Fas 157 Summary Analysis Essay Example

Fas 157 Summary Analysis Essay Project Summary Background The objective of this project is to provide guidance to entities on how they should measure the fair value of assets and liabilities when required by other Standards. This project will not change when fair value measurement is required by IFRSs. Discussion at the September 2005 IASB Meeting At the September 2005 meeting, the IASB added the Fair Value Measurements topic to its agenda. The aim of the project is to provide guidance to entities on how they should measure the fair value of assets and liabilities when required by other Standards. This project will not change when fair value measurement is required by IFRSs. Discussion at the November 2005 IASB Meeting The staff conducted an education session on the FASBs working draft of a final Statement on Fair Value Measurements. In addition, the staff reviewed the scope of FASBs Fair Value Measurements project as it relates to IFRSs and the issues and questions to be addressed in preparing an IASB Exposure Draft and related Invitation to Comment. No decisions were made. At a previous meeting, the Board decided to issue the FASBs final Statement on Fair Value Measurements as an IASB Exposure Draft with an Invitation to Comment. The appendices in the FASB document dealing with consequential amendments and references to US GAAP pronouncements will be replaced with proposed consequential amendments and references to IFRSs. The Board further decided that there should be limited changes to the FASBs document. Instead, the Invitation to Comment should discuss any areas where the Board disagrees with the FASBs conclusions along with the basis for the disagreement. We will write a custom essay sample on Fas 157 Summary Analysis specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Fas 157 Summary Analysis specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Fas 157 Summary Analysis specifically for you FOR ONLY $16.38 $13.9/page Hire Writer The staff expects these areas to be identified during Board deliberations during the December 2005 and January 2006 meetings whilst aiming toward issuance of the IASB Exposure Draft by April 2006. Discussion at the December 2005 IASB Meeting Definition of fair value The staff presented a paper identifying and comparing the differences between the definitions of fair value in the FASBs draft Fair Value Measurements (FVM) standard to the definition in IFRS. This comparison was meant to assist the Board in concluding whether or not to replace the current IFRS definition of fair value with the FVM standard definition. The staffs overall recommendation was to replace the current IFRS definition of fair value with the definition of fair value in the FVM standard. However, the staff made it clear that it was not stating that this definition be applied to all instances where fair value is currently used in IFRS. This scoping issue is the subject for a separate discussion that would span several Board meetings. The Board discussed in detail, the various components of the current and proposed definition of fair value in the context of the staffs analysis. Although the Board was in overall agreement to proceed with the proposed definition in the FVM standard, the following points were noted: †¢ Certain Board members wanted to see the various issues discussed pulled together and presented in some logical manner that would clarify how fair value is approached. As noted below, the Board was concerned that the proposed definition would cause confusion where this was not the intention. Some Board members were concerned about changing amount to price as this would change the meaning of fair value. This concern seemed to emanate around the treatment of transaction costs. †¢ The explicit discussion of exit values in the draft guidance was seen by some as problematic. Illustrations were provided indicating that at the time of the transaction; the agreed price constitutes both an entry and ex it value for that specific asset or liability. Others indicated that it was their belief that the current fair value definition already encompasses an exit value notion. Following on from this issue, the notion of marketplace participants is believed by some Board members to be a less superior phrase to the widely accepted knowledgeable, willing parties notion which is more readily understood to apply to a transaction between two parties without the necessity of the existence of a market. The FASBs rationale for introducing the marketplace participants notion as a means of excluding to the greatest extent possible, any entity specific factors when determining fair value, was noted. The Board will be asked to debate the meaning of the reference market notion at subsequent meetings. Scope of the Fair Value Measurements Project The Board considered a paper setting out on a Standard by Standard basis, which individual standards should be scoped in or out of this project. That paper was organised into three sections: †¢ Standards that require fair value measurement †¢ Standards that require fair value measurement by reference to another standard †¢ Standards that do not require fair value measurement Within each of these sections, the staff