College 1: Baker and Schulte 2017

Question 1 of 26

1

Which following statement is related to Accounting as Economics of the artikel?

Select one or more of the following:

Introduction of the idea of Fair Value;
IFRS 13: emphasis on current market price as a guide to economic decision –making;
Implication: market ontology=> no distinction between different types of fair value;
However, IFRS 13 explicitly acknowledges three levels of FV;
Level 3: IFRS 13 requires hypothetical market and simulations as if market exists.
Beliefs about fair value are shared by everyone (collective intentionality & acceptance), because it
said to be so (status function declarations)

Explanation

Question 2 of 26

1

Faithful representation = representing the market ontology

Select one of the following:

True
False

Explanation

Question 3 of 26

1

Tranformation of concept of “Reliability” are include the following:
1. Faithful representation = representing the market price
2. This Transformation makes assumptions about ontology & reality

Select one of the following:

True
False

Explanation

Question 4 of 26

1

Searle’s account of Institutional Reality: Select the correct one?

Select one or more of the following:

Beliefs about fair value are shared by everyone (collective intentionality & acceptance), because it
said to be so (status function declarations)
This creates institutions (=ontologically subjective);
Creates institutional facts (=epistemologically objective) => entity-specific instead of market-specific?
Creates institutional facts (=ontologically objective) => entity-specific instead of market-specific?
This creates institutions (=epistologically subjective);

Explanation

Question 5 of 26

1

This paper questions the main premise of IFRS 13, that Fair Value for non-financial assets always faithfully represents the economic ‘reality’.

Select one of the following:

True
False

Explanation

Question 6 of 26

1

What is Shift in Accounting as a metaphor?

Select one or more of the following:

Accounting as History:
 Information that is reliable
 Historical Cost Accounting
 [Record keeping]
Accounting as Economics:
 Information faithfully represents market signals and expected cash flows
 Fair Value Accounting
accounting is the translation of economic “reality” into the balance sheet

Explanation

Question 7 of 26

1

Accounting is the translation of subjectief “reality” into the balance sheet

Select one of the following:

True
False

Explanation

Question 8 of 26

1

Cost Model is the preferred measurement model of the IASB; the theory and practice of fair value measurement is set out in IFRS 13

Select one of the following:

True
False

Explanation

Question 9 of 26

1

IFRS 13 is centered on the concept of ‘the market price’ as a guide to economic decision-making.

Select one of the following:

True
False

Explanation

Question 10 of 26

1

What is the objective of IFRS 13?

Select one of the following:

To estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions’
Among their many functions, markets are systems that transmit information in the form of prices.
markets are systems that transmit information
Marketplace participants attribute prices to assets and, in doing so, distinguish the risks and rewards of one asset from those of another

Explanation

Question 11 of 26

1

Why use the market price as guiding principle?

Select one or more of the following:

Markets are systems that transmit information
Marketplace participants attribute prices to assets and, in doing so, distinguish the risks and rewards of one asset from those of another
Consensus view about an asset or liability
there is a single, unifying ‘market price
Market price is an unique outcome of the market, no other value exists

Explanation

Question 12 of 26

1

What is Market Ontology?

Select one of the following:

Market price is an unique outcome of the market, no other value exists it does not depend on any metaphor, it just exists
Data are observable inputs other than Level 1 data,
There should be distinction in IFRS 13 between different ‘types’ of fair value
Data are quoted prices in active markets, while

Explanation

Question 13 of 26

1

What if there are no market prices readily available?

Select one or more of the following:

The solution of IFRS 13 is epistemological diversity
Level 1’ data are quoted prices in active markets, while (Onaangepaste genoteerde prijzen in actieve markten voor identieke activa en verplichtingen . Voorbeeld: Slotkoers op Euronext)
Level 2’ data are observable inputs other than Level 1 data (Genoteerde prijzen voor soortgelijke activa en verplichtingen in actieve markten of inputfactoren die gebaseerd zijn op of ondersteund worden door waarneembare marktgegevens. Voorbeeld: Prijzen per vierkante meter afgeleid van prijzen in transacties van soortgelijke gebouwen in hetzelfde geografische gebied.)
Level 3’ data are unobservable, meaning that they are the preparer’s own assumptions about ‘the assumptions that market participants would use when pricing the asset’ (IFRS 13, para 87). (iet-waarneembare inputfactoren voor het bepalen van de reële waarde van een actief of verplichting.
Voorbeeld: Netto-contantewaardeberekening op basis van aannames van marktpartijen.)
there is a single, unifying ‘market price’

Explanation

Question 14 of 26

1

How do we know Level 3 fair value is an faithful representation of price?

