AT1 CGA Chapter 8.pptVIP

时即理论化为历史成本 * * 8.1 Overview An understanding of the concept of economic consequences of accounting policy choice is important for two reasons. First, the concept is interesting in its own right; Second, a suggestion that accounting policies do not matter is at odds with accountants’ experience. In the process to understand the concept of economic consequences, we will also learn about some of the accounting problems in a major area of accounting policy choice – stock-based compensation. 8.1 Overview The presence of economic consequences raises the question of why they exist. To answer this question, we begin with positive accounting theory. This theory is based on the contracts that firms enter into, in particular executive compensation contracts and debt contracts; These contracts are frequently based on financial accounting variables, such as net income and various measures of liquidity; Accounting policies affect the values of these variables; Management may choose accounting policies so as to maximize the firm’s interests, or its own interest, relative to these contracts; Positive accounting theory attempts to predict what accounting policies managers will choose in order to do this. 8.2 The Rise of Economic Consequences Zeff (1978): The rise of “Economics Consequences” Zeff defines economic consequences as “the impact of accounting reports on the decision-making behavior of business, government and creditors.” The essence of the definition is that accounting reports can affect the real decisions made by managers and others, rather than simply reflecting the results of these decisions Zeff documents several instances…… This “third-party intervention”, as Zeff calls it, greatly complicated the setting of accounting standards…… As an example of an economic consequences argument, Zeff discusses the attempts by several U.S. corporations to reduce reported earnings by implementing replacement cost accounting during 1947 to 1948, a period of high inflation…… (To be c