made various proposals for the Boards consideration. Overall, the staff recommended not modifying as part of this project existing reliability clauses and practicability exceptions. The staff concluded that such modifications could result in significant changes to current practice and that any changes should be considered on a standard-by-standard basis separately from this project. Standards that require fair value measurement The following standards were noted as requiring assets or liabilities to be measured at fair value in certain circumstances: †¢ (a) IAS 11 Construction Contracts †¢ (b) IAS 16 Property, Plant and Equipment (c) IAS 17 Leases †¢ (d) IAS 18 Revenue †¢ (e) IAS 19 Employee Benefits †¢ (f) IAS 20 Accounting for Government Grants and Disclosure of Government Assistance †¢ (g) IAS 26 Accounting and Reporting by Retirement Benefit Plans †¢ (h) IAS 33 Earnings per Share †¢ (i) IAS 36 Impairment of Assets †¢ (j) IAS 38 Intangible Assets †¢ (k) IAS 39 Financial In struments: Recognition and Measurement †¢ (l) IAS 40 Investment Property †¢ (m) IAS 41 Agriculture †¢ (n) IFRS 1 First-time Adoption of International Financial Reporting Standards †¢ (o) IFRS 2 Share-based Payment (p) IFRS 3 Business Combinations and the June 2005 Exposure Draft †¢ (q) IFRS 5 Non-current Assets Held for Sale and Discontinued Operations The Board agreed with the staff recommendations (as set out in the observer notes) for each standard except in the following instances: †¢ IAS 18 the staff concluded that in the instances where an entity received services for dissimilar goods or services, the measurement objective is not consistent with the draft FVM standard and therefore IAS 18 should be excluded from the scope. The Board noted this issue but indicated a preference to include IAS 18 within the scope of the FVM Standard as this is a minor part of the fair value requirements in IAS 18. The confusion caused in the market if the Board were to exclude IAS 18 from the project would be undesirable. †¢ IFRS 2 due to the grant date model, the Board noted the issue that may arise where an entity measures a share-based payment transaction by reference to the equity instruments granted, not the goods or services received. However, the Board decided to include IFRS 2 within the scope of the FVM Standard on the same basis as for IAS 18. Standards that require fair value measurement by reference to another standard †¢ (a) IAS 2 Inventory †¢ (b) IAS 21 The Effects of Changes in Foreign Exchange Rates †¢ (c) IAS 27 Consolidated and Separate Financial Statements †¢ (d) IAS 28 Investment in Associates †¢ (e) IAS 31 Interests in Joint Ventures (f) IAS 32 Financial Instruments: Presentation and Disclosure †¢ (g) IFRS 4 Insurance Contracts †¢ (h) IFRS 7 Financial Instruments The Board agreed with the staff recommendation that discussion of the above is not necessary as these standards do not contain any additional requirements to measure assets or liabilities at fair value. Standards that do not require fair value measurement †¢ (a) IAS 1 Presentation of Financial Statements †¢ (b) IAS 7 Cash Flow Statements (c) IAS 8 Accounting Policies, Changes in Accoun ting Estimates and Errors †¢ (d) IAS 10 Events After the Balance Sheet Date †¢ (e) IAS 12 Income Taxes †¢ (f) IAS 14 Segment Reporting †¢ (g) IAS 23 Borrowing Costs †¢ (h) IAS 24 Related Party Disclosures †¢ (i) IAS 29 Financial Reporting in Hyperinflationary Economies †¢ (j) IAS 30 Disclosures in the Financial Statements of Banks and Similar Financial Institutions †¢ (k) IAS 34 Interim Financial Reporting (l) IAS 37 Provisions, Contingent Liabilities and Contingent Assets †¢ (m) IFRS 6 Exploration for and Evaluations of Mineral Reserves With regard to IAS 37, the Board concurred with the staff that the measurement principles therein are consistent with fair value principles in many respects and went further to state that when the amendments to IAS 37 are finalised, it would add explicit reference to fair value to clarify this issue. Discussion at the February 2006 IASB Meeting This was a brief session to inform the Board about recent tentative decisions of the FASB on its fair value measurement standard. No observer notes were provided for this session. The FASB discussed the fair value hierarchy at its last meeting. FASBs exposure draft had proposed a five-level fair value hierarchy. The FASB has come to the conclusion that it is difficult to distinguish levels two to four in the hierarchy. They have therefore reduced the hierarchy to three levels. The FASB has not made other changes to its proposed fair value guidance. The staff said that discussion will continue in March. Discussion at the May 2006 IASB Meeting Principles of the fair value measurement project The following principles were put to the Board as those forming the foundation of the fair value measurement project: †¢ The objective of a fair value measurement is to determine the price that would be received for an asset or paid to transfer a liability in a transaction between market participants at the measurement date. †¢ The definition of fair value and its measurement objective should be consistent for all fair value measurements required by IFRS. A fair value measurement should reflect market views