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Finance accounting Essay Example

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Finance accounting

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Thus the increase in the net realizable value of the company will be projected at a low rate than now. This in turn will lower the intrinsic value of the company resulting in the valuation of the company being similar to the market value of the company or lower than the market value. Hence the company will be in the condition to revive of the present condition to a certain extent (Australian Government, 2009, p.The income and the deferred tax of the company accounted under the head of other assets of the company has taken the deductible temporary differences resulting in the deferred tax of the company amounting to US$3119 million as against US$2195 million in 2010. These amounts have not been recognized due to the probable future taxable profits as the deductible temporary differences do not expire under the tax legislation. The trade receivable of the company is the considered as the impaired assets of the company.All the financial assets of the company are computed at the fair value price under the consideration of payment and receipt. The fair value method is the not a completely independent process. It is based on the results of weighted average value of the items of the company. In spite of providing a balanced figure of valuation yet its limitation the valuation of the business model still persists. However, the fair value accounting process conveys important information related to the financial assets as against relying completely on the historical costs of the company. Fair value system of accounting reflects a better projection of the current market condition; thus providing a comparable status of the company at different point of time to the investors of the company through the financial disclosures issued by the company (Mard, Hitchner & Hyden, 2007, p. Other advantages of using the fair valuation of company is that incentives related to the operation of the company can be readily eliminated if unrealized. This would result in the reduction of the malincentives affecting the quality of earnings as an estimate of the economic rent.Fair valuation of the company leads to a stronger cyclicality of the accounting variable. Under the unstable economic condition fair valuation of the assets of the company is the most beneficial as it allows for the revaluation of the assets. Moreover, under the situation of economic downturn fair value accounting

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Australian Government, 2009. Inventories. [Pdf]. Available at: <http://www.aasb.gov.au/admin/file/content105/c9/AASB102_07-04_COMPjun09_01-09.pdf>. [Accessed on: 5 Oct. 2012].

Barth M. E., Biscarri J. G. & Espinosa G. L., n.d. Fair Value Accounting and Firm Valuation. [Pdf]. Available at: <http://www.ucm.es/centros/cont/descargas/documento18505.pdf>. [Accessed on: 5 Oct. 2012].

BHP Billiton Limited, 2011. Annual Report. [Pdf]. Available at: <http://www.bhpbilliton.com/home/investors/reports/Documents/2011/BHPBillitonAnnualReport2011_Interactive.pdf>. [Accessed on: 5 Oct. 2012].

Dodge R., 1997. Foundations of Business Accounting. United States: Cengage Learning.

Johnston D. & Johnston D., 2005. Introduction to Oil Company Financial Analysis. United States: PennWell Books.

Mard M. J., Hitchner J. R. & Hyden S. D., 2007. Valuation for Financial Reporting: Fair Value Measurements and Reporting, Intangible Assets, Goodwill and Impairment. United States: John Wiley & Sons.

Murray B. C., Newell R. G. & Pizer W. A., 2008. Balancing Cost and Emissions Certainty. [Pdf]. Available at: <http://www.rff.org/rff/documents/rff-dp-08-24.pdf>. [Accessed on: 5 Oct. 2012].

Nikolai L. A., Bazley J. D. & Jones J. P., 2009. Intermediate Accounting. United States: Cengage Learning.

The Telegraph, 2012. BHP Billiton writes down shale gas assets by $2.8bn, chief Marius Kloppers forgoes bonus. [Online]. Available at: <http://www.telegraph.co.uk/finance/newsbysector/industry/9448474/BHP-Billiton-writes-down-shale-gas-assets-by-2.8bn-chief-Marius-Kloppers-forgoes-bonus.html>. [Accessed on: 5 Oct. 2012].

Walton P. & Aerts W., 2006. Global Financial Accounting and Reporting: Principles and Analysis. United States: Cengage Learning.

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