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Accounting for Values - Creating value in the long-term (Measuring Issues,…
Accounting for Values - Creating value in the long-term
Shareholder Value
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Rappaport's 10 principles - shareholder/manger/employee focus
Reward long-term thinking
George: Focus should be on long-term value for customers
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80% < £ value-creation activities to meet earnings benchmark
Delay projects
:no_entry: Focusing on short-term profits over long-term gains
Miss real issues
Doesn't create value
Measuring Issues
Value = future-orientated vs accounting = past
Changes in value not captured
Measurement choices
Biased
Ignores value changes can't be meausred
Ignore equity capital
Ignore risk changes
Wrong info = impact decision making
Measurement Choices
Fair Value
Historical cost
Deprival value
HCA
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Simplicity
Conservative
Objectivity
Consistent
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Intangible assets
Unrealised gains
Management control