If accounting policies only determine how past transactions are Essay - 1

If accounting policies only determine how past transactions are recorded and reflected in financial reports, how can the choice - Essay Example Discussion In 1977, the Financial Accounting Standards Board proposed to change the accounting methods used in the oil industry from full costing (FC) to successful efforts (SE). The FSAB through the Exposure Draft received great opposition from oil companies because the change in accounting method could adversely reduce the market share price and earnings at the same time. From an analysis carried out, 64% of the oil companies will have their earnings decreasing by 5% or more and 74% of the companies surveyed could have a 5% or more decrease in the market share price if they changed the accounting method from full costing to successful efforts (Zeff, 1979). On average, it was established that the industry’s market share price and earnings decreased by 4.5% in three days after the release of the Exposure Draft (Lev, 1979). The financial accounting standards board put forward two method used to account for oil and gas exploration cost. These include the full costing method and the successful efforts method. The two methods differ in the way they treat exploration costs (Myers, 1979). Successful Efforts method Under this method, the costs are incurred in unsuccessful exploration are charged as current expenses and therefore not carried forward as assets. Under the SE method, costs are capitalized by collection if the costs directly end up in the development of proved reserves. Costs not resulting in proved reserves are expensed as are incurred or as a determination of verified reserves is made. Simply, within a cost group, wells that are explored and found dry are expensed and wells that are successfully explored and developed are capitalized (Lev, 1979). Full Costing Method The FC method, on the other hand, treats all costs that oil companies incurred in exploration oil and gas reserves as assets subject to a limitation that the total amount carried forward does not exceed the approximated value of the reserves, anywhere the well is located either within the country or across any continent (Lev, 1979). Under the full cost method, all charges of discovering and evolving wells are capitalized regardless of the fact that they are proven or not. After which, depletion is done using the units of production technique where the all the proven oil and gas reserves are taken into consideration (Myers, 1979). Fundamentally, all of the costs of developing gas and oil reserves, both successful and unsuccessful are depleted as output units which are recovered from the successful wells (Myers, 1979). This method is permitted by the Securities Exchange Commission but not favored by the FASB and is proposed as an inducement for the investigation of further oil and gas assets since charges related to failed exploration can be expensed over time rather than as incurred (Myers, 1979). The Securities Exchange Commission was in charge of regulating the oil industry as per the Energy Policy and Conservation Act of 1975. Shortly before this act, FASB had expressed interest of setting accounting standard to be used in the oil industry. For this reason, SEC relied on FASB for setting accounting standard for the oil industry. FASB then came up with the Exposure Draft the proposed to change the accounting method used in the industry (Lev, 1979). According to FASB, the full costing method was inappropriate as it did not reflect uniformity in the oil indust

Performance appraisal policies Essay Example | Topics and Well Written Essays - 750 words

Performance appraisal policies - Essay Example Walmart, Google and Apple are very reputed companies in the global market and hold a significant place in the list of Fortune 500 companies. Discussing about the performance appraisal of these companies this can be said that Walmart is using performance appraisal system for the purpose of evaluation. The management of this company has set four standards which are below standard, above standard, standard and outstanding performance. According to these levels they are evaluating the productiveness of their employee’s performance in the organizational activities. New joiners are received two times evaluation at the first fiscal year and other employees receive the same one time in a year. Management has decided that all employees should spend at least 6 months at their current position before getting any kind of promotion. The employees who are giving outstanding performance in the organization can receive monetary reward at any time in a financial year. Compensation and benefit are structured according to the performance evaluation of every employees and it can differ from person to person (Armstrong, 2006). Again in case of Apple Inc. this can be said that this company does not provide any kind of guarantee for lifelong employment opportunities without standard performance. So management of this company always focuses on this fact that employees should take responsibilities to achieve target growth to survive in this company. The company has set organization centric goals and target to recruit only qualified and skilled persons in the respective fields. The management of the company is doing performance appraisal of its employees on annual basis and high performers are getting exclusive rewards for their performances. The company is paying a variety of incentives to its employees such as long term care insurance, employee