of the attributes of the asset or liability being measured and should not include views of the reporting entity that differ from market expectations. †¢ A fair value measurement should consider the utility of the asset or liability being measured. As such, the fair value measurement should consider the location and the condi tion of the asset or liability at its measurement date. The Board concurred with the staff that the above principles form the foundation of the fair value measurement project. Revised definition of fair value In the staffs view, the FASBs revised definition of fair value is substantively similar to the one tentatively approved by the IASB in December 2005. Based on that, the IASB agreed that the revised definition is consistent with the measurement objective. However, some Board members expressed concern about the change to a price rather than amount. In addition, the revised definition is based on an exit price notion that does not consider prices that exist other than the exit price. As a consequence, other Board members noted that the current definition will require measurement based on a hypothetical market that, for some types of assets and liabilities, cannot be calibrated with reality and in most cases will result in day 1 gains or losses, which constituents are uncomfortable with. Revised fair value hierarchy The draft fair value measurement statement indicates that valuation techniques used to measure fair value shall maximise the use of observable inputs and minimize the use of unobservable inputs. The hierarchy prioritises the inputs to valuation techniques used to measure fair value based on their observable or unobservable nature. The revised three-level hierarchy is summarised as follows: †¢ Level 1 inputs are observable inputs that reflect quoted prices for identical assets or liabilities in active markets the reporting entity has the ability to access at the measurement date. †¢ Level 2 inputs are observable inputs other than quoted prices for identical assets or liabilities in active markets at the measurement date. Level 3 inputs are unobservable inputs, for example, inputs derived through extrapolation or interpolation that cannot be corroborated by observable data. However, the fair value measurement objective remains the same. Therefore, unobservable inputs should be adjusted for entity information that is inconsistent with market expectations. Unobservable inputs should also consider the risk premium a market participant (buyer) would demand to assume the inherent uncertainty in the unobservable input. IFRSs currently does not have a single hierarchy that applies to all fair value measures. Instead individual standards indicate preferences for certain inputs and measures of fair value over others, but this guidance is not consistent among all IFRSs. The Board agreed with the staffs conclusion that the revised hierarchy in the draft fair value measurement statement is consistent with the principles discussed above and that the hierarchy in the draft fair value measurement statement represents an improvement over the disparate and inconsistent guidance currently in IFRSs. Unit of account and fair value measurements The Board agreed that it is not appropriate or practical to provide detailed guidance on the unit of account within the fair value measurement project. Determining the appropriate unit of account is a critical element of accounting and is not always consistent from one asset or liability to another or from one type of transaction to another. Determination of which market The Board agreed with the FASBs conclusion to adopt the principal market view. While this will result in a change from the most advantageous view currently in IFRS, the principal market view more accurately reflects the fair value measurement objective and provides a more representative measure of fair value by giving preference to highly liquid markets over less liquid markets. Transaction price presumption At the December 2005 meeting, the IASB tentatively agreed the fair value measurement objective was an exit price. The December discussion highlighted the conceptual difference between transaction price (what an entity would pay to buy an asset or receive to assume a liability) and an exit price objective (what an entity would receive to sell an asset or pay to transfer a liability). The staff concluded that an entity cannot presume an entry price to be equal to an exit price without considering factors specific to the transaction and the asset or liability. As a consequence, the staff plans to bring a separate discussion of day 1 gains or losses to the Board at a future meeting. The Board shared the concerns of the staff that if a transaction price were presumed to be fair value on initial measurement, entities might not sufficiently consider the differences between an entry transaction price and an exit fair value. As such, IFRSs should require an entity to consider factors specific to the transaction and the asset or liability in assessing if the transaction price represents fair value. Fair value within the bid-ask spread Entities often transact somewhere between the bid and ask pricing points, particularly if the entity is a market maker or an influential