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Pitifully Old and Obsolete Principles (POOP)

An article in Accounting Today's July 2014 titled "POOP: it's time to bring GAAP into the 21st Century" portrays the age and how outmoded much of the precepts of GAAP is, both in terms of technical abilities to produce financials and the lack of clarity they provide. Thee mention one of my favorite gripes, depreciation with the 68 year old ARB 27 which guides us today to the collars of listing most assets at cost/book value, instead of market. What do you think about changing GAAP to really reflect what your business is doing and that of other organizations?

Answers

Anonymous User
Title: CFO
Company: Local Government Agency
(CFO, Local Government Agency) |

I would be fearful of listing FA at FMV. Who determines what FMV is at year end? A team of outside assessors? Accountants? Auditors?

The ultimate determination of FMV is a willing buyer and a willing seller. We can't have that without actually executing the transaction.

Footnotes reflect market value and the differences from book value on FA. Ask KKR. They were masters at finding value in and entity that others didn't recognize the discrepancies.

Dr. Rod Sparks
Title: Consultant
Company: IMPACT Solutions
(Consultant, IMPACT Solutions) |

To me, a Fixed Asset is just a long-term prepaid expense, whose cost I'm going to "amortize" over its useful life. As it ages, if I make repairs that extend that life, I'll add them to the asset base, otherwise expense them as repairs. I don't need to know the FMV of the FA unless I contemplate selling it (or the entire business).

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