In praise of Occam's Razor: a critique of the decomposition approach in IAS 32 to accounting for convertible debt

Article Abstract:

IAS 32 Financial Instruments: Disclosure and Presentation contains a fundamental flaw concerning the classification and reporting of compound financial instruments. IAS 32 demands that accounting treatment of compound financial instruments should be according to their separate equity and debt components at the time of issue. A better approach would be to treat a compound financial instrument as a single instrument with both an equity and a debt nature, and to report it according to which nature is dominant at the time of disclosure.

Accounting and auditing, Financial instruments

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Financial reporting quality: is fair value a plus or a minus?

Article Abstract:

Fair value accounting depends on the one-to-one relationship between exit prices and fair value. Both fair value accounting and historical cost accounting encounter serious matching problems. A valuation of Coca-Cola Company based on historical cost information is presented.

Asset Valuation & Distribution, Asset valuation, Report

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Discussion of 'Financial reporting quality: is fair value a plus or a minus?'

Article Abstract:

Fair value acccounting provides better information when observable market prices exist. Investors seek information, and management should provide information, not opinions. The position statement of the Hundred Group on financial reporting is also included.

Viewpoint essay

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