Accounting Theory DB Essay Example | Topics and Well Written Essays - 750 words

Accounting Theory DB - Essay Example s of the dissenter’s decision, I too changed my opinion based on the fresh insights into the matter shown by the CFO and agreed with the dissenter’s decision of using the current rates as they would give a truer picture. The current value of the restructured debt would be more apparent using the dissenter’s method. SFAS 115 was also brought up immediately in which marketable equity securities were to be offered either at a fair or the current market value. My opinion on this was sought for its impact on objectivity and bias. I preferred using the market value and my response was acknowledged for its correctness. I was informed of a new standard which would only allow FIFO to be used as inventory and I was asked about its usefulness in terms of verifiability. I agreed with the new standard which was then explained by the CFO, Mr. Washington, as being more verifiable due to elimination of double calculation if both FIFO and LIFO were used. Majority of my suggestions in the exchange of emails in the activity were right. I had a tendency of going for the majority in the first problem but on reflection the dissenter’s decision seemed more appropriate as using the current discount rate would affect the financial position of the corporation in a positive way. My instinctive response was of using the current market value or a fair price of the securities on offer in the market was correct. Using FIFO for inventory as a sole criterion in the new standard was also an appropriate decision. Exposure to accounting theory does influence reasoning power as one can make a more appropriate choice as and when required during a corporation’s financial planning and implementation. Knowledge of the minimum standards set up by the SEC (Securities and Exchange Commission) and FASB (Financial Accounting Standards Board) helps in making pertinent decisions which can influence the success or failure of a corporation. These regulatory bodies ensure transparency and consistency in