【领航教育】每周福利大放送---USYD ACCT6001 Week2 课后题详解

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    新学期刚开始两周，就已经有同学被ACCT6001这门课逼疯。与ACCT5现在！福利来了！领航老师们辛勤为同学们总结出了ACCT6001weeklACCT6001Week2ConceptualFrameworkElemOpenyourH&textbooktothe“accountingi(i)Readthearticlecarefully.Identifyab.Thearticlesays,“fairvalueisuseless(iii)Finallywritedownsomepointstoans(a)Thefairvaluemeasurementhasdrawnmo(b)AASB13containsafairvaluehierarchymaximizetheuseofrelevantobservablein-level1inputsaquotedprices(adjusted)-level2inputsareinputsotherthanquote?Quotedpricesforidenticalorsimilaras?Inputsotherthanquotedpricesthatareo-level3inputsareunobservableinputsfoFairvaluemeasurementismorerelevantth“EarningsmanagementoccurswhenmanagerAASB108isintendedtoenhancetherelevanPleasewritedownkeypointsdiscussedincTowhatextentdotheAASB108requirementsTheobjectiveofAASB108istoassistfinanAASB108hasestablishedaselectionprocewhichstatesclearlythatwhenanAustraliFinancialstatementpreparersaresubjecInconclusion,preparersoffinancialstaFrankClarkeandGraemeDeanhavespenttheTheybelievecompaniesaretakingabathnoGRAEMEDEAN:ThereisasuggestioncompaniGRAEMEDEAN:WellifinfacttherewasanoppSTEPHENLONG:AndIsupposealsointhecurrGRAEMEDEAN:ItwouldbeprettyhardtosummSTEPHENLONG:WhataboutinpastyearswherGRAEMEDEAN:it'snottosaythatnecessariSTEPHENLONG:Wellofcourse,there'stheUGRAEMEDEAN:WellIthinkwhenyoulookatwhsectorshavewrittendownsubstantiallyaSTEPHENLONG:Wellshouldn'ttheexecutivGRAEMEDEAN:Well,it'saninterestingqueSTEPHENLONG:HeldinreservesothatiftheGRAEMEDEAN:ThatwouldbeanotherpossibiSTEPHENLONG:WellwhatwouldregulatorsaGRAEMEDEAN:We'rereadingquiteabitinthSTEPHENLONGrofessorGraemeDean,whoi2.What‘accountingchoices’arebeingmadRefertothemindmapattachedtocompletey2.Companiesadoptrevaluationmodeltome3.Firstly,accountingstandardsetterscEthicalawarenessofthefinancialstatemLegislationshouldincreasethepunishme



新学期刚开始两周，就已經有同学被ACCT6001这门课逼疯。與ACCT5001相比，6001有更多理论上的东西，尤其是篇幅巨大的辅助资料framework和AASB，真实让同学們读的云里霧里，不知所云啊。不仅如此，每周的weekly  questions在课堂上并得不到详細的讲解与解答，完全靠同学们课下攻克，這更让同学们痛苦不已，泪牛满面。小编都禁不住同情起这些奮斗在水深火热中的同学们了！

现在！福利来了！领航老师們辛勤为同学们总结出了ACCT6001 weekly questions的解答！答案简直不能再詳細！這简直就是同学们的福音啊！同学们现在就可以開始仔细攻读了！再难的題我們也能hold住啦！~

ACCT6001 Week 2 Conceptual Framework Elements; Choice of Accounting Methods In-Class Student Practice Questions

In Class Question 1
Open your H& textbook to the “accounting in focus” article on page 72 and do the following.
(i) Read the article carefully. Identify any words, phrases or concepts you don’t understand in the article. Your lecturer will discuss these items during your class time.
(ii) Talk to your fellow students to answer the following questions:
a. Describe what happened with the accounting standard and what was the result:
b. The article says, “fair value is useless without a market to mark to.” What does Appendix 4.1 say about how to apply fair value when there is no market?
(iii) Finally write down some points to answer the following: “Assess whether fair value measurement results in financial information that is more useful than historical cost based information.”

