Question

Knowing that accounting and reporting laws differ widely around the world thereby posing risks for the international business, briefly explain for each how physical asset valuation (PAV) and research and

development (R&D) costs are likely to pose risks?

Answer 1

Physical assets valuation (PAV):- Assest valuation is the process of determining the fair market or present value of properties.It includes stocks, bonds, building and equipments.
Asset valuation,play a very important role in finance and other measurements.Every company has fixed assets like property, plant, and equipments, which are called capital assets.
Asset valuations risks:- Asset valuation has following risk including-revenue risk, expense risk, financial leverage Risk, cash flow risk, loan agreement default Risk, capital expenditure risk, hidden liabilities risk, debtor default risk, commodity price risk, interest rate risk, currency risk, financial model risk.

Research and development costs:- These are the costs which included new products that may or may not result in commercially. when the costs are increased the research and development costs are to be expended.

Research and development costs risk:- In general terms, research and development activities are conducted by specialized units of a country. Research and development costs cannot appear as intangible assets on balance sheet. Innovation risk also included in it.