Accounting For Financial Instruments For Securities and Investment Term Paper

Accounting For Financial Instruments For Securities and Investment Companies and Banking Institutions - Term Paper Example In particular, the use of the SFAS 157 accounting policy differs in its application for the banking industry and investment companies. Recent bouts of credit crises have ended in lasting implications in which financial instruments have stringent regulations. International accounting standards demand that certain procedures get disclosure in the accounting and valuation of financial instruments and securities. The standards are highly specific on fair value measurements for different classes of financial instruments. The objective of this report is to debate the differences in accounting for financial instruments and securities in investment companies and banking corporations with regard to SFAS 175 (ASC 820-20). Advancements in economic perspectives are responsible for the unprecedented increase in the use of financial instruments. Therefore, accounting regulations bodies have had to come up with policy guidelines to keep pace with these changes. Policy changes in regulation of finan cial instruments will continue to affect the industry for many years to come. An intriguing and somewhat challenging issue pertaining to the use of financial instruments and securities is the difference in their usage across a range of industries. SFAS 157, on fair value measurements, seeks to fill this important role and resolve any obstructing issues. This paper discusses how the financial reporting standard varies for the investment and the banking industries. SFAS 157 (ASC 820-10) Fair Value Measurements The fair value measurement standard, which came into force in 2006, seeks to provide a unified framework that offers greater consistency in application of fair value measurement guidelines (J.P. Morgan, 2).SFAS 157, Fair Value Measurement, defines fair value, outlines a framework for its measurement through levels, and expands disclosures relating to fair value. The accounting statement provides a major pronouncement to the measurement of fair value for financial instruments, an d its effects spread to several corporate entities. The broad mandate of the SFAS 157 is to increase disclosure requirements for fair value measurements. IFRS standards require that the measure on securities be at fair value. Previously, accounting regulations on measurement of value for financial instruments were scattered and inconsistent, and the Fair Value Measurements guidelines’ intention was to lay a foundation for all fair value measurements, disambiguate the term ‘fair value’, and enhance disclosures falling under the fair value categorization (Deloitte, 7). To some extent, the disclosure of the financial instrument values and particularly securities differs with the industry type, notably for the banking and the investment industry. Terms on Fair Value Measurement In SFAS 157, fair value is the price at which an asset is saleable or transferrable between participants in the market at the date the measurement takes place (J.P. Morgan, 3). Inputs can eith er be observable and unobservable, where the observable inputs are indicative of the market conditions and the unobservable inputs indicate the company’s perspective on the price of an asset. An active market is one where daily price is obtainable and the fair value is easy to obtain without reliance on forecasting models or other forms of adjustments. Accounting for Financial Instruments and Securities Financial instruments are negotiable cash instruments with a certain financial worth. Financial instruments give an entity the right to receive or the commitment to provide cash or another financial instru

Commercialization of Product & Services Essay Example | Topics and Well Written Essays - 750 words

Commercialization of Product & Services - Essay Example It's only after such an analysis that the managers can decide when, how and where to launch their new product. This essay seeks to expound on the implications of launching a new product internationally in terms of commercialization. Degeeter (2004) suggests that before any form of commercialization, there is a need to invoke a strategic plan in order to define the new product in all dimensions. The product being launched into the market wisely identified based on the intention of the subject company. There is a need to come up with a unique product that the company can sustain in the long term in the market. Many economists have recommended the funnel model as the best for identifying a product that can be fully accepted in the market. According to the funnel model, the planning stage should begin by coming up with many ideas regarding possible goods or services and then narrowing down to one specific product by eliminating those that seem unappreciable. At the stage of elimination, the best product is identified by identifying the key characteristics of the products that will make it thrive in the international market. For instance, non-perishable goods and services are more acceptable for long distance transport than perishable goods. Launching, the final stage of product development during a commercialization process, is the most sensitive stage while introducing a new product and especially in foreign market. Launching occurs only when the company has certified that the new product will satisfy the standards that are deemed fit internationally. When the product has been launched into the market, there is never a point to turn back and hence the company has to prepare adequately before launching their product (Vijay, 2009: Han, 2008). International market requires that the market be standardized before it’s forwarded into the various target countries. The international market is characterized by different tastes that may vary from culture to culture, country to country or even from one continent to another. In standardization, there is need to understand the preferences that exists in the different foreign markets in order to come up with a product that will suit every person in the market. At this stage, there is need to conduct a reconnaissance pilot marketing that will assist in the comprehension of the customer value. Dave (2011) suggests that successful products are only those that solve the problems of many people in the global market. Effective entry models in global launch plans are necessary during commercialization process. One of the optimization mechanisms includes the proper timing of the launching period in order to hit the market when the demand of the new product is at a peak (Butler & Gibson, 2011). To do this, there is a need to evaluate the economic trend during the time of launching. The economy of any country has a great influence on the demand of any particular good as it determines the purchasing power of the people. The process of commercialization is expensive especially if the product requires to be rolled out into foreign markets. A lot of money is consumed in the planning, preparation and production stage and hence there is need to enter the market at a time when the returns are expected to be high. Most researchers have proposed that the best time to enter a market is when the economy of the country it at its peak on the ground that