Reminder: Click here for the course materials.
Please note that we are NOT meeting in the classroom on Tuesday this week. Instead, we are engaging in an online activity.
Hello again, International Accounting students! I hope you’re enjoying the weekend.
First and foremost, I apologize for the (relatively) late posting of this weekly announcement. As you know, we are about to initiate our first online session. I delayed the posting of this announcement until I was certain about our plans, and now I can communicate them to you.
Last week, we reviewed the financial statements of Anadarko Petroleum Corporation. We discussed how their financial statement presentation format significantly impacts the analytical perception of shareholder value. Then we discussed the IFRS approach to valuing fixed assets, i.e. the largest asset class of most industrial manufacturing organizations.
We also touched upon the existence of FASB Statement 157. It establishes a hierarchy of three “Levels” of assets and liabilities for fair value accounting purposes. However, we did not delve into the details of Statement 157, and we did not compare the American definition fair value to the International definition. Furthermore, we did not discuss how the differences between the two standards would impact a firm like Anadarko.
These are the questions that will enrich our online activity. Here are our plans regarding this activity:
1. On Tuesday, we will NOT meet in the classroom. Instead, we will re-allocate those 150 minutes of classroom activity to online learning activities over the remainder of the semester.
2. So what must you do this week? First, please open a free Gmail account. If you already have one and do not wish to use it for our upcoming online discussion, you are welcome to open a second account.
3. Then use your free IFRS account to download and review the IFRS Standard regarding fair value. We identified the online location of this standard in the classroom last week.
4. Then obtain a copy of FASB Statement 157. Our HBU library has a data base that permits you to download a free copy of this standard. If you need instructions about accessing the data base, please access our course materials and review the document entitled HBU Library Instructions.
5. Skim the IFRS and FASB Statements to obtain a very “high level” understanding of their similarities and differences. Then jot down your thoughts to these two questions:
(a) Is it possible that the Chief Financial Officer of Anadarko might prefer one Statement over the other Statement?
(b) To what extent do the Statements require fair value estimates to be modified in order to address risks like catastrophic oil spills?
Because this is very dense material, I do not expect you to hand in your “jotted thoughts”this week. In fact, you might find the content to be slow reading, and you might experience a little difficulty getting through it.
If this occurs, please don’t worry! Simply dedicate an hour to obtaining the information, skimming the Standards, and then jotting down your thoughts. And please prepare to bring your jottings to the classroom on Tuesday, September 18th, when we will continue our conversation.
Good luck! If you have any difficulty with this assignment, please let me know.