IFRS 9 allows financial assets with a predictable cash flow to be measured at amortized cost, subject to an impairment test, if the firm’s business model is to hold them to collect cash flows from interest and principal payments. Given that reliance on manager intent is a shifting sand upon which to base a measurement approach ( Section 7.2.1 ), and that management determines the firm’s business model, why would a standard setter who wishes to minimize opportunistic manager actions allow the accounting to depend on the firm’s business model?
Answer to relevant QuestionsRegulation FD of the SEC was intended to reduce small investor concerns about analysts’ information advantage and increase their confidence in a fair marketplace. However, during the period leading up to Regulation FD, ...Suppose that a foreign company plans to crosslist its shares on a U. S. securities exchange. The company currently uses local GAAP. Before applying for crosslisting, it plans to switch its current and future financial ...An investor’s utility function isUi(a) = 3x – 1/2 σx 2Act a1 has x 5 0.88, s 2 x 5 0.512, yielding Ui (a1) 5 2.384. Act a2 has x 5 0.80.What σx2 would this act require to yield the same utility as a1? Explain the ...a1: Buy bonds of Risky Mining Ltd. These pay 14.4% interest, unless Risky goes bankrupt, in which case Marie will lose her principal and interest. a2: Buy savings bonds, paying 6.4% interest. Marie assesses her prior ...Using the concept of information asymmetry, answer the following questions: a. You observe that used cars sold by new car dealers sell for a higher price, for models of same make, year, and condition, than used cars sold by ...
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