Individual research assignment, weighting 20%
Due Date: no later than 5pm on Thursday 30 April 2015
Research topic: Historical cost versus fair value accounting for non-financial assets
The choice between fair value and historical cost accounting has been a widely debated issue in the accounting literature (Christensen & Nikolaev, 2013). However, the conceptual framework for international financial reporting (hereafter the IASB Framework) and the equivalent AASB Framework does not prescribe a specific measurement base to account for the key elements in financial reports (the IASB Framework 2010). Specific measurement methods for different accounting elements are provided in the specific international financial reporting standards (IFRS). Unlike most other accounting standards, IFRS provides a free choice between fair value and historical cost accounting for the non-financial asset groups: property, plant and equipment (PPE) (see IAS 16) and intangibles (see IAS 38). This has resulted in variations in valuation practices for PPE and intangible assets.
Required
1. Refer to the current IASB Framework and IFRS 13 Fair Value measurements, briefly explain the measurement concepts in relation to historical cost and fair value accounting.
2. Evaluate the benefits and challenges of using historical cost and fair value accounting for PPE and intangibles, by reviewing accounting literature.
3. Identify valuation practices (in relation to the use of historical cost and fair value accounting) for the following non-financial asset groups: PPE and intangibles, by reading the ‘accounting policy’ sections of three listed companies’ 2014 annual reports.
Note: You are required to select one company listed London stock exchange, one company listed on the New York Stock Exchange, USA, and the third one is selected from the Australian Securities Exchange.
4. Analyse if the valuation practices for PPE and intangibles are consistent across the three companies.
5. What is your opinion on the free choice between historical cost and fair value accounting for PPE and intangibles: should such free choice be continued in practice? Or should it be abandoned? Justify your answer.
References
Christensen, Hans B. & Nikolaev, Valeri V., (2013). Does fair value accounting for non-financial assets pass the market test? Review of Accounting Studies, 18(3), pp 734-775.
Missonier-Piera, Franck., (2007). Motives for fixed-asset revaluation: An empirical analysis with Swiss data, The International Journal of Accounting, 42(2), pp186–205.
IASB Framework, IAS 16, IAS 38, IFRS 13, retrieved from http://www.ifrs.org
AASB Framework, AASB 116, AASB 138, AASB 13, retrieved from http://www.aasb.gov.au
Australian Securities Exchange, www.asx.com.au
New York Stock Exchange, www.nyse.com
London Stock Exchange, www.londonstockexchange.com
Submission requirement
1. Assignment submission
a. Submission of this assignment by due date is compulsory for the successful completion of the subject.
b. The submitted hardcopy of the assignment must be the identical version of the electronic copy submitted through the Dropbox (i.e. Turnitin) on VU Collaborate. Inconsistence in the hardcopy and the electronic copy may result in a zero mark of the assignment.
Note: If you cannot submit your assignment through the Dropbox on VU Collaborate due to technical issue, then email your assignment to your tutor or lecturer no later than the due date.
c. The Turnitin/Dropbox Similarity Report should be no more than 25%.
d. Late submission without the extension approval from your tutor will be penalised at two marks (out of 20) per calendar day (including weekend).
e. Completed extension application form must be submitted to your tutor at least five days in advance of the due date.
f. Students are responsible to protect their work and save data by making necessary backup. Loss of data due to a computer or storage devices problems will not be considered a legitimate reason for an extension.
2. Referencing and style
• Assignment must be typed using Word document, with double alignment, and 1.5lines space.
• Assignment is required to use Harvard referencing style (see VU library for examples of Harvard Referencing Style at http://guides.library.vu.edu.au/Harvard).
• Assignment without proper referencing (in text and end of text) will be subject to substantial deduction of marks. This may result in the assignment being marked zero.
3. Preventing plagiarism
3.1 Academic Honesty and Preventing Plagiarism Policy
Plagiarism is defined as ‘The practice that involves use of another person’s intellectual output and presenting it (without appropriate acknowledgement) as one’s own’.
Examples of plagiarism:
• Word-for-word copying of sentences/paragraphs in an assignment without acknowledgement or with insufficient or improper acknowledgement;
• Downloading essays or assignments from the web and presenting these for assessment;
• Presenting another student’s work or research data as the student’s work;
• Copying out parts of any text without acknowledging the source(s). This may be written text, structures within texts, diagrams, formulae, sound files, still photographs, audio-visual material (sound and image files), graphics/animations/multimedia objects, other computer based material, mathematical proofs, art objects, products and others. This can be done as verbatim copying or paraphrasing.
• The use of someone else’s concepts, experimental results, experimental conclusions or conclusions drawn from analysing evidence or arguments without acknowledging the originator of the idea(s) or conclusion(s).
3.2 Students are responsible for:
• Understanding and respecting the University’s policies and procedures regarding plagiarism, collusion, and other forms of academic misconduct, and as such should only submit work for correction or academic credit that is their own or that properly acknowledges the ideas, interpretations, words or creative works of others;
• Avoiding the lending or making accessible original work to others;
• Being clear about the appropriate referencing rules that are applicable to their field of study;
• Refusing to be a party to another student’s efforts to undermine the academic integrity of the University.
• Seeking assistance with their learning and assessment tasks if they are unsure of appropriate forms of acknowledgement.

Assignment Marking Sheet
Student Name………………………………………..Student No……………….
Part 1 Total of 20 marks Marks Marks
received
Demonstrates the ability to understand the concepts of
historical cost and fair value accounting
(measurements). 20
Part 2 Total of 30 marks
Quality in the survey of relevant accounting literature: Demonstrates the ability to understand and synthesise
complex ideas; and demonstrates an appropriate application of the literature to evaluating historical cost accounting
15
Quality in the survey of relevant accounting literature: Demonstrates the ability to understand and synthesise
complex ideas; and demonstrates an appropriate application of the literature to evaluating fair value accounting 15
Part 3 Total of 15 marks
Quality in identifying the valuation practices for PPE and Intangibles in each company 15
Part 4 Total of 15 marks
Quality in analysing the valuation practices for PPE and Intangibles in each company 15
Part 5 Total of 15 marks
Quality in developing arguments to justify the selected answer 15
Presentation Total of 5 marks
• The presentation of the results, which should be clear, concise and accompanied by expository text accessible to the reader
• The presentation of the entire assignment, which should be written in English of an appropriate academic register and of a format and standard of presentation acceptable to business study 5
Total marks out of 100 100
Weighted marks out of 20 20