Discuss the qualitative concept of comparability

Assignment Help Accounting Basics
Reference no: EM13143535

Under U.S. GAAP, property, plant, and equipment are reported at historical cost net of accumulated depreciation. These assets are written down to fair value when it is determined that they have been impaired. A number of other countries, including Australia, Brazil, England, Mexico, and Singapore, permit the revaluation of property, plant, and equipment to their current cost as of the balance sheet date. The primary argument favoring revaluation is that the historical cost of assets purchased ten, twenty, or more years ago is not meaningful. A primary argument against revaluation is the lack of objectivity in arriving at current cost estimates, particularly for old assets that either will or cannot be replaced with similar assets or for which there are no comparable or similar assets currently available for purchase.

a. Discuss the qualitative concept of comparability. In your opinion, would the financial statements of companies operating in one of the foreign countries listed above be comparable to a U.S. company's financial statements? Explain.

b. Discuss the concept of reliability. In your opinion, would the amounts reported by U.S. companies for property, plant, and equipment be more or less reliable than the current cost amounts reported by companies in England, Mexico, or elsewhere?

c. Discuss the concept of relevance. In your opinion, would the amounts reported by U.S. companies for property, plant, and equipment be more or less relevant than the current cost amounts reported by companies in England, Mexico, or elsewhere?

Reference no: EM13143535

Questions Cloud

How much will you be able to withdraw each year : To make the money last, you have decided to invest it at 12% and withdraw it in 20 equal amounts over the next 20 years. Your first withdrawal will be one year from today. How much will you be able to withdraw each year?
Complete direct materials purchases budget by month : Management wants to have a raw materials inventory at the end of the month equal to 30% of next month's production requirements. Complete direct materials purchases budget by month for the first quarter.
Compute power of previous test if true proportion is given : Compute the power of the previous test if the true proportion of adults having access to the internet in the population is 41%. What is the power if the true proportion is 42%? 43%?
Compute jim overhead using the new product mix : a. Compute Jim's overhead using the new product mix, profit, and contribution margins. b. How could expanding into a product line with higher contribution margin erode the firm's profit margin?
Discuss the qualitative concept of comparability : Discuss the qualitative concept of comparability. In your opinion, would the financial statements of companies operating in one of the foreign countries listed above be comparable to a U.S. company's financial statements? Explain.
Probability that average nox level for fleet is greater : What is the level L (±0.0001) such that the probability that the average NOX level for the fleet is greater than L is only 0.03?
Indirect method in reporting operating cash flows : FASB allows companies to use either the indirect or direct method in reporting operating cash flows. Note that both methods produce the same total cash, and that the financing and investing sections are exactly the same for both methods. Do the tw..
Find program was effective in reducing cholesterol levels : After six months each pilot's cholesterol level is checked again. At the 0.01 significance level, can we conclude that the program was effective in reducing cholesterol levels?
Do teachers with master degrees have higher salaries : Average salary of $27,839 with a standard deviation of $7,400. At the 0.01 significance level, do teachers with Master Degrees have higher salaries?

Reviews

Write a Review

 

Accounting Basics Questions & Answers

  What additional procedures pherson must perform

Criticize the positions taken by Pherson and Collier, and express your own opinion about the similarities and differences that should exist in understanding internal control and assessing control risk for different-sized companies.

  Write an analysis about test of liquidity

Write an analysis about test of liquidity that compare Radio Shack and Conn's to Best buy.

  Major objectives of financial reporting

What are the major objectives of financial reporting? Who are the users of financial reporting? What type of information will each user group need? Why?

  Advanced accounting-journal entries

Prepare all journal entries in all funds and the GCA and GLTL accounts to record the following transactions and events.

  Problem regarding bankruptcy

During 2010, one of the customers of Klote company declared bankruptcy. This customer had been a major purchaser of Klote's products and had owed $40,000 on account to Klote (a material portion of its receivables) at the time of bankruptcy.

  Concept of straight-line depreciation

Stevens Co. bought a machine on January 1, 2008 for $875,000. It had a $25,000 estimated residual value and a ten-year life. An expense account was debited on the purchase date. Stevens uses straight-line depreciation.

  Statement of cash flows under indirect method

Cash flows from operating activities, as reported on the statement of cash flows under the indirect method, would include:

  Opinion in the internal control audit report

The existence of a material weakness led to an adverse opinion in the internal control audit report of a publicly traded company. Which of the following statements is correct if management believes that it has remediated the weakness?

  Amount of net capital gain and net ordinary income

The ABC stock was purchased for $1,800 and sold for $3,200. In 2010 (the year of sale), Jack should report what amount of net capital gain and net ordinary income?

  Substantial amount of equipment

Gould Machinery builds bulldozers. Prior to this year, it sold a substantial amount of equipment to Mace Contractors on credit. Mace recently went into bankruptcy. To protect its investment, Gould took over Mace.

  Sector-industry analysis

Provide a sector/industry analysis and narrative to start a health food cafe that serves whole food and organic food. Please also include sources.

  What is the impact on not eliminating intercompany payables

What is the impact of not balancing intercompany payables/receivables on a monthly basis? What is the impact on not eliminating intercompany payables/receivables during the consolidation? Is there an instance where either of these two practices wo..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd