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Fair Value
In accounting, fair value is a rational and unbiased estimate of the potential market price of a good, service, or asset. The derivation takes into account such objective factors as the costs associated with production or replacement, market conditions and matters of supply and demand. Subjective factors may also be considered such as the risk characteristics, the cost of and return on capital, and individually perceived utility. Economic understanding Market price There are two schools of thought about the relation between the market price and fair value in any form of market, but especially with regard to tradable assets: * The efficient-market hypothesis asserts that, in a well organized, reasonably transparent market, the market price is generally equal to or close to the fair value, as investors react quickly to incorporate new information about relative scarcity, utility, or potential returns in their bids; see also Rational pricing. * Behavioral finance asserts t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Accounting
Accounting, also known as accountancy, is the process of recording and processing information about economic entity, economic entities, such as businesses and corporations. Accounting measures the results of an organization's economic activities and conveys this information to a variety of stakeholders, including investors, creditors, management, and Regulatory agency, regulators. Practitioners of accounting are known as accountants. The terms "accounting" and "financial reporting" are often used interchangeably. Accounting can be divided into several fields including financial accounting, management accounting, tax accounting and cost accounting. Financial accounting focuses on the reporting of an organization's financial information, including the preparation of financial statements, to the external users of the information, such as investors, regulators and suppliers. Management accounting focuses on the measurement, analysis and reporting of information for internal use by ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
FASB
The Financial Accounting Standards Board (FASB) is a private standard-setting body whose primary purpose is to establish and improve Generally Accepted Accounting Principles (GAAP) within the United States in the public's interest. The Securities and Exchange Commission (SEC) designated the FASB as the organization responsible for setting accounting standards for public companies in the U.S. The FASB replaced the American Institute of Certified Public Accountants' (AICPA) Accounting Principles Board (APB) on July 1, 1973. The FASB is run by the nonprofit Financial Accounting Foundation. FASB accounting standards are accepted as authoritative by many organizations, including state Boards of Accountancy and the American Institute of CPAs (AICPA). Structure The FASB is based in Norwalk, Connecticut, and is led by seven full-time Board members,Spiceland, David; Sepe, James; Nelson, Mark; & Tomassini, Lawrence (2009). ''Intermediate Accounting'' (5th Edition). McGraw-Hill/Irwi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Tax Amortization Benefit
In accounting, tax amortization benefit (or tax amortisation benefit) refers to the present value of income tax savings resulting from the tax deduction generated by the amortization of an intangible asset. Intangible asset valuation When the purchaser of an intangible asset is allowed to amortize the price of the asset as an expense for tax purposes, the value of the asset is enhanced by this tax amortization benefit. Specifically, the fair market value of the asset is increased by the present value of the future tax savings derived from the tax amortization of the asset. The present value of these savings is to be estimated and included as a part of the fair market value when valuing an intangible asset. Circularity of the tax amortization benefit The present value of the future tax savings is a mathematical function of the fair market value. This creates circularity, because the fair market value includes the present value of the tax savings. This circularity can be handled usin ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Fair Value Accounting
Mark-to-market (MTM or M2M) or fair value accounting is accounting for the "fair value" of an asset or liability based on the current market price, or the price for similar assets and liabilities, or based on another objectively assessed "fair" value. Fair value accounting has been a part of Generally Accepted Accounting Principles (GAAP) in the United States since the early 1990s. Failure to use it is viewed as the cause of the Orange County Bankruptcy, even though its use is considered to be one of the reasons for the Enron scandal and the eventual bankruptcy of the company, as well as the closure of the accounting firm Arthur Andersen. Mark-to-market accounting can change values on the balance sheet as market conditions change. In contrast, historical cost accounting, based on the past transactions, is simpler, more stable, and easier to perform, but does not represent current market value. It summarizes past transactions instead. Mark-to-market accounting can become vola ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Deprival Value
Deprival value is a concept used in accounting theory to determine the appropriate measurement basis for assets. It is an alternative to historical cost and fair value or mark to market accounting. Some writers prefer terms such as 'value to the owner' or 'value to the firm'. Deprival value is also sometimes advocated for liabilities, in which case another term such as 'Relief value' may be used. The deprival value of an asset is the extent to which the entity is "better off" because it holds the asset. This may be thought of as the answer to the following questions, all of which are equivalent: - What amount would just compensate the entity for the loss of the asset? - What loss would the entity sustain if deprived of the asset? - How much would the entity rationally pay to acquire the asset (if it did not already hold it)? Deprival value explained Deprival value is based on the premise that the value of an asset is equivalent to the loss that the owner of an asset would ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Ernst & Young
