AFM101 Chapter Notes - Chapter 1-6: Cognitive Bias, Nortel, Income Statement

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM101
• Professor: Donna Psutka

Document Summary

Article: framework for financial reporting chapter 1 - grewal. Fv for plant, property & equipment vs. historical cost. Loose definitions of market" and economic" value: different applications of fair value measurement = less reliable, comparable f/s. Property plant and equipment: amortized historical cost, fair value. Investment properties: amortized historical cost and fair value. International standards and us working on common conceptual framework: Business creates economic value by inputs =>outputs, this, it reasons, leads to the conclusion that market values for inputs and outputs should be expected to play a critical role in financial reporting measurement theory. It turns out that making good judgments is much more difficult than initially realized. Once you make a decision/opinion, hard to change your mind. Safeguards: (for use in a team of auditors) Using formal decision-making frameworks that result in questioning management"s judgments; Becoming aware of and uncovering bias in auditor judgment at every level in the team hierarchy.