Question

Prepare a one-paragraph argument for the FASB for an alternative accounting rule – that Microsoft should retroactive restate all of its previous financial results to include LinkedIn as far back as possible. In answering this question, you may want to ask yourself what is the objective of financial reporting (please see FASB Conceptual Framework, SFAC8, 2010) to identify the benefits of retroactive restatement?

Answer 1

a)the accounting changes are under the radar of many investors,who may scramble to make sense of whats happening with the stocks,many of them blue chips like miicrossoft,into which they have poured their money.it will ccause ssignifiicant investor confusion to the finanncial analysis of companiies upto the largest including microsoft.there are many companies have gotten started or even made a decisiision on what ssystem they will uuse to make the change.

B)objective of financial reporting (FASB conceptual framework SFAC8 2010--

The main objective of financial reportibg is to probide financial information about the reporting entity that is useful to the primary users in making decisions.

The objective of financial reporting is_ 1)it will provide complete information about financial information of the company or organisation to their investors and other creditors, which help them to make decisions about giving complete resources to the organisation. This decisions will include the selling of goods buying of goods holding of equity information and providing loans extetra.

2)here decision of investors will always depend on the returns that they expect from an investment in those instruments.it includes buying selling all these wil depend on thr returns that they expect from an investment in those instruments. But decision of investors will always depend on the principal and intetest payments or other returns thsy they expect if they are providing loans or settling loans.

3)many exisying investors lenders or other creditors has to deprnd on general purpose financial reports to get much informayion about finance as they cannot require reporting entities to provide information directly to them.

4)to assess an entity's prospect for future net cashinflow, existing and potential investors lenders and other creditors need information about the resourses of the entity,clsims against entity,how efficiently the entity,s management and governing board have discharged their responsibilities to use the entity's resourses.

5)genetal purpose financial report will not provide complete information to the investors.so they need to get information from other sources.

6)it helps to get and provide information to investors lenders to estimate the value of reporting entity

7)this reports will not be directly provide to regulstors members of the public but it is usefull report for them

8)it helps the managment to get financial information of the organisation but itis not comulsory thst msnagement should use this report

9)it helps to making decisions about providing resources to the entity

10)general purpose financial provide inforamayion about entity's financial position

11) it provide information about transaction effects on entity

12) financial information ptovides meets informational needs.

13)information about a reporting entity's economic financial performance hrlps users to understand the return that the entity has produced in its economic resources.