Select one or more of the following:

considered from the perspective of a market participant
not identify specific market participants
obtain information about market participant assumptions
clear distinction between the reporting entity and the market participant
an entity uses assumptions that market participants would use when pricing the asset

Explanation

Question 15 of 26

1

Searle (1995; 2010), use theory of the nature of institutional reality. Benoem four elements?

Select one or more of the following:

Intentionality (“what are you trying to do?”)
Collective Intentionality (“what are we all trying to do
together?”)
Status function declarations (“ have we made it clear
to everyone what we try to do as a fact”?)
ontological and epistemological status of institutional facts
Institutions are rules of society to create assets and liabilities

Explanation

Question 16 of 26

1

What is Searle’s theory on the nature of institutional reality?

Select one or more of the following:

Institutions are rules of society to create assets and liabilities
IFRS standards are rules of accounting to create assets
fair value of assets & liabilities

Explanation

Question 17 of 26

1

What reality is IFRS 13 “representing”?

Select one or more of the following:

Collective Intentionality = a market is a setting where agents try to determine the “right” price
Status function declarations = the price quoted on the market is “in fact” the right price, i.e. the fair value.
ontological status: Ontology: [“ontos=being, that which is” – “logos= the study of-” ; “logia= logical discourse]” >>> Does it’s really exist?
it is a network where market transactions and environmental context coexist

Explanation

Question 18 of 26

1

Does “the market” exist by itself?

Select one of the following:

No, it is a network where market transactions and environmental context coexist.
Yes, it is a network where market transactions and environmental context coexist.
No, IFRS 13 is subjective for both Level 1 & 3, because it depends on what someone consider to be the
market.

Explanation

Question 19 of 26

1

Epistemological status: Objective: we know that there is a market where all market participants come together to agree on a price, and we can find this price (so we don’t need a financial statement in which this is copy-pasted (redundancy because it is a pre-existing institutional fact). Which level is this?

Select one of the following:

Level 1
Level 2
Level 3

Explanation

Question 20 of 26

1

epistemological status: subjective: depends on whether we agree with the calculations of the entity (hypothetical fair value) >> faithful representation is meaningless. Which level is this?

Select one of the following:

Level 1
Level 2
Level 3

Explanation

Question 21 of 26

1

Interviews with preparers of the financial reports explore how they responded to this dilemma for Level 3?

Select one or more of the following:

Transferring the problem elsewhere
Finding an expedient solution
Narrowing the problem to make it more tractable
Speculative thinking
Different practices emerged (no acceptance of one status function declaration)

Explanation

Question 22 of 26

1

What are the main results?

Select one or more of the following:

Very Limited use of Level 1: core-assets are very specific, CGU can not be separated & very difficult
to determine the correct market discount rate
One way to deal with this is to let another party determine the fair value: for instance the auditor
(this makes it entity-specific)
Different practices emerged (no acceptance of one status function declaration)
Speculative thinking
profit is change in (market) value. There is flexibility in to what you can consider market value
in practice, accounting was more conservative, with focus on historical cost
fair values are introduced in a select group of standards

Explanation

Question 23 of 26

1

What explained Baker and Schulte?

Select one of the following:

This paper questions the main premise of IFRS 13, that Fair Value for non-financial assets always faithfully represents the economic ‘reality’.
Faithful representation (previously called relevance) stands opposite to reliability, so a focus
on faithful representation marks a metaphorical shift in what the IASB emphasizes in their standards. Is this shift consistent with Searle’s notion of ‘reality’?
Does Fair Value represents an objective reality or a subjective reality?

