ACC XXXXXXXXXXSM I Version 1 - Published 06 June 2018 ACC518 - Current Developments In Accounting Thought Table of Contents Subject Summary...

Solution 1:
CHECK THE NUMBERS: ACCOUNTING INFORMATION STILL MATTERS TO YOU, ME AND
INVESTORS AROUND THE WORLD
The annual lecture organized by the CPA Australia together with the University of Western Australia Business School and Curtin Business school on the dated August 09, 2018 and the Ann Tarca delivered the CPA Philips annual lecture.
INTRODUCTION
The learner speaker Ann Tarca first met the Philips brown in the year 1996 when he was pursuing his post graduate studies and in his first meeting with the Philip Brown impressed by the way of his research examining and the conduct. He continuous learned from the Philips Brown for the principles and the techniques on the following major three topics and also discussed as regard namely as:
1. The relationship and the impact exist between the share price and the accounting information.
2. Whether over the change in the economy and accounting practices the accounting information has lost its significance.
3. Manner of the issue dealt of the loss of value accounting with the international accounting standards board (IASB).
(Deegan, 2014, p.xxx)
BACKGROUND—BALL & BROWN 1968
During the investigation done by the Philips brown and the Roy ball on the part whether and at what extent the accounting information was useful for the capital market it has been observed that there exist an underlying relationship between the profit earned by the company and the market prices of the share in the capital market.
The research also determines that the unexpected and the abnormal increase in the profit of the company due to the some unexpected good news flows of the company in the capital market before the announcement made by the company in regards to the earnings of the company during the reporting period and the same was also observed for the bad news in the capital market for the company. However after the research done by the Philips and the Roy many researchers come and then argue on the relationship of the accounting information, share prices and the market return that the accounting information is less useful for the investors who take the decision in the capital market.
("IASB discusses accounting information", 2018 )
LOSS OF VALUE RELEVANCE— BARUCH LEV AND OTHER RESEARCH
The professor Baruch Lev form his presentation in the ICAEW said that there is a growing gap between the financial reporting to the investors and the other stakeholders and pointed out the gap between the capital market and the financial information. He pointed out the researches which are showing the growing gap between the capital market indicator and the financial information with regards to the earnings of the company. The major reason according to him was the use of the asset valuation method of accounting instead of the traditional accounting system. And the failure on the part to comply with the accounting standards to adjust the asset recognition criteria
(IFRS, 2018a, p.xxx)
RESEARCH THAT PROVIDES ANOTHER VIEW
Through the newspaper Dechow, Sloan and Zha estimates that there exist the relationship between the accounting information and the prices of the share of the company and the share prices are the true reflection of the accounting information of the company. Also the study conducted by the Mary Barth the professor of the University of the Stanford had no found any evidences for the reduction in the significance of the accounting information on the basis of the sample selected by her for research. In the other sense they found during the research the increase in the importance of the accounting due to the intangible asset, growth opportunities, and other factors which are non-directly related to the earnings of the company.
Many researchers also found that there is no decline in the value of the firm of Australia as compare to the US firms and the significance of the accounting information is determined by the investors views on the usefulness of the EBIT and the EBITDA in their decision making purpose.
Also the research of the Ann Tarc about the performance measures it estimates that the companies who were adopted the IFRS in the accounting and found the non-gap earnings to the operating profits as determined by the management and the same is move in relation to the share prices, this will made the evidence that the not only the earnings constitute in affecting the share prices of the company there exist some other factors also.
("Check the numbers", 2018b)
STANDARD-SETTER RESPONSE—LEV 1: BALANCE SHEET FOCUS/IFRS 3/CONCEPTUAL FRAMEWORK
Now come back to the professor Lev’s Criticism as to the weakness of the accounting information and the respond to the professional accountant and standards. The board work with the consultation of the various people including the auditors, regulators , and the investors and the board is working towards the changes in the statement of financial performance of the entity which will provide the more specific presentation and the classification of the specific items of the financial in the sub heads and heads subject to the performance of the management to be presented in the financial with the prior reconciliation done by the auditor during the course of the performance of the audit.
("How we set IFRS Standards", 2018d)
With the reference to the criticism of the professor Lev it is observed that the IFRS 3 to be applied on the accounting of the asset acquired by the company and to be recorded at the fair market value. Major objective of the standards of accounting to provide the true and fair view of the statement of the affairs of the company including the true accounting information to be presented to the stakeholders of the company. In the traditional accounting the asset acquired to be recorded at the historical cost and the amortized cost to be deducted.
However the comparison become difficult due to the accounting treatment and the more of the acquisition made the higher cost of goods sold of the company due to the higher amortization cost and in the converse the situation the company will not able to grow due to the due to the large acquisition and the intangible assets and the customer Image has been created.
("How we develop IFRS Standards", 2018e)
In the reference to the above example of the IFRS3 the logic is determined for the asset valuation method using the fair market value instead of the historical method at the time of acquisition. The careful review of the IFRS 3 requires that the valuation of the asset to the some extent require that the measurement of the assets like derivatives for such the having the no historical cost then the fair market value is the only way to ascertain...