investor. However, application of the rule in IAS 39 results in consistency across entities without consideration of entity specific factors that may influence where within the bid-ask spread the entity is likely to transact. Further, the rule creates a bright-line in quoted markets, thus limiting the use of judgement and subjectivity in the fair value measurement. The Board agreed to add a discussion to the invitation to comment that communicates agreement with the principle in the draft fair value measurement statement. The discussion would state that it is not appropriate to use a consistently applied pricing convention as a practical expedient to fair value. This recommendation would result in both a change to existing IFRSs as well as a departure from the FASBs draft fair value measurement statement. Transaction and transportation costs in measuring fair value The definitions of transaction type costs vary in IFRSs, though such costs are consistently excluded from fair value measurements. Currently, IFRSs are not clear (with the exception of IAS 41) whether transportation costs are an attribute of the asset or liability, and as such should be included in the fair value measurement. The draft fair value measurement statement defines transaction costs as the incremental direct costs to transact in the principal or most advantageous market. Incremental direct costs are costs that result directly from, and are essential to, a transaction involving an asset (or liability). Incremental direct costs are costs that would not be incurred by the entity if the decision to sell or dispose of the asset (or transfer the liability) was not made. In the draft fair value measurement statement, the FASB concluded the fair value measurement of the asset or liability shall include only those costs that are an attribute of the asset or liability. The FASB concluded transaction costs are an attribute of the transaction, not an attribute of the asset or liability. Therefore the fair value measurement of the asset or liability shall not include transaction costs. The staff agreed with the conclusions in the draft FVM statement regarding transportation and transaction costs. However, the staff concluded that the discussion of what types of costs are attributes of the asset or liability could be more robust as it is difficult to decipher justification for different treatment of transaction costs and transportation costs in the current discussion in the draft FVM statement. As such, the staff recommended, and the Board agreed that the invitation to comment should include a question on the sufficiency of the discussion of costs that are attributes of an asset or liability, such as transportation costs. Discussion at the June 2006 IASB Meeting The Board continued its discussion of Fair Value Measurements (FVM), and reviewed the current project plan and due process steps. In addition, the Board had a preliminary discussion on accounting for day-one gains. Project Plan and Due Process The Board was briefly updated on the developments from the last FASB meeting at which the Fair Value Measurements project was discussed. The Fair Value Measurement project was added to the IASBs agenda in September 2005. At that time, the Board decided that they would expose the FASBs final FVM standard as an IASB exposure draft, not modifying it other than change US GAAP references to the appropriate IFRS references. Since then, the staff has become aware of concerns raised by IASB constituents. These include: †¢ As the FVM project could change how fair value is measured, some think that proceeding directly to an IASB exposure draft based on the final FASB document could potentially short-cut the IASBs due process requirements. †¢ As the FASB document applies a different concept of fair value from that of older IFRSs, constituents have problems with the conceptual reasons for changing to an exit price objective of fair value, particularly when an entity have no intention to sell an asset. As fair value is being increasingly used, fundamental questions regarding relevance and reliability need to be debated prior to completion of the project. Due to these concerns, the staff presented the Board with two alternative solutions: †¢ The first alternative was a modified plan which still would include issuing the FASB document as an exposure draft, in addition to conducting field visits and round-table discussions to get input from constituents. †¢ The second alt ernative was to issue the FASB document as a discussion paper, deliberate this, and then issue an exposure draft. This would allow the Board more time and more flexibility to address the concerns raised by constituents and hopefully a better standard, even if this route will be a longer one. The Board expressed sympathy for the concerns raised by the constituents, and the majority of Board members agreed that this would require a shift from the current project plan to alternative two which is to issue the FASB document as a discussion paper. However some Board members thought that the second alternative should be avoided as this would delay the issuing of a final standard too long. Alternative two will result in a final IFRS in late 2008 or early 2009. Some Board members