Answer:
(ii)
(a) The fair value measurement has drawn more attention among governments, investors and Accounting standard setters. Due to financial turmoil, the French government more or less put the screws on the International Accounting Stardards Board and demanded a softening of the fair value rules- or else. The result was a rapid loosening of fair value to give the holders of bombed-out mortgage securities the ability to reclassify them at historical cost, the accounting measurement that fair value is supposed to replace.  
(b) AASB 13 contains a fair value hierarchy that categories into three levels the inputs to the valuation techniques used to measure fair value (para. 73). Management is required to

maximize the use of relevant observable inputs and minimize the use of unobservable inputs.
-level 1 inputs a quoted prices (adjusted) in active markets for identical assets or liabilities that management can access at the measurement date (para.76)
-level 2 inputs are inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly or indirectly (para.81). Level 2 includes:
?        Quoted prices for similar assets or liabilities in active markets.
?        Quoted prices for identical or similar assets or liabilities in markets that are not active.
?        Inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves observable at commonly quoted intervals) and
?        Market-corroborated input (para.82)
-level 3 inputs are unobservable inputs for the asset or liability (para.86)- this might include future net cash flows used to value a business or non-controlling  (c) the accounting setting process should perform through a transparent and consultative process. Changes should not be the result of with the political powers.
(iii)
Fair value measurement is more relevant than historical cost information when evaluating some assets where is a active market to handle them because the fair value represents the real value of these assets. For example, the land was brought fifty years ago. If it is measured at historical cost, it reflects the value of land accurately at the time when it was brought. However, when times goes, the value of land varies significantly. Thus, the historical cost cannot reflect the value of land, in the contrast, adoption of fair value measurement is more appropriate.  


In class Question 2
“Earnings management occurs when managers use judgement to choose an entity’s transactions or accounting policies in ways that may benefit particular stakeholders by, for example, influencing the share price, affecting management salaries and performance bonuses awarded, and affecting judgements whether the entity has complied with contractual commitments.”
AASB108 is intended to enhance the relevance and reliability of an entity’s financial statements (para 1). It requires financial statement preparers to choose the most appropriate accounting policies, while AASB 108 para 14(b) permits an entity to change its accounting policies when the new policies provide more “relevant” financial information for the decision making needs of users.
Please write down key points discussed in class for the following question so you can prepare a complete written answer to the question in your personal study time.
To what extent do the AASB108 requirements about the selection and change to accounting policies make earnings management as described above possible?

Answer:
The objective of AASB 108 is to assist financial statement preparers by establishing criteria and creating a framework they can use when selecting and changing companies accounting policies. It is questionable whether AASB 108 will achieve this objective as it makes earnings management possible through its management judgement provisions for the selection and change to accounting policies. This view will be supported by describing briefly the AASB 108 accounting policy selection criteria and applying these criteria to the concept of earnings management.
AASB 108 has established a selection process to assist financial statement preparers when choosing and changing accounting policies. The starting point is AASB 108 para 7

which states clearly that when an Australian accounting standard applies to a transaction, the entity must apply it. Against a background of qualitative characteristics that include relevant, representationally faithful, neutral, prudent, complete, and reflecting the economic substance of the transaction, AASB 108 para 10 is the paragraph that introduces the concept of using management judgement when an applicable Australian accounting standard does apply to a transaction. To give some structure to the use of management judgement, AASB 108 paras 11 and 12 provide an order of reference to assist financial statement preparers, this order being Australian accounting standards dealing with similar transactions, the definition and recognition criteria in the Framework, and lastly recent pronouncements of other standard setting bodies that use a similar conceptual framework.
Financial statement preparers are subject to substantial pressures from their users and may fall subject to using accounting policies that resemble earnings management. AASB 108 para 10 through the use of management judgement does provide an opportunity for earnings management to occur when selecting and changing accounting policies. Some entities will adopt accounting policies purely to satisfy contractual commitments such like increasing profit for performance bonuses that are calculated on a percentage of reported profit.
In conclusion, preparers of financial statements have to choose accounting policies so information about the position and performance of the company can be provided to its financial statement users. The purpose of AASB 108 is to provide a structure for the selecting and changing these accounting policies. The AASB 108 requirements for selection and change to accounting policies do present earnings management opportunities and financial statement users need to be aware of this limitation.


