Fair Value and Fair Presentation of Financial Statements Assignment

Fair Value and Fair Presentation of Financial Statements - Assignment Example As per the requirements of IFRS 5, 'the assets that are held for sale are to measured at the lower of carrying amount and fair value fewer costs to sell' (IASB, n.d.). This means that the asset should be marketed for sale at a price which is arrived by considering the fair value of the asset. This ensures that financial statements provide a more realistic figure for fixed assets that are held for sale. IAS 16 provides accounting treatment of property, plant, and equipment and their revaluation for the purpose of financial reporting. As per the standard, 'after recognition as an asset, an item of property, plant and equipment whose fair value can be measured reliably shall be carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses' (IASB, n.d.). This shows that the standard requires assets to be represented in financial statements at their fair value as a true representation of their actual value at the time of balance sheet development. This standard deals with recognition, measurement, and revaluation of an intangible asset. An intangible asset is a non-monetary asset and has no physical form. The standard requires a revaluation of the intangible asset at the 'fair value at the date of revaluation less any  accumulated amortization and any subsequent accumulated impairment losses' (IASB, n.d.). The fair value is determined with reference to active markets where the prices are available to the public, buyers and sellers are available, and items are traded in a homogenous way. In addition to the above, IAS 32 and IAS 39 require the use of fair value for measuring and presenting the value of financial assets and financial liabilities.  

Business Economics Essay Example | Topics and Well Written Essays - 3750 words

Business Economics - Essay Example There is an inverse relationship between a country’s current account and its foreign debt, all things remaining equal. This can be observed from the current account and foreign debt statistics of Australia, in the current year. In the year 2009 there is a deficit in Australia’s current account. This is because of a continued rise in its net foreign debt which results in a negative impact on a country’s current account. As shown in the figure below – the total current account deficit for the year 2009 amounts to $6346 million. Revenue gains received by a country help in increasing the balance in its current account while excessive expenditure leads to a deficit. Thus, if a country imports more goods and services than the goods and services it exports, it leads to a deficit in its current account and vice versa (Daly, 2004). The above figure shows an increase in Australia’s net foreign debt, over the years from $506,355 million in 2006- 07 to $616,650 million in 2008 – 09 (Australian Bureau of Statistics, 2009), thus indicating that its exports far exceeds its imports, and the savings are relatively lower as well. Thus, it can be said that there is an inverse relationship between current account deficit and foreign debt of a country, as the foreign debt increases, with savings remaining constant, there is a deficit in the current account while, a reduction in foreign debt, increase in exports, increase in savings, etc would lead to a surplus in the country’s current account. Another significant relationship between CAD (current account deficit) and foreign debt of a country is the fact that as the country experiences a CAD it leads to an increase in foreign borrowings, which is required to pay off the deficit, which ultimately leads to a further increase in foreign debt. As the fore ign debt rises, the interest on it rises simultaneously,