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Case study
Publication date: 20 January 2017

Mark E. Haskins and Rebecca Bray

This case raises the question: How does a company reasonably estimate and record entries for uncollectible trade receivables, and under what circumstances are receivables written

Abstract

This case raises the question: How does a company reasonably estimate and record entries for uncollectible trade receivables, and under what circumstances are receivables written off as uncollectible? The required accounting transactions for the case involve estimating a receivables allowance both as a percentage of sales and as a percentage of accounts receivable and making specific account judgments under the direct write?off method. The subjective issues involve analyzing and assessing a company's methods of collection and accounting for bad debts.

Article
Publication date: 1 February 2000

Wee Lin Chong, Greg Tower and Ross Taplin

This paper examines accounting harmonisation and determinants explaining accounting measurement policy choice decisions by Asia‐Pacific listed manufacturing companies. Using…

Abstract

This paper examines accounting harmonisation and determinants explaining accounting measurement policy choice decisions by Asia‐Pacific listed manufacturing companies. Using Thomas' (1991) theoretical framework, four contingent variables (country of reporting, company size, profitability and debt leverage) are examined as possible determinants of firms' accounting choices concerning non‐current asset valuation measurement base, goodwill and depreciation. 130 listed manufacturing companies' annual reports were examined from Australia, Hong Kong, Indonesia, Malaysia, and Singapore. This study involves two phases. The first phase evaluates accounting harmonisation measurement indices in comparison with the extant literature. An important innovation is the operationalisation of Archer et. al. (1995) between‐country and within‐country C indices. Computed comparability indices indicated variations in the level of harmony across the five countries for all three accounting measurement practices. The second phase employed logistic regression to examine possible determinants of accounting policy choice decisions. Such a combined research approach should lead to a better understanding of de facto accounting harmonisation and practices.

Details

Asian Review of Accounting, vol. 8 no. 2
Type: Research Article
ISSN: 1321-7348

Article
Publication date: 18 October 2021

Gerald Mashange and Brian C. Briggeman

The purpose of this paper is to examine the financial condition and ability of farmer cooperatives to withstand significant increases in bad debt expense.

Abstract

Purpose

The purpose of this paper is to examine the financial condition and ability of farmer cooperatives to withstand significant increases in bad debt expense.

Design/methodology/approach

A unique data set of farmer cooperative financial statements that spans from 1996 to 2019 is used to examine the changes in profitability, solvency, liquidity and accounts receivable risk. Also, a deterministic stress test model is designed to shock bad debt expense and the resulting write-off of accounts receivable for farmer cooperatives. The stress test provides insights to the resiliency of farmer cooperatives.

Findings

Results find that farmer cooperatives are in a strong financial position, which has improved over time. The majority of farmer cooperatives are able to absorb a substantial increase in bad debt expense because of their sizable, retained earnings position. However, cooperatives that have significant profitability challenges do experience much larger losses, especially mixed farmer cooperatives (roughly equally amounts of grain and farm supply sales) and large cooperatives with more than $500 million in sales.

Practical implications

The stress test results suggest farmer cooperative managers and boards of directors could re-examine their credit policies and consider extending additional credit. Also, cooperatives should consider monitoring and identifying an optimal accounts receivable to retained earnings ratio, which is similar to how banks examine their tier 1 capital ratios.

Originality/value

The value of this study is having data that allows for the examination of the financial condition of farmer cooperatives over time. Also, having current data means the accounts receivable stress test results are more relevant and timelier. This is important because these accounts receivable are primarily tied to crop input supplies, and farmer cooperatives are a significant market participant in the crop input supply market.

Details

Agricultural Finance Review, vol. 82 no. 2
Type: Research Article
ISSN: 0002-1466

Keywords

Abstract

Details

Advances in Accounting Education Teaching and Curriculum Innovations
Type: Book
ISBN: 978-1-84950-868-1

Article
Publication date: 18 September 2023

Hafez Abdo, Freeman Brobbey Owusu and Musa Mangena

The purpose of this study is to provide a harmonisation framework for the diverse accounting practices by extractive industries.

Abstract

Purpose

The purpose of this study is to provide a harmonisation framework for the diverse accounting practices by extractive industries.

Design/methodology/approach

The study takes a three-stage approach. The first involves a comprehensive literature review of the historical evolution of accounting regulations by extractive industries. The second involves constructing an accounting practice index for extractive industries. The third involves constructing a harmonisation framework.

Findings

The accounting practice index provides empirical evidence of the wide diversity of accounting practices by extractive industries. Analysis of the literature review addresses the several attempts by accounting and regulatory bodies to standardise the diverse practices of accounting by extractive industries and reasons for the lack of successful standardisations. The authors extract lessons from these previous attempts and propose a harmonisation framework.

Research limitations/implications

The proposed harmonisation framework can be used to align together the diverse accounting practices by extractive industries and enhance comparability and consistency of accounting figures and statements produced by these industries. Harmonising the diverse accounting practices is crucial for investment decision-making.

Originality/value

The harmonisation framework is the first of its kind that could enhance the comparability of accounts of extractive industries’ firms and be used to harmonise diverse accounting practices by other industries.