EY, previously known as Ernst & Young, is a multinational corporation, multinational professional services partnership, network based in London, United Kingdom. Along with Deloitte, KPMG and PwC, it is one of the Big Four accounting firms, Big Four accounting firms. The EY network is composed of member firms of Ernst & Young Global Limited, a UK company Company limited by guarantee, limited by guarantee. EY is one of the largest professional services networks in the world. It primarily provides assurance services, assurance, tax, Information technology, information technology services (including managed services in areas like Cybersecurity, Cloud computing, Cloud, Digital transformation, Digital Transformation and Artificial intelligence, AI), management consulting, consulting, and Corporate services, advisory services to its clients. Ernst & Young Global Limited operates as a network of member firms which are structured as separate legal entities in a partnership, which has 395 ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Derivative (finance)
In finance, a derivative is a contract between a buyer and a seller. The derivative can take various forms, depending on the transaction, but every derivative has the following four elements: # an item (the "underlier") that can or must be bought or sold, # a future act which must occur (such as a sale or purchase of the underlier), # a price at which the future transaction must take place, and # a future date by which the act (such as a purchase or sale) must take place. A derivative's value depends on the performance of the underlier, which can be a commodity (for example, corn or oil), a financial instrument (e.g. a stock or a bond), price index, a price index, a currency, or an interest rate. Derivatives can be used to insure against price movements (Hedge (finance)#Etymology, hedging), increase exposure to price movements for speculation, or get access to otherwise hard-to-trade assets or markets. Most derivatives are price guarantees. But some are based on an event or p ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Credit Valuation Adjustment
A Credit valuation adjustment (CVA), in financial mathematics, is an "adjustment" to a derivative's price, as charged by a bank to a counterparty to compensate it for taking on the credit risk of that counterparty during the life of the transaction. "CVA" can refer more generally to several related concepts, as delineated aside. The most common transactions attracting CVA involve interest rate derivatives, foreign exchange derivatives, and combinations thereof. CVA has a specific capital charge under Basel III, and may also result in earnings volatility under IFRS 13, and is therefore managed by a specialized desk. CVA is one of a family of related valuation adjustments, collectively xVA; for further context here see . Calculation In financial mathematics one defines CVA as the difference between the risk-free portfolio value and the true portfolio value that takes into account the possibility of a counterparty's default. In other words, CVA is the market valu ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Credit Risk
Credit risk is the chance that a borrower does not repay a loan In finance, a loan is the tender of money by one party to another with an agreement to pay it back. The recipient, or borrower, incurs a debt and is usually required to pay interest for the use of the money. The document evidencing the deb ... or fulfill a loan obligation. For lenders the risk includes late or lost interest and principal payment, leading to disrupted cash flows and increased collection costs. The loss may be complete or partial. In an efficient market, higher levels of credit risk will be associated with higher borrowing costs. Because of this, measures of borrowing costs such as yield spreads can be used to infer credit risk levels based on assessments by market participants. Losses can arise in a number of circumstances, for example: * A consumer may fail to make a payment due on a mortgage loan, credit card, line of credit, or other loan. * A company is unable to repay asset- ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Duff & Phelps
Duff may refer to: People * Duff (surname) * Duff (given name) * Duff (nickname) * Karen Duffy, an actress, model, and former MTV VJ once known as "Duff" * Duff Roman, on-air name of Canadian radio personality and executive David Mostoway (born 1938) Places * Duff, Indiana, United States, an unincorporated community * Duff, Nebraska, United States, an unincorporated community * Duff, Tennessee, United States, an unincorporated community * Duff, Saskatchewan, Canada, a village * Duff Hill, a mountain in County Wicklow, Ireland * Duff River, a river in County Sligo, Ireland * Duff Islands, in the Solomon Islands, Pacific Ocean * Mount Duff, Mangareva Island, French Polynesia * Mount Duff (Yakutat), a Canadian mountain on the border between Alberta and British Columbia * Duff Peak, Victoria Land, Antarctica * Duff Point, Greenwich Island, Antarctica Arts and entertainment * ''The DUFF'' (novel), by Kody Keplinger ** '' The DUFF'', a 2015 film based on the Keplinge ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
International Accounting Standards Board
The International Accounting Standards Board (IASB) is the independent accounting standard-setting body of the IFRS Foundation. The IASB was founded on April 1, 2001, as the successor to the International Accounting Standards Committee (IASC). It is responsible for developing International Financial Reporting Standards (IFRS) and for promoting their use and application. Background and semantics The International Accounting Standards Committee (IASC) had been established in 1973 and had issued a number of standards known as International Accounting Standards (IAS). As the organization was reformed in 2001, it changed the name of the standard-setting body from IASC to IASB, and established a foundation to oversee it, initially known as the IASC Foundation and renamed the IFRS Foundation in mid-2010. Also in 2001, it was decided that newly issued standards would be labeled IFRS instead of IAS, and that the entire set of IASC/IASB standards (including the IAS issued until 2001 an ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
