U.S. companies will soon be joining the European Union and many Asian countries in converting to International Financial Reporting Standards (IFRS) as a single set of globally accepted accounting standards.
When that happens, get ready for hard-to-measure assets—brand names, research and development, maybe even human capital—to find their way on to U.S. balance sheets, says Professor Peter Easton, director of the Center for Accounting Research and Education at Notre Dame.
Easton explains that the goal is to provide more information so that all assets will be on
the balance sheet at their current, fair value. “For assets such as land and buildings, it makes sense,” he says. “But you can’t measure fair value for many, many assets. If you think of valuing Dell’s brand name, is it worth $25 billion? $10 billion? The IFRS standards open the door for an awful lot of subjectivity.”
The implications of shifting accounting standards was just one of the contemporary
valuation issues addressed by leading international scholars and practitioners at the 2008 Financial Statement Analysis and Valuation Conference: Cross-Border Issues, held in May 2008 in London, England.
To learn more about Professor Peter Easton, his research, or the annual valuation conference he organizes, visit business.nd.edu/petereaston