Application of theory to accounting    LO3 Moo Ltd is a listed company with a large dairy farm. The fair value of the company’s herd of cows declined as a result of a drop in the price of milk. The managing director is very worried about the impact that recognising the loss might have on the company’s share price, claiming ‘Investors will think the company is performing poorly, even though we have long-term contracts for delivery of milk’. The managing director suggests disclosing the decline in fair value in the notes instead of recognising it in the financial statements. Required Prepare a response to the managing director addressing: 1. whether her suggestion complies with the requirements of AASB 141/IAS 41 2. the potential implications of the efficient market hypothesis for the impact of the recognition of the loss on the company’s share price, noting any assumptions in your argument 3. the implications of the efficient market hypothesis for the managing director’s strategy of disclosing the change in fair value in the notes instead of recognising it in the financial statements.