Investments: conceptual clarity v legal muddle
Article Abstract:
The comment period for the Accounting Standards Committee's Exposure Draft (ED) 55, Accounting for Investments, has been extended to Mar 31, 1991. ED 55 covers standards for accounting and classifying investments other than those covered by Statement of Standard Accounting Practice 19, Accounting for Investment Properties. The key changes contained in ED 55 include classifying current assets that are readily marketable investments as 'marked to market.' The profit and loss account will reflect any changes in the market value of the assets in the period in which they are incurred. For investments not classified marked to market but revalued to current costs, any surplus will be earmarked for the revaluation reserve.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1991
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Solomons' guidelines: where do they lead?
Article Abstract:
David Solomons' 'Guidelines for Financial Reporting Standards' for the Accounting Standards Committee is well written, but it does not provide auditors with what they really need. Solomons argues that the 'balance sheet' approach focusing on assets and liabilities is preferable to analyzing revenues, expenses, and other income elements first. However, there is no evidence that the 'balance sheet' approach is any more useful for accountants than the profit-and-loss approach. Additionally, Solomons does not provide for the recognizing of intangible assets with certain values yet does provide for the writing-off of tangible assets with certain values.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1989
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Questioning the wisdom of Solomons
Article Abstract:
David Solomons' Guidelines for Financial Reporting Standards report largely reiterates the FASB's conceptual framework approach. His basic supposition that accounting's inability to impact aggregate earnings in the long run flaws his report because it recommends the acceptance of volatility in financial reporting. He also advocates treating executory contracts both as assets and liabilities. Additionally, Solomons ignores other important reporting objectives,such as establishing an equitable reporting basis, and adhering to contract or statue laws.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1989
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