BAO3309 S2 ASSIGNMENT-1

On 12 May 2011 the IASB issued IFRS 13 Fair Value Measurement. IFRS 13, which is effective from 1 January 2013, defines fair value, sets out in a single IFRS a framework for measuring fair value and requires disclosures about fair value measurements. IFRS 13 does not determine when an asset, a liability or an entity’s own equity instrument is measured at fair value. Rather, the measurement and disclosure requirements of IFRS 13 apply when another IFRS requires or permits the item to be measured at fair value (with limited exceptions).

The fair value measurement project was part of the Memorandum of Understanding between the IASB and the US national standard-setter, the Financial Accounting Standards Board (FASB). This joint work resulted in IFRSs and US generally accepted accounting principles (GAAP) having the same definition and meaning of fair value and the same disclosure requirements about fair value measurements.

INDIVIDUAL ASSIGNMENT – 20% (Due date week 9, 21st September, 2011)

Before IFRS 13 was issued, the requirements for measuring fair value and for disclosing information about fair values were dispersed across many standards and in many cases those standards did not articulate a clear measurement or disclosure objective. The Board developed IFRS 13:

to reduce complexity and improve consistency in the application of fair value measurement principles by having a single set of requirements for all fair value measurements;

to communicate the measurement objective more clearly by clarifying the definition of

fair value;

to improve transparency by enhancing disclosures about fair value measurements;

and

to increase the convergence of IFRSs and US GAAP.

IFRS 13 is to be applied prospectively and, although its application is only mandatory from 1 January 2013, entities may choose to apply IFRS 13 earlier.

Source:

A. Explain the purpose of the the Memorandum of Understanding between the IASB

and the US national standard-setter, the Financial Accounting Standards Board (FASB).

B. How did IFRSs and US generally accepted accounting principles (GAAP) define fair

value prior to the issue of IFRS 13 and what were the disclosure and measurement requirements of IFRSs and US generally accepted accounting principles (GAAP) with regard to fair value prior to the issue of IFRS 13?

C. Identify and explain four reasons as to why the IASB developed IFRS 13, particularly

with regard to the global financial crisis. Particular reference should be made to the goals of the fair value measurement project.

D. Identify and explain the main differences between IFRS 13 and the exposure draft

proposal that precluded the issuing of IFRS 13.

E. How, and to what extent, did the IASB seek to ensure comparability between IFRS

13 and US GAAP?

F. Explain how, and to what extent, we can expect there to be differences between

IFRS 13 and US GAAP. Particular reference should be made to theoretical reasons as to why international differences are expected to exist, and perhaps should still exist.

References:

1. FASB website.

2. IFRS website.

3. Deegan, C. Financial Accounting Theory, Edition 3, McGraw Hill 2009.

Students should also refer to journals such as the Australian Accounting Review, Accounting Research Journal, Charter, and In The Black which are available on the electronic journals webpage of the VU library website:

The following matters should be given particular attention:

1. Evidence of extensive research beyond the prescribed texts is required.

Ensure these are referenced appropriately in your references using Harvard referencing. 2. Assignment must be typed and properly documented.

Assignment should be no greater than 3000 words double-spaced with a 3cm left margin. A word count must be displayed on the title page of assignment. (Note: Word count does not include abstract, graphs, tables, and references).

Note: Failure to submit both printed copies and electronic copy through Web-CT turnitin will result in a fail grade. 3. NO extensions will be granted unless supported by appropriate

documentation prior to the due date. An application for an extension must use

an application for extension of assessment form, submit an application on or before a due date to unit coordinator, be accompanied by a medical certificate or similar evidence, be accompanied by any work completed to date

Note: Poor organisation and work commitments are not grounds for an extension. Students’ are responsible to protect their work and save data by making necessary backup. Therefore, loss of data due to computer or storage devices problems will not be considered a valid reason for an extension. 4. 5. 6.

Essays not using the Harvard system or showing no evidence of research for information are obviously plagiarised will be returned unmarked.

This assignment must be handed in for successful completion of the subject before the due. It will count 20% towards the final mark.

Recommendation: Students can submit their completed assignment or partially completed assignment through Turnitin at least five days before the due date to get a similarity report. This report will provide guidance and opportunity to students to withdraw their assignment before the due date and resubmit it before the due date after removing similarities and avoiding plagiarism. Remember you cannot withdraw an assignment after the due date. Any assignments handed in late without prior permission of the lecturer/tutor will be penalised 2 (out of 20) marks per day. Do not submit any assessable task by slipping it under the door of your lecturer’s or tutor’s office.

7.

8.

SEMESTER 2, 2011

Student Name Student Number Tutorial group Mark out of 100

Excellent:

Very Good:

Good:

Average:

Marginal:

Poor:

Very poor:

Work fulfilling the above criteria to an outstanding degree, in particular

demonstrating excellence in sustained argument, critical thought and synthesis of material from diverse sources.

Work demonstrating extensive knowledge and understanding of major

content areas and issues; the ability to appropriately synthesise material from a range of sources; a well developed capacity for critical analysis of key issues and concepts; the ability to present a defensible personal perspective on issues; evidence of wide reading in relevant areas of the discipline; high quality presentation.

Above average work demonstrating good knowledge and understanding of

major content areas and issues; demonstration of some capacity for critical analysis; the ability to present a perspective on issues; evidence of reading in relevant areas of the discipline; high quality presentation.

Work of ‘average’ standard which demonstrates a average comprehension

both of basic concepts and some issues, based on class work and some further reading in the area; some ability to compare key concepts and theoretical perspectives; average presentation, particularly in regard to structure, expression and referencing.

Work which shows a basic understanding of key elements of the subject

matter at a descriptive level, based mainly on attendance at lectures; satisfactory presentation with some deficiencies in structure, expression and referencing.

Work which shows little evidence of knowledge or understanding of the

subject matter and is unsatisfactorily presented, particularly in regard to structure, expression and referencing.

Work which shows no evidence of knowledge or understanding of the subject

matter.

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