Discuss the two objections to the use of fair value measurement Essay

Discuss the two objections to the use of fair value measurement referred to above, and critically examine how far they are valid - Essay Example The first objection says that the method is, thus, not good for financial reporting while the second says that the method will be against the stakeholders and investors’ interest. This study seeks to analyze fair value measurement method in accounting in light of the aforementioned objections. Before embarking on the study’s purpose, it is of essence, though, to define fair value as given by IASB. According to IFRS 13, Fair value is that price that one would receive if he/she disposed an asset or paid to ensure an obligation’s transfer in an orderly kind of transaction between players in a market at the date of measurement. IFRS 13 is there to increase comparability and consistency in measurements that use fair value method and the disclosures that go in tandem through what is referred to as ‘fair value hierarchy’. This hierarchy categorizes the inputs that are usually utilized in the techniques of valuation into three main levels. This hierarchy pri oritizes at the top, the unadjusted/quoted prices for identical liabilities or assets and in active markets. The lowest priority is given to unobservable type of inputs. The levels of inputs are explained as under. Level 1 inputs refer to the quoted prices in the active markets for liabilities or assets that are identical that the entity can get at the date of measurement. ... Those scholars who are against this method argue that fair value method presents information that is unreliable since it is not usually based upon transactions at arm’s length. Thus, it should not be used when it comes to investors’ making financial decisions. Under its reliability, cynics say that it is not a reliable measurement method. Some of the scholars against this method like Cunningham Colleen, the president of FEI- Financial Executives International, said that the information that is generated by this method cannot be of any relevant use to an investor. According to Cunningham, it is in fact useless to an investor. Income statements are subject to manipulation if this method is applied in measurements. (Shortridge et al, 2006) Fair values are not applicable in cases of firm’s arbitraging of market prices. It is not an appropriate method especially when a firm adds value for stockholders by way of purchasing at input prices of the market and disposing at output prices of the market. In this case, the argument is that the raw materials applied in the process of manufacturing do not gain their value from a variance in their exit prices in the market, but as inputs into processes which add values to the existing market prices by making a product as well as selling the same to consumers. This is because a variance in the value for stockholders is not really connected to a variance in the prices of the market. Thus, as a form of stewardship stockholders should be rewarded by the management through other basis, but not using market values. Also efficient prices are reliant on historical costs and, thus, fair market value measurements cannot serve as substitutes under this kind of scenario. The

Choose one of the following Assignment Example | Topics and Well Written Essays - 1750 words

Choose one of the following - Assignment Example In other words, this essay attempts to explore how an advertisement in the printed media can illustrate Umberto Eco’s assertion that the medium as well as the message can be â€Å"charged with cultural signification† (Eco, 1976: 267). To add, the analysis of the perfume advert will focus on the photographic imagery that provides iconic representation of the product along with what it is supposed to stand for. It will also center around how the aforementioned imagery produces relevant signified concepts or, in other words, certain emotional overtones that serve to promote the item’s image. First of all, let us define semiotics and discuss concepts related to it. David Chandler, the author of â€Å"Semiotics: The Basics†, defines semiotics as â€Å"the study of signs† (Chandler, 2002: 1). The definition that is broader in scope was given by Umberto Eco, who assumed that â€Å"semiotics is concerned with everything that can be taken as a sign† ( Eco, 1976: 7). Wray (1981: 4) further explained that semiotics is a study of â€Å"the way any sign, whether it is a traffic signal, a thermometer reading of 98.6 F, poetic imagery, musical notation, a prose passage, or a wink of the eye, functions in the mind of an interpreter to convey a specific meaning in a given situation†. ... With reference to signs, two notable theories should be mentioned – that of Ferdinand de Saussure, a famous Swiss linguist, and Charles Pierce, a U.S. philosopher. For Saussure, semiotics was some kind of science that studies signs’ role within social life. For Pierce, semiotics was rather â€Å"a formal doctrine of signs†, inseparable from logic. While both approaches are considered essentially important for the modern understanding of semiotics, there is a major difference between them: as Leeds-Hurwitz points out, Pierce studied logics, while Saussure focused on behaviour (Leedz-Hurwitz, 2012: 6). The theory of semiotics posits that making meaning is a complex process within the text, and encompasses both signification and address. Signification is a word used to describe the overall process of signs’ reading. Semiotics understands ‘signs’ as something that denotes the elements of language, for instance, words. All languages are complex sig n systems. However, there may be found sign systems that are less complex. These are, for instance, colours. Through the use of specific colours, a message may be transmitted, based on their meanings in various cultures. For instance, the red colour is widely used to signify either a warning or passion in the cultures of the western civilization, while green is believed to be a colour of nature and the colour of harmony. Garments and accessories can serve another language that conveys things about individuals. Therefore, meaning gets formed not just by purely linguistic signifiers, e.g. written words, but also through images as well as different non-linguistic sounds. With reference to this, images function as