In contrast to U.S. GAAP, IFRS permits management to reverse impairment on fixed assets which have increased in value since the time of their impairment. Revaluations are typically based on estimates of realizable value made by management or independent valuers. Do you expect that these accounting standards will make earnings and book values more or less useful to investors? Explain why or why not. How can management make these types of disclosures more credible?
Answer to relevant QuestionsWhat are the critical drivers of industry profitability? There are very few companies that are able to be both cost leaders and differentiators. Why? Can you think of a company that has been successful at both? Fair value accounting attempts to make financial information more relevant to financial statement users, at the risk of greater subjectivity. What factors would you examine to evaluate the reliability of fair valued assets?Under a management buyout, the top management of a firm offers to buy the company from its stockholders, usually at a premium over its current stock price. The management team puts up its own capital to finance the ...German firms are traditionally financed by banks, which have representatives on the companies’ boards. How would communication challenges differ for these firms relative to U.S. firms, which rely more on public financing?
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