As indicated in the reading, U.S. GAAP requires the use of historical cost for valuing most assets while IFRS permits the use of fair value.

DQ1 As indicated in the reading, U.S. GAAP requires the use of historical cost for valuing most assets while IFRS permits the use of fair value. Using the first letter of your last name, answer the question below for which the letter of your name falls in the range. Use your own words to summarize the information from the textbook. Provide proper citations for resources used, including the textbook.

A – M: Assume you are in support of the historical cost basis as required by GAAP. Discuss why you think the historical cost approach best values the long-term assets on the balance sheet. In addition, provide an example to support your position.

N – Z: Assume you are in support of the fair value basis as recommended by IFRS. Discuss why you think the fair value approach best values the long-term assets on the balance sheet. In addition, provide an example to support your position.

Participate in follow-up discussion by responding to classmates who posted about the opposite approach and professionally debate why the approach you reported on is the better method for valuing the long-term assets on the balance sheet.

DQ2 Refer to Question 10 in Chapter 17 of the textbook: How is the use of the equity method subject to manipulation? How might a financial statement reader detect such behavior? In addition, provide an example to prove how the equity method may result in manipulation of the financial results.

Participate in follow-up discussion by providing recommendations to classmates’ fact patterns on how a company could implement procedures to prevent manipulation of the use of the equity method.