External Reporting Issued-Free-Samples for Students-Myassignment

Questions: 1.Provide the reason or point out the Advantage and Strength of the Mixed Measurement Model. 2.Provide the reason or point out the Limitation and Disadvantage why the Mixed Measurement Model should be ceased and an alternative used. 3.According the negative view, provide the reason or explain to retort why Mixed Measurement Model is the most appropriate Measurement Model. Answers: 1.Affirmative view of the mixed measurement model Mixed measurement model of accounting refers to a specific approach to accounting in which there are various approaches of measurement that can be utilized for enumerating both assets as well as liabilities. Affirmative view that refers to positive factors implies that mixed measurement model has no foundation of measurement that is prescribed for diverse classes of assets as well as liabilities. Utilization of a mixed measurement model helps in providing flexibility for preparers of financial declaration (AsangaAbhayawansa, 2014). For instance, at the time of measurement, there can be active market for a particular asset and particularly the preparer can select the fair value to register the asset. On the other hand, historical cost can also be utilized at the time when no active market happened for the particular asset. Moreover, at the time when markets become unsteady for instance during the period of financial crisis, it might possibly happen to be inappropriate to use the base for enumeration of an asset on fair value as prices are particularly volatile. In essence, this mixed measurement model reflects a principle based approach that show that diverse business entities might perhaps follow different models of business. However, this is because high level general declarations that leave space for discussion. However, this can widely be used by different assessors (de Villiers et al., 2014)). In particular, this mixed model can lead to effective process of reporting that can deliver investors with better information for evaluation of financial instruments. As per then results of a worldwide survey conducted as well as presented by Price Waterhouse Cooper, financiers prefer to use a mix measurement model for the purpose of accounting of different financial instruments. This necessarily helps in the process of utilizing a model having a fair value and this in turn helps in reporting for short lived instruments and reporting amortized cost for longer period of time as information better reflects underlying business as well as economic re asons of an entity to hold a specific instrument. As rightly indicated by EcclesSerafeim (2014), the International Accounting Standards Board essentially prefers this particular model since it divides the entire financial instruments into specifically those proposedto be traded and those to be held till the period of maturity. In particular, assignment of a cost model to a specific financial instrument can be considered to be very easy serially when categorization of asset is carried out. As such, the primary advantage of this specific model is that it is said to be well established and at the same time understood and this divulges underlying information of different business models along with management stratagem. 2.Negative view of the mixed model The mixed measurement model also has certain downsides. In essence, this potentially undermines the overall comparability of financial statements prepared and presented by corporations that utilize different enumeration bases. In addition to this, this mixed measurement model also directs towards what is referred to as additivity issues, in which the overall sum of the assets can reflect the summation of all the assets as well as liabilities enumerated on diverse assets. Finally, in cases where choices are obtainable, this permits for the overall possibility that executives can resourcefully select the foundation basis that properly fit in (mechanism that delivers a preferred outcome) (Owen, 2013). The mixed measurement model also has certain limitations that undermine the process of accounting. In essence, there exists problems or else issues of mixed measurement model. In addition to this, there is little or else no settlement as regards what enumerations need to be utilized. However, conceptual structure is also adequately prescriptive. For instance, the enumeration of plant, property and equipment in financial statements use HC or FV that is particularly less analogous. Apart from this, the inherent flexibility along with the characteristics and the nature of a mixed measurement approach helps in reduction of the overall comparability. In addition to this, analysis of the disadvantages of the mixed measurement model also reveals the fact that process of measurement can be relatively subjective. This include choice, approximation along with assumptions. For instance, there might be 10% or else 12% rate of discount or else rate of depreciation. In this connection, it can also be stated that mixed measurement model has higher flexibility. However, this flexibility also leads to opportunistic accounting choices (Henderson, 2016). For instance, it can be hereby mentioned that rational economic individuals can be associated to positive accounting theory. In addition to this, it can also be hereby mentioned that this present approach also leads to different additivity issues. For example, measurement of plant, property and equipment uses specific dimensions such as HC. Besides this, land measure at fair value total assets. In this case. Total assets is the sum total of HC as well as fair value. Thus, it can be hereby said that mix measurement model is quite unappealing and generates issues for different users. However, utilization of diverse bases for enumerating specific financial instruments can obfuscate the process of analysis of accounting summary. This in turn makes it further difficult to differentiate between accounting income that is (induced) or else expense from specific economic earnings or else expends. 3.Explanation why mixed measurement model is the most appropriate one As rightly indicated by LoGrasso (2016), a mixed measurement model can be taken up and this might include fair value, historical cost method, present value or else any one of the said methods for measurement of diverse financial instruments, future flow of cash. In essence, it is predicted that this kind of measure can always be considered to be pertinent and at the same time reliable in case if markets are considered to be complete and thought to be in perfectly competitive equilibrium. Nevertheless, in this kind of circumstances, an exclusive value of market can be attributed to each as well as every classes of assets as well as liability. Thus, it can be hereby mentioned that a mixed method of measurement can be considered to be most appropriate. In addition to this, academic literature also points out towards the fact that markets are not always perfect as well as complete, therefore, it can be considered to be proper information is not available (EcclesSerafeim, 2014). Hence, a mixed model for enumeration can be recommended for measurement of diverse financial instruments that again can help in supporting the overall concept that a mixed model of measurement is better and superior to others. However, as per the Federal Accounting Standards Advisory, there are certain individuals that are of the view that under this specific model of mixed measurement tactic, there are certain assets as well as liabilities that are reported as initial amounts. This too serves a range of decision making requirements than each of the two different approaches of measurement. Finally, selection of the best model of measurement depends on the types of different transactions as well as other events that have taken place, specific information required for decisionsthat need to be made (de Villiers et al., 2014). Essentially, when the goal is primarily to make certain that the reported information particularly meets financial declaration objectives in response to diverse decision making requirements of a wide range of users. In addition to this, it can be said in this connection it is necessary to accept different methods of enumeration that might be appropriate for conveying important informatio n. References AsangaAbhayawansa, S. (2014). A review of guidelines and frameworks on external reporting of intellectual capital.Journal of Intellectual Capital,15(1), 100-141. de Villiers, C., Rinaldi, L., Unerman, J. (2014). Integrated Reporting: Insights, gaps and an agenda for future research.Accounting, Auditing Accountability Journal,27(7), 1042-1067. Eccles, R. G., Serafeim, G. (2014). Corporate and integrated reporting: A functional perspective. Eccles, R. G., Serafeim, G. (2014). Corporate and integrated reporting: A functional perspective. Henderson, A. E. (Ed.). (2016).Burden or Benefit: External Data Reporting: New Directions for Institutional Research, Number 166(No. 166). John Wiley Sons. LoGrasso, M. F. (2016). Easing the burden of external reporting.New Directions for Institutional Research,2015(166), 61-72. Owen, G. (2013). Integrated reporting: A review of developments and their implications for the accounting curriculum.Accounting Education,22(4), 340-356.