Accounting has been critized for being one of the leading factors in the latest financial crisis. One of the primary problem areas was identified as delayed recogonition of losses on financial instruments. Consequently, a new impairment model is being developed and is to be namned expected loss model. The difference from the present model, incurred loss model, is that it takes losses into consideration on an much earlier level. Even though the model may be theoretically feasible, in practice it may implicate a number of issues. This study examines this model and divides it into three divisions - classification of the assets, estimation procedure and disclosures. Reasearch has been conducted through in-depth interviews with practitioners within the accounting profession. The information gathered from the respondents have been analyzed using prior research that is considered closely linked to the model and the international accounting standardsetters IASBs and FASBs qualitiative characteristics, relevance and reliability. The conclusion is that the proposed model is deemed relevant even if it is difficult to reach high reliability as a consequense of the models high level of uncertainty, subjectivity and flexibility from a management perspective. To ensure sufficient capital reserves, despite the possibly low reliability, the model should be of conservative nature. Disclosures will continue to play an important role in conveying assumptions and minimizing manipulation if they can be presented in a comprehensive manner.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:uu-167416 |
| Date | January 2011 |
| Creators | Swärdh, Magnus, Hickman, Erik |
| Publisher | Uppsala universitet, Företagsekonomiska institutionen, Uppsala universitet, Företagsekonomiska institutionen |
| Source Sets | DiVA Archive at Upsalla University |
| Language | Swedish |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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