Explains the decision made by the regulators

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Current Developments in Accounting Thought - Additional Assignment

Question 1 -

Mather and Peison (2006) report that public debt contracts tend to have a lower average number of accounting based debt covenants as well as less binding debt covenants relative to private debt contracts. (For example, in relation to debt-to-asset constraints in both public and private debt agreements, the covenants in the public debt agreements were found to be "looser: meaning that the ratio percentage is typically higher in the public debt contract.)

You are required to write an essay explaining why this would be the case, supporting your arguments with references to Mather and Peirson (2006) and other relevant sources.

Question 2 - Assume that a government regulator makes a decision that all companies with a dead office in Australia must separately disclose, within their annual financial reports, the amount of expense incurred in relation to the training of employees. The companies must also spend at least 5 per cent of their reported profits on training employees.

You are required to write an essay that

a) Explains the decision made by the regulators in terms of public interest theory.

b) Explain the decision made by the regulator in terms of the economic interest group theory of regulation.

Support your arguments with references in APA 6 style from relevant sources.

Question 3 -

Identify a listed company, and then

a) Identify at least one positive and one negative externality generated by the organisation and identify the stakeholders affected by the externalities.

b) Would these externalities directly impact on the income or expenses (and therefore profit) of the organisation?

c) In your opinion, is the failure to recognise externalities a fundamental limitation of our current financial reporting requirements? Explain your answer.

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In this solution there were 3 task in first we have discussed about the public bad private covenants, in second task we have discussed about the public interest theory of regulations and economic interest theory of regulation in respect to expenditure made on employee training and lastly in the third task we have discussed about the externalizations provided by the company both positive and negative. Apart from the impact of externalizes on the financial position of the entity is also discussed.

Reference no: EM131310501

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Reviews

len1310501

12/13/2016 4:58:38 AM

A detailed explanation of the terms is provided, demonstrating a high level of understanding of the context of the information in relation to the question. The terms are explained with the additional use of examples. The essay correctly identifies the impact on the profit of the organisation. The student's perspective is clearly articulated and supported providing an insightful perspective on the issues surrounding financial reporting. Further comments on other relevant financial impacts. Accurate use of syntax, spelling and punctuation. A sophisticated vocabulary is appropriately used. Answer is logically structured with arguments coherently developed and supported. Reference list included with correct adherence to referencing guidelines. Correct in-text referencing is provided. For this assessment you are required to use APA 6 referencing to acknowledge the sources that you have used in preparing your assessment.

len1310501

12/13/2016 4:58:31 AM

Total 3000 words; please make sure you read the requirements as well. Referencing and all should be done, Australian student. Exemplary description of all of the key issues and underlying assumptions thoroughly articulated. A high level of understanding demonstrated. Response provides a clear, deep and critical analysis of both the issues and demonstrates a very high level of understanding of the underlying theories. Well communicated and supported, relying on a wide variety of source material.

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