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MEASUREMENT APPROACHES AND ACCOUNTING STANDARDS

MEASUREMENT APPROACHES AND ACCOUNTING STANDARDS

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MEASUREMENT APPROACHES AND ACCOUNTING STANDARDS

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  1. MEASUREMENT APPROACHES AND ACCOUNTING STANDARDS Chapter 5-B Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

  2. Professional support for various approaches • Current purchasing power accounting generally supported by standard-setters from 1960s to mid-1970s • From about 1975 preference shifted to current cost accounting • Late 1970s and early 1980s standard-setters issued recommendations which favoured a mixture of CPPA and CCA • From mid-1980s support waned (time of falling inflation) Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

  3. Potential reasons for lack of continued support • May question the relevance of current cost information in times of falling inflation • Drastic change to accounting conventions could cause disruption and confusion in capital markets • New method of accounting could have taxation consequences Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

  4. Potential reasons for lack of continued support (cont.) • Self-interest motives of corporations • Limited relevance to decision makers • Nevertheless, in recent years there have been movements towards the use of ‘fair values’ as new accounting standards are being released Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan

  5. ACCOUNTING STANDARDS Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Financial Accounting Theory 2e by Deegan DISCUSS THE INTERNATIONAL ACCOUNTING STANDARDS