Acct 3563 Summary
ACCT3563
Issues in Financial Reporting & Analysis
Semester 1 – 2010 Version 0.5.0 1st April 2010
Contents
Page 3 Page 7 Page 12 Page 17 Page 20 Positive Accounting Theory Ethics in Accounting Accounting for Physical Assets & Intangible Assets Accounting for Assets in Mining & Agricultural Industries ounting Accounting for Provisions
Copyright © Ka Hei Yeh 2010 Fifth Revision published April 2010 2010.
This work is licensed under the Creative Commons Attribution Attribution-Non-CommercialNo Deriva Derivative Works 2.5 Australia Licence. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-nd/2.5/au/ or send a letter to Creative http://creativecommons.org/licenses/by nd/2.5/au/ Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. Disclaimer: The author does not guarantee the accuracy of the notes available and will not be held liable for any damages (including lost marks etc.) as a result of the use of these notes. Use at your own discretion with etc.) caution. Do not rely on them; these notes are not intended to serve as a replacement for your own.
Issues in Financial Reporting & Analysis – Semester 1 2010
2
Positive Accounting Theory
Positive Accounting Theory
Background In previous accounting subjects, we explored what should happen when a firm uses a particular set of accounting principles and practices. However, in real life, we know this is not always the case. Hence, Positive Accounting Theory (PAT) tries to explain, and possibly predict, accounting practices. Assumptions As always there are some assumptions that PAT takes: • • • • Everyone takes measures to maximise their own self-interest; even at the expense of others. Rational behaviour. Efficient markets in that prices for shares and debt will adjust instantly to changes in the business. Price protection in that markets will continually and accurately adjust prices to reflect managerial actions.
The Agency Problem The Agency
Issues in Financial Reporting & Analysis
Semester 1 – 2010 Version 0.5.0 1st April 2010
Contents
Page 3 Page 7 Page 12 Page 17 Page 20 Positive Accounting Theory Ethics in Accounting Accounting for Physical Assets & Intangible Assets Accounting for Assets in Mining & Agricultural Industries ounting Accounting for Provisions
Copyright © Ka Hei Yeh 2010 Fifth Revision published April 2010 2010.
This work is licensed under the Creative Commons Attribution Attribution-Non-CommercialNo Deriva Derivative Works 2.5 Australia Licence. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-nd/2.5/au/ or send a letter to Creative http://creativecommons.org/licenses/by nd/2.5/au/ Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. Disclaimer: The author does not guarantee the accuracy of the notes available and will not be held liable for any damages (including lost marks etc.) as a result of the use of these notes. Use at your own discretion with etc.) caution. Do not rely on them; these notes are not intended to serve as a replacement for your own.
Issues in Financial Reporting & Analysis – Semester 1 2010
2
Positive Accounting Theory
Positive Accounting Theory
Background In previous accounting subjects, we explored what should happen when a firm uses a particular set of accounting principles and practices. However, in real life, we know this is not always the case. Hence, Positive Accounting Theory (PAT) tries to explain, and possibly predict, accounting practices. Assumptions As always there are some assumptions that PAT takes: • • • • Everyone takes measures to maximise their own self-interest; even at the expense of others. Rational behaviour. Efficient markets in that prices for shares and debt will adjust instantly to changes in the business. Price protection in that markets will continually and accurately adjust prices to reflect managerial actions.
The Agency Problem The Agency