thought that it would be crucial to communicate with constituents that this move away from the current project plan and towards the discussion paper route would take more time, but that it would be done to ensure the interest of constituents. The Board voted in favour of alternative two, resulting in a discussion paper being issued based on the FASB document. The Board noted that a final plan could not be put together before the final FASB document is issued. As long as the FASB have not issued their final document including, e. . their application guidance, the IASB will not have a public document accessible for issuing as the IASBs discussion paper. Day-one Gains and Losses Fair value, as defined in the FASBs document is an exit price. As a result of the Boards tentative approval of the exit price definition of fair value, in circumstances where an asset or a liability is required to be measu red at fair value on initial recognition, a day-one gain or loss may be recorded. The staff believes the existing guidance in IAS 39 is inconsistent with the exit price notion as tentatively approved by the Board, and therefore needs amendment. The Board was asked whether they would consider: †¢ To make only consequential amendments to conform IAS 39 with the guidance in the Fair Value Measurement statement and to leave the current guidance on recognition of day-one gains and losses in IAS 39. †¢ Making consequential amendments and change the existing guidance in IAS 39. The Board decided that they would not make any amendments right now, but rather put a question in the discussion paper whether this should be dealt with in a separate project or as a part of the Fair Value Measurement project. September 2006: FASB issues fair value measurement standard On 15 September 2006, the US Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157 Fair Value Measurements. FAS 157 provides enhanced guidance for using fair value to measure assets and liabilities. It applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. FAS 157 does not expand the use of fair value in any new circumstances. Click for: †¢ FASB News Release (PDF 19k) Special issue of the Heads Up Newsletter Summarising FAS 157 (PDF 218k) Some points about FAS 157: †¢ Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. †¢ Fair value should be based on the assumptions market participants would use when pricing the asset or liability. †¢ FAS 157 establishes a fair va lue hierarchy that prioritises the information used to develop those assumptions. The fair value hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data, for example, the reporting entitys own data. †¢ Fair value measurements would be separately disclosed by level within the fair value hierarchy. †¢ FAS 157 is effective for financial statements issued for fiscal years beginning after 15 November 2007, and interim periods within those fiscal years. Early adoption is permitted. †¢ FAS 157 may be downloaded from FASBs Website without charge. The IASB has on its agenda a project on fair value measurement. It is one of the convergence projects with the FASB. This means that the IASB and the FASB plan to have similar, if not identical, definitions and guidance relating to fair value measurements. The IASB plans to issue a discussion paper in the fourth quarter of 2006 that will: †¢ indicate the IASBs preliminary views on the provisions of FAS 157; †¢ identify differences between FAS 157 and fair value measurement guidance in existing IFRSs; and †¢ invite comments on the provisions of FAS 157 and on the IASBs preliminary views about those provisions. Discussion at the September 2006 IASB Meeting The staff noted that FAS 157 Fair Value Measurements was issued on 15 September 2006 (see IAS Plus News Story of 19 September 2006). The IASB staff can now complete the preparation of an IASB Discussion Paper on Fair Value Measurements, which will comprise: †¢ FAS 157; †¢ excerpts of existing FVM guidance in IFRSs; and †¢ an Invitation to Comment that expresses the Boards preliminary views and requests constituent input on certain matters Non-performance risk The Board noted that IFRSs currently do not discuss non-performance risk in relation to the fair value of liabilities. IAS 39 requires the fair value of a financial liability to reflect the credit quality of the instrument. Reflecting credit quality in the fair value measurement of a financial liability effectively causes the fair value measurement to reflect the risk that the obligation will not be fulfilled. FAS 157 extends this principle to the fair value measurement of both financial and non-financial liabilities. It was noted that non-financial liabilities include both credit risk (which related to the financial component) and non-performance risk (which related to the activity). After some discussion, the Board agreed to include a preliminary view in the invitation to comment agreeing with the concept that the fair value of a liability should reflect the non-performance risk relating to that liability (in addition to credit risk). Issues in the Invitation to Comment Entry and exit prices The Board agreed that the Invitation to Comment should discuss the concepts of entry and exit prices without stating a preliminary view. The