The analytical derivation and empirical test of a tax-adjusted fundamental value model

Article Abstract:

The tax-adjusted fundamental value framework model (FV) capable of estimating the economic value of owned used assets was derived and compared with the historical cost (HC) and current cost (CC) valuation models. FV considers the interactive effects of differential tax benefits and alternative productive capacity depreciation schedules on the estimation of the economic value of owned used assets. HC valuation model specifies the association between asset cost and productive capacity while the CC valuation framework specifies the association among asset cost, productive capacity and specific price changes. Results showed that HC point estimates are limited to a straight-line capacity depreciation schedule. CC point estimates are most accurate when generated by an accelerated depreciation schedule. FV point estimates are most accurate across alternative capacity depreciation schedules.

Models, Analysis, Depreciation, Assets (Accounting), Fixed assets

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The impact of new pension disclosure rules on perceptions of debt

Article Abstract:

Statement of Financial Accounting Standards number 87 of the Financial Accounting Standards Board (FASB) states that companies whose pension liabilities exceed their pension assets must disclose this in their financial statements and not use a footnote, as was done previously. A study of 51 bankers and 82 accounting students indicates that the majority would include pension debts in the numerator of a debt-equity ratio rather than as a footnote to a balance sheet. The general perception that a company's financial position would suffer as a result of balance sheet disclosure of pension indebtedness is not examined.

Liabilities (Accounting), Compensation and benefits, Accounting and auditing, Pensions, Disclosure statements (Accounting)

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Further evidence on the marginal gains in accuracy of alternative levels of specificity of the producer price indexes

Article Abstract:

In response to the Financial Accounting Standards Board's (FASB) solicitation, the question of how accurately price indexes estimate the costs of machinery and equipment is addressed. Statistical analyses are performed in order to compare the methodology, the price data, and the accuracy of the product price indexes (PPI). It was found that the PPI is more accurate for newer assets and that the level of index aggregation affected the accuracy of the PPI.

Research, Machinery, Prices and rates, Price indexes

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