a cost-benefit analysis. Similarly, when the decision-makers interest is naturally focused on the ‘bottom line’, it is easy for the analysis itself to be rather obscure. No analysis is better than the assumptions on which it is based and, in the interest of ‘quality control’, assumptions should always be made explicit.
While they are concerned about the company's cash flow, they recognize the potential at Endius and, since they have a personal relationship with Davison, they are willing to extend generous terms to the company. In either case, cash flow will be a problem since neither employees nor contractors will be willing to work without some payment. Generally, however, the external threats to the organization are minimal at this time. Problem Definition At this point, the problem facing Endius is whether it should outsource the product development of its steerable forceps, or develop the product in-house. At Product Genesis, Endius is only one of many projects competing for resources.
The disadvantage of owning a variety of assets is that investors will never be able to fully capture the gains and returns. Diversification has a net effect that enables slow and careful performances and smoother returns, never shifting upward or downward too quickly. The reduced volatility that comes from portfolio diversification helps ease financial distress in investors. The risk of diversification While diversification is a simple way for investors to reduce portfolio risk, it is unable to eliminate risk entirely. There are two broad types of investment risk: Market Risks.
The contracting measures and explanations have shown that conservatism is quite beneficial when viewed from investor perspectives. In the span of the past few years, shareholder litigation is a core source of conservatism (Sohn, 2011). It should also be noted that shareholder litigation is a strong source of conservatism. Litigation also results in the production of asymmetric payoffs. Keeping these assertions into focus, it can be said that understating the assets of a company results in the reduction of expected costs of litigation (Givoly, Hayn & Natarajan,
Without trust, building a stable work environment between differing parties is difficult if not impossible. However, it could be said that it does not address other glaring issues with Carr’s position that personal morality does not apply to business. First, that cultural acceptance for such behaviour, the implication that business operates in a morality-free zone, is a glaring fallacy. Secondly, Carr’s position relies on the fact that when one enters a business they put on their ‘poker face’ and leaves behind their human identity. Not only is such a thing impossible, it attributes to business autonomy that it is lacking.
The most well-known and widely explained models on underpricing is based on asymmetric information among investors. These include the winner’s curse hypothesis, Information Revelation Theories, Principal-Agent Models and underpricing as a signal of firm quality. Others are based on institutional reasons such as legal liability and behavioral explanations like investor sentiment (Ljungqvist, 2004). Theories that may potentially be specific to emerging growth firms, which tend to be lesser known, are the ones based on valuation risk and underpricing as publicity stance. Firms that are less known or could not indicate a long history of profitability may usually be underpriced due to unpredictable risk associated in valuation (Damodaran, 2009).
ABC system enable firms to know and identify if there any surplus in the capacity and also if there any lack in the capacity. We can add that one of the advantages of this system is that it provides us with a guide to evaluate the performance of the firm by comparing results with each other; in addition companies can transform unprofitable customers into profitable one by convincing them to use more of company's products; it also helps in understanding the quantity required by each activity of every product and this knowledge allow companies to be more accurate by determining the cost of product. ABC system promote the use of ABM with the firm or company and ABM refers to any action the manager take; by using this system it enables firm to develop the efficiency of their activities and the profitability of their
A study by Nodon (2015) has demonstrated that the fraud triangle consists of three factors: motivation, opportunity, rationalizations. The first element is motivation or pressure, Buchholz (2012) clarified the main reason that pressure people to commit an act is due to financial complication. The incentive for Bernard Madoff was to keep a trend for a successful lifestyle Buchholz (2012). Hurt (2009) elaborated that Madoff was feeling pressurized due to the sum of money he has to repay to existing investors. The second factor of fraud triangle is opportunity, there are high chance fraudsters would not be exposed because of their powers and position and there is a direct relationship between fraud opportunity and weak internal control (Dorminey et al., 2010).