Discussion Paper will address two views without stating a preference. The discussion note that the notion of a price established between a willing buyer and a willing seller matters only when one is shifting markets. In many IASB standards, fair value is used to mean an exit price; in a few (such as IFRS 3, IAS 39, and IAS 41), the phrase is used to mean an entry price. Board members found using the same phrase to communicate two different measurement objectives confusing. Board members noted that they might need to reassess the measurement objective in IFRS 3, IAS 39, and IAS 41 should they adopt the approach in FAS 157 paragraph 17(d), which allows the use of a price other than the transaction price to represent fair value if the transaction occurred in a market other than the principal or most advantageous market. The staff proposed wording on the fly, which they will bring back to the Board. Principal or most advantageous market IAS 39 requires an entity to use the most advantageous active market in measuring the fair value of a financial asset or liability when multiple markets exist, whereas IAS 41 Agriculture requires an entity to use the most relevant market. By comparison, the FAS 157 requires an entity use the principal market for the asset or liability. In the absence of a principal market for the asset or liability, the entity uses the most advantageous market. The principal market is the market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity for the asset or liability. The most advantageous market is the market in which the reporting entity would sell the asset or transfer the liability with the price that maximizes the amount that would be received for the asset or minimizes the amount that would be paid to transfer the liability, considering transaction costs in the respective market(s). In either case, the principal (or most advantageous) market (and thus, market participants) should be considered from the perspective of the reporting entity, thereby allowing for differences between and among entities with different activities. The Board reconfirmed their view taken in May 2006, namely: When multiple markets exist for an asset or liability, the fair value measure should be based on the principal market for that asset or liability. If there is no principal market, the most advantageous market should be used. In both instances, the principal or most advantageous market should be determined from the perspective of the reporting entity. A question will be asked on this topic in the Invitation to Comment. Calling level 3 measurements fair value The Board noted that FAS 157 establishes a three level hierarchy for categorising and prioritising inputs for fair value measurements. Level 3 of the hierarchy is unobservable inputs for the asset or liability (that is, they are not observable in a market). Unobservable inputs are used to measure fair value only to the extent that observable inputs are not available. These inputs reflect the reporting entitys own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). When Level 3 measures are used, FAS 157 prescribes additional disclosures. The Board agreed that the disclosure requirements in FAS 157 highlight sufficiently the nature of the fair value measurement so that users of financial statements can develop a view of the potential uncertainty of that measurement. Therefore, it would not be necessary to include in the Discussion Paper a discussion of whether measurements comprised of significant Level 3 inputs should be labelled something other than fair value. Block premiums and discounts The Board agreed to address the issue of whether block premiums and discounts should be discussed in the Discussion Paper. Such premiums or discounts may arise when a larger-than-normal quantity of an asset or liability is being sold in a market. Board members noted that the requirement to use the Price x Quantity formula is limited to Level 1 measures, and that this opens the treatment of block purchases and sales to abuse, since it could be argued that these should be measured using Level 2 or 3 inputs. Board members also agreed that there is a need to distinguish illiquidity caused by the size of the block from that caused by the thinness of the market. The staff will draft a question on this issue for inclusion in the Invitation to Comment. Day 1 gains and losses The Board noted that an exit price measurement objective could have significant implications on certain fair value measurements in IFRSs, particularly in IAS 39 on initial Fas 157 Summary Analysis Essay Example Fas 157 Summary Analysis Essay Project Summary Background The objective of this project is to provide guidance to entities on how they should measure the fair value of assets and liabilities when required by other Standards. This project will not change when fair value measurement is required by IFRSs. Discussion at the September 2005 IASB Meeting At the September 2005 meeting, the IASB added the Fair Value Measurements topic to its agenda. The aim of the project is to provide guidance to entities on how they should measure the fair value of assets and liabilities when required by other Standards. This project will not change when fair value measurement is required by