Explanation

Question 24 of 26

1

Why explained banker and Schulte the economic reality?

Select one of the following:

This paper questions the main premise of IFRS 13, that Fair Value for non-financial assets always faithfully represents the economic ‘reality’.
Faithful representation (previously called relevance) stands opposite to reliability, so a focus on faithful representation marks a metaphorical shift in what the IASB emphasizes in their standards. Is this shift consistent with Searle’s notion of ‘reality’?
Critical Question of this paper: does Fair Value represents an objective reality or a subjective
reality?

Explanation

Question 25 of 26

1

How explained banker and Schulte the economic reality?

Select one of the following:

This paper questions the main premise of IFRS 13, that Fair Value for non-financial assets always faithfully represents the economic ‘reality’.
Faithful representation (previously called relevance) stands opposite to reliability, so a focus on faithful representation marks a metaphorical shift in what the IASB emphasizes in their standards. Is this shift consistent with Searle’s notion of ‘reality’?
Critical Question of this paper: does Fair Value represents an objective reality or a subjective
reality?

Explanation

Question 26 of 26

1

Which problem is identified within this artikel?

Select one of the following:

Fair Values are (1) either reported as preexisting institutional fact (Level 1), or (2) ‘made-up’ representations (level 2 & 3). However, firms that report under IFRS are required to apply IFRS 13.
Transferring the problem elsewhere
Narrowing the problem to make it more tractable
Finding an expedient solution

	Created by Burak Baharli over 5 years ago

Baker and Schulte

College 1: Baker and Schulte 2017

Question 1 of 26

Which following statement is related to Accounting as Economics of the artikel?

Select one or more of the following:

Explanation

Question 2 of 26

Faithful representation = representing the market ontology

Select one of the following:

Explanation

Question 3 of 26

Tranformation of concept of “Reliability” are include the following: 1. Faithful representation = representing the market price 2. This Transformation makes assumptions about ontology & reality

Select one of the following:

Explanation

Question 4 of 26

Searle’s account of Institutional Reality: Select the correct one?

Select one or more of the following:

Explanation

Question 5 of 26

This paper questions the main premise of IFRS 13, that Fair Value for non-financial assets always faithfully represents the economic ‘reality’.

Select one of the following:

Explanation

Question 6 of 26

What is Shift in Accounting as a metaphor?

Select one or more of the following:

Explanation

Question 7 of 26

Accounting is the translation of subjectief “reality” into the balance sheet

Select one of the following:

Explanation

Question 8 of 26

Cost Model is the preferred measurement model of the IASB; the theory and practice of fair value measurement is set out in IFRS 13

Select one of the following:

Explanation

Question 9 of 26

IFRS 13 is centered on the concept of ‘the market price’ as a guide to economic decision-making.

Select one of the following:

Explanation

Question 10 of 26

What is the objective of IFRS 13?

Select one of the following:

Explanation

Question 11 of 26

Why use the market price as guiding principle?

Select one or more of the following:

Explanation

Question 12 of 26

What is Market Ontology?

Select one of the following:

Explanation

Question 13 of 26

What if there are no market prices readily available?

Select one or more of the following:

Explanation

Question 14 of 26

How do we know Level 3 fair value is an faithful representation of price?

Select one or more of the following:

Explanation

Question 15 of 26

Searle (1995; 2010), use theory of the nature of institutional reality. Benoem four elements?

Select one or more of the following:

Explanation

Question 16 of 26

What is Searle’s theory on the nature of institutional reality?

Select one or more of the following:

Explanation

Question 17 of 26

What reality is IFRS 13 “representing”?

Select one or more of the following:

Explanation

Question 18 of 26

Does “the market” exist by itself?

Select one of the following:

Explanation

Question 19 of 26

Select one of the following:

Explanation

Question 20 of 26

epistemological status: subjective: depends on whether we agree with the calculations of the entity (hypothetical fair value) >> faithful representation is meaningless. Which level is this?

Select one of the following:

Tranformation of concept of “Reliability” are include the following:
1. Faithful representation = representing the market price
2. This Transformation makes assumptions about ontology & reality