As discussed in this chapter, U.S. accounting standards at one time contained a requirement that certain large
Question:
As discussed in this chapter, U.S. accounting standards at one time contained a requirement that certain large companies disclose current values for inventories and fixed assets. Such dis¬ closure included dollar amounts for cost of goods sold and depreciation that were based on cur¬ rent instead of historical cost. This requirement, however, was quickly abandoned in response to heated controversy. REQUIRED:
a. Consider the case of News Corp. described in this chapter, and build an argument against requiring current values on the balance sheet. Chapter 9 Long-Lived Assets 471 C9-9 (MCI annual report) C9-1 O (Appendix 9A: Accounting for intangibles) C9-1 1 (Appendix 9A: Goodwill write-offs)
b. Consider the usefulness of historical costs for decision-making purposes, and build a case for requiring current values on the balance sheet.
c. Which of the two arguments do you find most convincing?
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