scholarly journals Technology for Solving the Problems Related To the Implementation of the Concept of Preserving Capital in Accounting and Statistics

2019 ◽  
Vol 8 (3) ◽  
pp. 789-792 ◽  
Keyword(s):  
Discount Rate ◽  
Theory Development ◽  
Main Tool ◽  
Financial Statements ◽  
Cash Flows ◽  
Economic Life ◽  
International Standards ◽  
Special Role ◽  
Present Value ◽  
Specific Interpretation

At the present stage of economic theory development, a special role as a comprehensive indicator of the efficiency of activity is acquired by the current cost of the organization’s capital. The definition of the value of an asset was first explained by Fisher “The cost of a capital asset equals the sum of the present value of all future cash flow receipts” [17]. The concept of the current value of invested capital is the main tool for increasing the transparency of financial statements and a component of the concept of value and capital. In his work “The Nature of Capital and Income,” the American economist Fisher stated that "The theory of capital is that the value of an asset is equal to future cash receipts, reduced to present value based on the appropriate discount rate ”[1]. As for John Barr William, a well-known investor wrote in his book “The Theory of Investment Value” that “the value of any company is determined by incoming and outgoing cash flows, adjusted at a discount rate” [5]. The specific interpretation of capital by international standards largely determines the methodology for accounting for specific facts of economic life, as well as the approach to providing the financial position of an organization in its financial statements

Convergence Problems of the Cash Flows Statement Preparation Methods Under the Russian and International Financial Reporting Standards

Auditor ◽  
2018 ◽  
Vol 4 (6) ◽  
pp. 51-55
Author(s):  
Ольга Калачева ◽  
Olga Kalacheva ◽  
С. Смелова ◽  
S. Smelova
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Cash Flows ◽  
Economic Life ◽  
International Standards ◽  
Preparation Methods ◽  
World Community ◽  
Financial Reporting Standards ◽  
The Russian Federation ◽  
Convergence Problems

The problem of convergence of the disclosure order in accounting (financial) reporting of information on cash flows by Russian and international standards is disclosed in the article. The authors emphasize that the integration of the Russian Federation into the world community requires from Russian organizations the provision of fi nancial statements according IFRS. However, most Russian companies are legally required to provide both IFRS fi nancial statements and RAS financial statements. In this regard, the Cash Flow Statement, as one of the obligatory statement of companies, is represented in this article as a tool for eff ectively assessing the organization’s ability to attract and use cash in the economic life.

scholarly journals Economic and financial approaches to valuing pension liabilities

2015 ◽  
Vol 14 (2) ◽  
pp. 144-150 ◽  
Author(s):  
ROBERT NOVY-MARX
Keyword(s):  
Decision Making ◽  
Discount Rate ◽  
Cash Flows ◽  
Point Of View ◽  
Investment Policy ◽  
Rate Of Return ◽  
Pension Benefit ◽  
Defined Benefit ◽  
Present Value ◽  
Pension Liabilities

AbstractFinancial economics holds that payment streams should be valued using discount rates that reflect the cash flows’ risks. In the case of pension liabilities, the appropriate discount rate for a pension fund's liabilities is the expected rate of return on a portfolio that would be held under a liability-driven investment policy. The valuation of defined benefit pension obligations involves choices revolving around deciding: (1) what future benefit payments to recognize today (i.e., which liability concept to use); and (2) from whose point of view to value the liabilities. Moving towards modeling, the distribution of future liabilities using a ‘risk-neutral’ framework, would allow for calculating the present value of the future liabilities more accurately. This would provide policymakers with information more relevant for the decision-making, and it would also permit easier communication of the risks facing the Pension Benefit Guaranty Corporation's PIMS model via a single univariate statistic.

Global Conclusion

2012 ◽  
Author(s):  
Christian Gollier
Keyword(s):  
Decision Rule ◽  
Term Structure ◽  
Discount Rate ◽  
Net Present Value ◽  
Cash Flows ◽  
Future Generations ◽  
Discount Rates ◽  
Present Value ◽  
Basic Principles ◽  
Key Parameter

This concluding chapter summarizes the principles set forth in this volume. It argues that the discount rate is a key parameter in economics because it determines how our societies value their future. The chapter aims to use the discount rate in the net present value (NPV) decision rule: to find the discount rate which gives a positive NPV only for those projects that raise the sum of present and future generations’ felicity. In that light, this chapter briefly touches upon the basic principles of discounting, the discounting of safe real cash flows, the term structure of real discount rates, the evaluation of uncertain projects, and the adaptability of projects.