Question 3
Frank Clarke and Graeme Dean have spent their careers investigating dodgy company accounts. Professors Clarke and Dean want the corporate watchdog to investigate a spate of write-downs and losses in the tens of billions by Australian companies in the current reporting season.
They believe companies are taking a bath now so they can report improved income and profits down the track.
Graeme Dean outlined his concerns to economics correspondent Stephen Long.
GRAEME DEAN: There is a suggestion companies are clearing the decks. Companies are in effect taking a big bath in the sense that they're perhaps writing down more in the current year than would relate to the actual write-downs of that year.
STEPHEN LONG: Why would companies want to do that?
GRAEME DEAN: Well if in fact there was an opportunity to write off more in a current year, that has implications for future years in the sense that your reports will look better in the future, bonuses and other related performance assessments would be changed by virtue of the amount you'd written off perhaps in excess in this current period.
STEPHEN LONG: And I suppose also in the current environment, it's pretty easy for directors and executives to blame it all on the global financial crisis and absolve themselves of particular
blame?
GRAEME DEAN: It would be pretty hard to summarise that any better than you just have Stephen.
STEPHEN LONG: What about in past years where one had the suspicion that companies were taking a fairly optimistic view of what their future earnings from assets might be and upping on paper the value of assets they held and then making pretty good profits on the basis of those re- evaluations and paying it out in big salaries and bonuses and dividends. With the test of time, is it fair to say that really those valuations don't hold up?
GRAEME DEAN: it's not to say that necessarily those re-evaluations do not reflect the current market prices but there is always a greater opportunity for the directors to take advantage of that boom period to increase asset values which increases collateral, increases the opportunity for borrowings and perhaps increases the importunities to pay dividends, perhaps out of those re- evaluations which was a contentious issues in some of the large companies that got into corporate difficulties in the last three or four years.
STEPHEN LONG: Well of course, there's the US investment banks which suffered huge write- downs on toxic assets as they're now known but here we had Babcock and Brown, Alco, Centro and some of the Macquarie Trust which have now had very, very big write-downs. Do you think we have to be suspicious about whether those valuations were justified?
GRAEME DEAN: Well I think when you look at what's happened in the various sectors which include sectors relating to the infrastructure then given that many of the companies in those

sectors have written down substantially amounts totalling over $60-billion in the last two years, then some of thosecould be deemed to be in need of greater scrutiny.
STEPHEN LONG: Well shouldn't the executives and traders who made huge salaries on the basis of those valuations be giving the money back?
GRAEME DEAN: Well, it's an interesting question. That's a contractual sort of issue but I've been thinking about that a little bit in this suggestion at the moment that you limit executive bonuses to a base salary of one year, perhaps there should be an added sort of covenant there that perhaps the amount should be in escrow one or two years in order to see whether or not there aren't any subsequent mis-statements or re-statements.
STEPHEN LONG: Held in reserve so that if they had to re-state the accounts you could actually claw the money back?
GRAEME DEAN: That would be another possibility that perhaps the productivity commission and others could look at.
STEPHEN LONG: Well what would regulators and others be doing to scrutinise the accounts of companies that a) perhaps overvalued assets in past years and b) had a fortuitous large write-down in the current reporting period which may set them up for future bonuses and the like?
GRAEME DEAN: We're reading quite a bit in the press that the regulators have rather large teams in action in assessing companies' solvency in related financial matters and perhaps some of those teams could be directed towards looking at what were the bases or what are the bases of the asset evaluations in accounts as part of their review process.
STEPHEN LONG: Professor Graeme Dean, who is a professor of accounting at Sydney University speaking to Stephen Long.
Questions:
1.        What are the key points being raised in this radio interview?
2.        What ‘accounting choices’ are being made in this situation? Be specific about the accounting choices and their impacts as described in the interview.
3.        What are some possible solutions to the problems outlined?
Refer to the mind map attached to complete your answers to these questions. Please note a mind map is a useful planning tool to help you work out how you can comprehensively answer all parts of a written question.

Answer:
1. Key points:
Earning Management.
Assets revaluation
2. Companies adopt revaluation model to measure its assets. They are perhaps trying  eyto writing down more in the current year than would relate to the actual write-downs of that year. As a result, there is a greater opportunity for management to increase asset values in the future. And they are more likely to receive greater bonus than they should have received. In the contrast, the investors get the inaccurate or useless information from financial statements for their decision-marking.
3. Firstly, accounting standard setters can set up more specific rules and principles for particular transactions or recognition or measurement of assets and liabilities, in order to leave less room for management to manipulate.
  Ethical awareness of the financial statement preparers and audits should be enhanced in order to reduce the likelihood of inappropriate accounting recording.
  Legislation should increase the punishment for person who manipulates the accounting and causes numerous investors to make great losses.  

看完如此详尽的習题解答，同学們是不是覺得浑身轻松呢？小编忍不住要感叹一句，妈妈再也不用担心我们的学習！~
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