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Assignment Accounting | Historical Cost Vs Fair Value Accounting

   

Added on  2020-05-28

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Running head: HISTORICAL COST VERSUS FAIR VALUE ACCOUNTINGHistorical cost versus fair value accountingName of the UniversityName of the StudentAuthors Note
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1HISTORICAL COST VERSUS FAIR VALUE ACCOUNTINGTable of ContentsExecutive summary:...................................................................................................................2Introduction:...............................................................................................................................3Discussion:.................................................................................................................................4Explanation of the measurement concepts in relation to historical cost and fair valueaccounting:.................................................................................................................................4Evaluate the benefits and challenges of using historical cost and fair value accounting forPPE and intangibles:..................................................................................................................5Valuation policies of non-financial assets groups of three listed companies:...........................7Analysis of consistency of valuation practices across three companies:.................................11Framing an opinion on the free choice between historical cost and fair value accounting forPPE and intangibles:................................................................................................................12Conclusion:..............................................................................................................................13References list:.........................................................................................................................14
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2HISTORICAL COST VERSUS FAIR VALUE ACCOUNTINGExecutive summary:The report is prepared to demonstrate the accounting method that is used for non financialassets by three different organizations listed on different stock exchanges. Analysis has beendone regarding the concepts of fair value and historical accounting method practices byorganizations in valuing their intangible assets and plant, property and equipment. Threecompanies that selected are BHP billion limited listed on ASX, Hudbay minerals listed onNSX and Anglesey limited listed on LSE. Evaluation of their accounting method in valuatingnon financial assets is by analyzing their respective financial report.
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3HISTORICAL COST VERSUS FAIR VALUE ACCOUNTINGIntroduction:The report is prepared to conduct a detailed analysis of given research topic that is“Historical cost versus fair value of accounting for non-financial assets”. It has beenascertained that there is an ongoing debate between these two methods of accounting byreviewing literature. Free choice between historical accounting and fair value accountinghave been debated and mandating any particular method is considered from one perspectiveand do not considering the perspective of users of financial statements. Report hasdemonstrated the explanation of measurement concepts of both the accounting method forvaluing non-financial assets. Challenges and benefits of using one particular accountingmethod have also been explained. Concerning the explanation of practical valuation practices of these two methods ofaccounting, three companies from three different stock exchanges have been selected. Threecompanies that are selected are BHP Billiton Limited from Australian stock exchange,Anglesey Mineral limited from London stock exchange and Hudbay Minerals from NewYork stock exchange. All these three companies operate in mineral and exploration. BHPBilliton limited is an Australian multinational, mining and petroleum based public companyhaving headquarter in Melbourne (bhp.com 2018). Anglesey limited is a mining companythat is based on United Kingdom and has direct shipping deposits of iron ore in Quebec andLabrador (angleseymining.co.uk 2018). Hudbay Mining Corporation is a mining companythat is based in Canada and has been exploring and mining for over eighty years in Manitoba(Hudbayminerals.com 2018).
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