scholarly journals JUSTIFICATION FOR CHOOSING THE DISCOUNT RATE IN INVESTMENT ANALYSIS

2021 ◽  
pp. 21-28
Author(s):  
Светлана Викторовна Кузина ◽  
Павел Константинович Кузин
Keyword(s):  
Discount Rate ◽  
Economic Efficiency ◽  
Methodological Approach ◽  
Investment Project ◽  
Cash Flows ◽  
Present Value ◽  
Investment Projects ◽  
The Future ◽  
Value Of Cash ◽  
Future Value

Статья посвящена вопросам выбора ставки дисконта для приведения будущей стоимости денежных потоков к настоящей стоимости с помощью коэффициента дисконтирования. Целью исследования является анализ и обоснование выбора численного значения ставки дисконта в зависимости от источников финансирования инвестиционного проекта. Авторами приведены практические рекомендации по выбору метода оценки экономической эффективности привлечения инвестиций как для экономически обособленного инвестиционного проекта, так и для инвестиционного проекта, интегрированного в действующее предприятие. Научная новизна полученных результатов заключается в разработке методического подхода к выбору численного значения ставки дисконта для приведения будущей стоимости денежных потоков к настоящей стоимости с помощью коэффициента дисконтирования и к выбору приоритетного метода оценки экономической эффективности для экономически обособленных и интегрированных в действующее предприятие инвестиционных проектов. The article is devoted to the issues of choosing the discount rate for bringing the future value of cash flows to the present value using the discount coefficient. The purpose of the study is to analyze and justify the choice of the numerical value of the discount rate depending on the sources of financing of the investment project. The authors provide practical recommendations on the choice of a method for assessing the economic efficiency of attracting investment both for an economically isolated investment project and for an investment project integrated into an operating enterprise. The scientific novelty of the obtained results consists in the development of a methodological approach to the choice of the numerical value of the discount rate for bringing the future value of cash flows to the present value using the discount coefficient and the choice of a priority method for assessing economic efficiency for both economically isolated and integrated investment projects in an operating enterprise.

scholarly journals TRANSFORMATION OF MODERN METHODS OF FINANCIAL ANALYSIS OF CONSOLIDATED FINANCIAL STATEMENTS OF ENTERPRISES

2021 ◽  
Author(s):  
Victoria Umanska ◽  
◽  
Olena Lavrova-Manzenko ◽  
Keyword(s):  
Information Needs ◽  
Financial Analysis ◽  
Main Tool ◽  
Financial Statements ◽  
Business Owners ◽  
International Standards ◽  
Consolidated Financial Statements ◽  
Global Harmonization ◽  
Property Condition ◽  
Favorable Light

The main goal of this research is to identify those indicators of reporting of associations of enterprises that change their nature or content under the influence of consolidation against the background of the application of IFRS, as well as areas of transformation of methods of its analysis. The article reveals the essence of consolidated financial statements and the peculiarities of the process of its formation. Financial information becomes the main tool of communication and formation of business image of enterprises in the market environment. The carrier of such information is the financial statements, which are compiled according to international standards, which are constantly progressing and reforming. As a result, business owners have more and more freedom in its formation, despite the global harmonization of the list of indicators and their content, which allows you to present your business in a favorable light and assess those aspects of contractors that are most important for further cooperation. The main information needs of groups of users of consolidated financial statements are considered. The authors specify the areas of analysis of the financial and property condition of the group of enterprises according to the consolidated financial statements and substantiate the reasons for the need for their transformation. Some aspects of the analysis of the consolidated financial statements are characterized, which do not allow to form a correct idea of the financial and property condition of its individual elements. The accounting components of the consolidated financial statements are determined, which may distort the results of the coefficient analysis and indicators of their modification. The peculiarities of the analysis of such reporting are due to the transformations of the accounting content of its indicators - the reflection of contingent assets, liabilities, risks, possible costs and revenues. All components of analysis methods - horizontal, vertical, trend, and especially - coefficient - undergo certain changes. The need to disseminate cost-oriented approaches in the analysis of consolidated financial statements is substantiated.

