The definitions for Fair Value are similar under both IFRS and US GAAP:
IFRS: Fair value is the amount for which an asset could be exchanged, or a liability settled between knowledgeable, willing parties in an arm’s length transaction. Fair value excludes transaction costs.
US GAAP: Under U.S. GAAP fair value is defined as the price that [...]
Archives for October, 2009
Fair Value Definition under IFRS and US GAAP
Categorized in Accounting, Investment Accounting
Mid-price
Mid price is the average between the bid and ask prices of a security, the bid price being the price that a dealer is willing to pay and the ask price is the price represents the price the dealer is willing to sell at.
Under US GAAP bid price is generally used for long positions, i.e. [...]
FSP FAS 157-4 Determining Fair Value When the Volume and Level of Activity for the Asset Have Significantly Decreased and Identifying Transaction That Are Not Orderly
FSP FAS 157-4 has been deemed as an additional clarification for fair value measurements by many accountants, rather than a completely new guidance. The FSP addresses the problem of determining fair value when a transaction may have not been orderly (i.e. forced sale) or when the market for the transaction may have not been active.
FSP [...]
Categorized in Accounting, Investment Accounting
New FASB Accounting Standards Codification
On June 30, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 168, The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162.
The FASB Accounting Standards Codification (ASC) is intended to become the single source of authoritative generally accepted accounting principles (GAAP) in the US. [...]
Categorized in Accounting
Bottom Up Investing
In contrast to top down investing, bottom up investing focuses on the individual company first, detached from the macroeconomic factors such the business cycle or the state of the entire industry. The rationale is that a strong company will flourish no matter what the macroeconomic conditions are.
I would this approach is more promising for non-cyclicals [...]
Categorized in Investing Basics
Tags: Bottom Up Investing
Top Down Investing
Top down investing starts out by looking at the macroeconomic factors, such as looking where we are in the Macroeconomic Cycle, what the political conditions are, the risk appetite, differences in prospective growth rates among different regions, or prospective interest rates, and so on.
Then, by keeping the macroeconomic conditions in mind, it is determined which [...]
Categorized in Investing Basics
Tags: Top Down Investing
Return on Equity (ROE)
Return on equity measures the percentage return shareholders get on their investments. It is calculated by dividing net income by total equity. One might conclude that good investments are companies with a high ROE. It is however not advisable to just compare standalone ROEs. It is important to consider the risks as well, some companies [...]
Categorized in Ratios
Tags: Return on Equity, ROE
Accrual Basis of Accounting and Matching Principle
This refers to the method of recognizing revenues in the income statement when they are earned, i.e. when the product is delivered or the service is completed, as opposed to when the cash is received or paid. For example, an computer manufacturer that receives an order for 50 computers in June, ships the computers in [...]
Categorized in Accounting
Price to Earnings (P/E) Ratio
P/E ratio is calculated by dividing the current share price of a stock by its per share earnings. It is a measure of how many multiples of earnings an investor is willing to pay for a share. High P/E indicates that investors expect a high growth in earnings in the upcoming years. A low P/E [...]
Categorized in Ratios
Tags: P/E, Price Earnings Ratio
Double Entry Bookkeeping
Double entry is an accounting procedure that has been introduced several hundred years ago. Its basic concept is that each transaction results in amounts being recorded in at least two accounts.
Categorized in Accounting
Member Login
Random Blog Authors
Tags
- ABS Accounting Standards Codification X FASB Accounting Standards Codification Accrual Basis of Accounting AFS Asset Allocation Available-for-sale Biotech Bonds Bottom Up Investing Business Form CMBS constant dollar accounting copyright credit spread efficient frontier Equity Fair Value Fair Value Definition under IFRS and US GAAP FAS 157 FASB Accounting Standards Codification™ FSP FAS 157-4 fundamental analysis Held-to-maturity HTM Installment Sales Method Limited Liability Company Matching Principle P/E partnership patent Portfolio Management portfolio theory Price Earnings Ratio Return on Equity RMBS ROE Securitized Products SFAS 89 sole proprietorship technical analysis Top Down Investing trade date accounting trademark trade secret Trading