Details

Journal of Financial Reporting and Accounting, vol. 22 no. 1
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 1 March 2004

A. Seetharaman, M. Balachandran and A.S. Saravanan

The issue of goodwill has been debated in many countries throughout the world. Despite numerous efforts and the existence of accounting standards and exposure drafts issued by…

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Abstract

The issue of goodwill has been debated in many countries throughout the world. Despite numerous efforts and the existence of accounting standards and exposure drafts issued by various professional bodies internationally, there is yet to be a universally accepted accounting treatment for goodwill. The opinion on this subject differs and changes frequently. The dichotomy of having to preserve prescribed recognition criteria on the one hand and the need to report useful information on the other has led to the many controversial issues debated on the subject of goodwill. This study centres around the international accounting treatment of goodwill in the past, present and future. This study reviewed some of the issues that surrounded the accounting for goodwill where it was found that goodwill accounting had faced many problems. Besides problems, this project also looks into the prospect of the accounting for goodwill in the cyberspace era and emergence of the knowledge‐based economy. This study confirms that controversy remains internationally with no solution in sight in the foreseeable future internationally.

Details

Journal of Intellectual Capital, vol. 5 no. 1
Type: Research Article
ISSN: 1469-1930

Keywords

Article
Publication date: 1 April 1993

Louis A. Tucci and James J. Tucker

Examines the Accounting Standards Committee′s proposal that alladvertising costs other than direct response be incurred or expensed thefirst time the advertising takes place…

Abstract

Examines the Accounting Standards Committee′s proposal that all advertising costs other than direct response be incurred or expensed the first time the advertising takes place. Suggests that managers who have been deferring the write‐off of advertising costs, the proposed rule change provides incentives to reduce the level of advertising and/or postpone these expenditures.

Details

Journal of Consumer Marketing, vol. 10 no. 4
Type: Research Article
ISSN: 0736-3761

Keywords

Book part
Publication date: 11 December 2007

Mirko Cvetkovic, Alexander Pankov and Andrej Popovic

Two factors explain why the Serbian privatization experience deserves close attention from outside world. First, Serbia's starting conditions for privatization, with a historical…

Abstract

Two factors explain why the Serbian privatization experience deserves close attention from outside world. First, Serbia's starting conditions for privatization, with a historical tradition of workers’ management, strong trade unions, and an ambivalent initial attitude toward privatization, have as much in common with circumstances surrounding privatization in the developing countries as with those in the so-called economies in transition. Second, Serbia embarked on a resolute privatization path only in 2001, following more than 10 years of diverse privatization efforts in other post-socialist economies of the region. This makes Serbia a perfect case study of how a country can learn from the experience (both positive and negative) of other reformers.

Details

Privatization in Transition Economies: The Ongoing Story
Type: Book
ISBN: 978-1-84950-513-0

Article
Publication date: 9 November 2012

Minh T.H. Dinh, Andrew W. Mullineux and Peter Muriu

The purpose of this paper is to investigate the effects of macroeconomic factors on secured and unsecured household loans from UK banks.

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Abstract

Purpose

The purpose of this paper is to investigate the effects of macroeconomic factors on secured and unsecured household loans from UK banks.

Design/methodology/approach

The approach uses Vector auto‐regression models to test the relationship between macroeconomic factors such as interest rates, house prices, unemployment rates, disposable income and bank write‐offs to discern the main factors which could impact on banks' losses.

Findings

This paper identifies several macroeconomic factors that influence loan losses. The influence however depends on the type of arrears. Changes in house prices, interest rates and unemployment rates have a significant impact on secured loans. There is however, minimal impact on unsecured loans. Unemployment stands out as the major factor that influences both mortgage and credit card arrears. The estimated results show that the main factors impacting on credit cards are disposable income and unemployment rates, while changes in interest rates have no impact on credit card write‐offs.

Originality/value

This paper's value lies in providing methods by which commercial banks could manage household loans better by reducing the effects of macroeconomic factors.

Details

Journal of Financial Regulation and Compliance, vol. 20 no. 4
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 1 December 2007

Salleh Hassan and Theo Christopher

This study examines the incentives motivating listed companies in Malaysia to voluntarily choose the Direct Method over the Indirect Method in reporting cash flow from operating…

Abstract

This study examines the incentives motivating listed companies in Malaysia to voluntarily choose the Direct Method over the Indirect Method in reporting cash flow from operating (CFO) activities in their 1997 annual financial reports following the adoption of the IAS 7 (Revised) Statement of Cash Flows (SCF), which was used prior to the current standard MASB No. 5 Cash Flow Statement promulgated by the Malaysian Accounting Standards Board (MASB) in 1999. Adopting the signalling perspective, the general hypothesis of this study is that the choice of the Direct Method over the Indirect Method in reporting CFO activities is to maximize a firm’s value via engagement in quality signalling to the market. Specifically, it is hypothesised that such decision is influenced by the firm’s level of managerial efficiency, financial risk, size, its auditor, and industry membership. The sample consists of 231 firms listed on the Kuala Lumpur Stock Exchange; 32 firms in the treatment group (Direct Method) and 199 firms in the control group (Indirect Method). Based on the results from the univariate and multivariate analyses, we found all variables to be in the hypothesised directions. However, we infer that the decision to choose the Direct Method for reporting CFO activities in SCF is significantly influenced by the firm’s level of managerial efficiency, size, and its auditor. Thus, there is support for the general hypothesis of maximization of the value of the firm via quality signalling. The authors gratefully appreciate the helpful comments of the discussant and workshop participants at the 11th Asian‐Pacific Conference on International Accounting

Details

Journal of Financial Reporting and Accounting, vol. 5 no. 1
Type: Research Article
ISSN: 1985-2517

Keywords

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