Why Do Firms Write Off Their Goodwill? A Comparison of Different Accounting Systems

2015 ◽  
pp. 23-40 ◽  
Author(s):  
Francesco Avallone ◽  
Claudia Gabbioneta ◽  
Paola Ramassa ◽  
Marco Sorrentino
Keyword(s):  
Good Deal ◽  
Financial Statements ◽  
Cash Flows ◽  
Accounting System ◽  
Anglo Saxon ◽  
Accounting Systems ◽  
Ifrs Adoption ◽  
The Future

Increased comparability of financial statements across adopting countries is one of the main objectives of IFRS adoption. The level of achievement of this objective, however, is still debatable. While some studies have documented that crosscountry comparability of financial statements has increased after IFRS adoption, other studies have found that comparability has actually decreased since 2005. We contribute to this debate by studying whether the motivations for goodwill writeoff are the same or vary across countries with different accounting systems. Although a good deal of research has investigated the motivations for goodwill writeoff, our study is the first to analyze whether these motivations vary across countries with different accounting systems. We find that firms that expect low cash flows in the future are more likely to report goodwill write-offs if they are located in countries with an Anglo-Saxon accounting system than if they are located in countries with a Continental accounting system. These results suggest that IFRS are "interpreted" differently in different countries and that harmonization of financial statements has not been fully achieved yet.

IFRS IMPLEMENTATION AS ONE OF THE FACTORS FOR IMPROVING THE INVESTMENT CLIMATE IN UKRAINE

2017 ◽  
Author(s):  
Kateryna Sova ◽  
◽  
Natalia Yatsenko ◽  
Denys Zagirniak ◽  
◽  
...  
Keyword(s):  
Financial Reporting ◽  
Direct Investment ◽  
Financial Statements ◽  
International Standards ◽  
Investment Climate ◽  
The European Union ◽  
Economic Activities ◽  
Financial Reporting Standards ◽  
Almost All ◽  
The Impact

The article is devoted to the study of the impact of the introduction of International Financial Reporting Standards (IFRS) on changes in the investment climate in Ukraine. The relevance of the topic is that improving the practice of applying IFRS as a tool for exchanging financial information is one of the key conditions for improving the investment climate in Ukraine. The authors have created the generalized scheme that illustrates the chronological list of enterprises that are required by law to prepare financial statements in accordance with IFRS. It was noted that in 2018, in accordance with Part 2 of Article 12 of the law on accounting and financial reporting in Ukraine and resolution of the Cabinet of Ministers of Ukraine No. 547 from 11.07.2018, the criteria of enterprises that are required to prepare financial statements in accordance with IFRS were updated. This step significantly increased the level of application of international standards due to the adoption of such a decision at the legislative level. The dynamics of the number of IFRS enterprises in Ukraine was analyzed. The analysis showed that over the past three years, the number of almost all enterprises that must apply international standards has been growing. The advantages of using IFRS for different users of financial statements were determined. It was determined that the priority users of IFRS financial statements are investors. At the same time, it was noted that the main advantage for other users of financial statements prepared in accordance with international standards is the improvement of the investment climate. The dynamics of the Investment Attractiveness Index of Ukraine based on the Likert scale in the period from 2016 to 2020 was analyzed. The direct investment receipts to Ukraine from the European Union countries were studied. The dynamics of direct investment in the Ukrainian economy was analyzed for two types of economic activities that should form financial statements in accordance with IFRS, namely, the extractive industry and quarrying, as well as financial and insurance activities.

Accounting for Employee Stock Options

2004 ◽  
Vol 18 (2) ◽  
pp. 135-156 ◽  
Author(s):  
Michael Kirschenheiter ◽  
Rohit Mathur ◽  
Jacob K. Thomas
Keyword(s):  
Stock Options ◽  
Financial Statements ◽  
Cash Flows ◽  
Stock Option ◽  
Share Price ◽  
Employee Stock Options ◽  
Deferred Taxes ◽  
Recommended Treatment ◽  
Option Values ◽  
The Common

Accounting for employee stock options is affected by whether outstanding options are viewed as equity or liabilities. The common perception is that the FASB's recommended treatment (per SFAS No. 123), which is based on the options-as-equity view, results in representative financial statements. We argue that this treatment distorts performance measures for three reasons. First, the deferred taxes associated with nonqualified options should also be included as equity, but are not. Second, since unexpected share price changes affect optionholders and equityholders differently, combining their interests provides an average earnings effect that is not representative for either group. We show that efforts to isolate the interests of common stockholders via diluted earning per share calculations (per SFAS No. 128) are inherently incapable of identifying wealth transfers between stockholders and optionholders. Finally, projections of future cash flow statements prepared under SFAS No. 95 overstate cash flows to current equityholders by the pretax value of projected option grants. We show that these distortions can be avoided simply by accounting for options as liabilities at grant and thereafter recognizing changes in option values (similar to the accounting for stock appreciation rights). Our analysis of stock option accounting leads to two, more general implications: (1) all securities other than common shares should be treated as liabilities, thereby simplifying the equity versus liability distinction, and (2) these liabilities should be recorded at fair values, thereby obviating the need to consider earnings dilution.

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