IFRSs. Discussion at the November 2005 IASB Meeting The staff conducted an education session on the FASBs working draft of a final Statement on Fair Value Measurements. In addition, the staff reviewed the scope of FASBs Fair Value Measurements project as it relates to IFRSs and the issues and questions to be addressed in preparing an IASB Exposure Draft and related Invitation to Comment. No decisions were made. At a previous meeting, the Board decided to issue the FASBs final Statement on Fair Value Measurements as an IASB Exposure Draft with an Invitation to Comment. The appendices in the FASB document dealing with consequential amendments and references to US GAAP pronouncements will be replaced with proposed consequential amendments and references to IFRSs. The Board further decided that there should be limited changes to the FASBs document. Instead, the Invitation to Comment should discuss any areas where the Board disagrees with the FASBs conclusions along with the basis for the disagreement. We will write a custom essay sample on Fas 157 Summary Analysis specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Fas 157 Summary Analysis specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Fas 157 Summary Analysis specifically for you FOR ONLY $16.38 $13.9/page Hire Writer The staff expects these areas to be identified during Board deliberations during the December 2005 and January 2006 meetings whilst aiming toward issuance of the IASB Exposure Draft by April 2006. Discussion at the December 2005 IASB Meeting Definition of fair value The staff presented a paper identifying and comparing the differences between the definitions of fair value in the FASBs draft Fair Value Measurements (FVM) standard to the definition in IFRS. This comparison was meant to assist the Board in concluding whether or not to replace the current IFRS definition of fair value with the FVM standard definition. The staffs overall recommendation was to replace the current IFRS definition of fair value with the definition of fair value in the FVM standard. However, the staff made it clear that it was not stating that this definition be applied to all instances where fair value is currently used in IFRS. This scoping issue is the subject for a separate discussion that would span several Board meetings. The Board discussed in detail, the various components of the current and proposed definition of fair value in the context of the staffs analysis. Although the Board was in overall agreement to proceed with the proposed definition in the FVM standard, the following points were noted: †¢ Certain Board members wanted to see the various issues discussed pulled together and presented in some logical manner that would clarify how fair value is approached. As noted below, the Board was concerned that the proposed definition would cause confusion where this was not the intention. Some Board members were concerned about changing amount to price as this would change the meaning of fair value. This concern seemed to emanate around the treatment of transaction costs. †¢ The explicit discussion of exit values in the draft guidance was seen by some as problematic. Illustrations were provided indicating that at the time of the transaction; the agreed price constitutes both an entry and ex it value for that specific asset or liability. Others indicated that it was their belief that the current fair value definition already encompasses an exit value notion. Following on from this issue, the notion of marketplace participants is believed by some Board members to be a less superior phrase to the widely accepted knowledgeable, willing parties notion which is more readily understood to apply to a transaction between two parties without the necessity of the existence of a market. The FASBs rationale for introducing the marketplace participants notion as a means of excluding to the greatest extent possible, any entity specific factors when determining fair value, was noted. The Board will be asked to debate the meaning of the reference market notion at subsequent meetings. Scope of the Fair Value Measurements Project The Board considered a paper setting out on a Standard by Standard basis, which individual standards should be scoped in or out of this project. That paper was organised into three sections: †¢ Standards that require fair value measurement †¢ Standards that require fair value measurement by reference to another standard †¢ Standards that do not require fair value measurement Within each of these sections, the staff made various proposals for the Boards consideration. Overall, the staff recommended not modifying as part of this project existing reliability clauses and practicability exceptions. The staff concluded that such modifications could result in significant changes to current practice and that any changes should be considered on a standard-by-standard basis separately from this project. Standards that require fair value measurement The following standards were noted as requiring assets or liabilities to be measured at fair value in certain circumstances: †¢ (a) IAS 11 Construction Contracts †¢ (b) IAS 16 Property, Plant and Equipment (c) IAS 17 Leases †¢ (d) IAS 18 Revenue †¢ (e) IAS 19 Employee Benefits †¢ (f) IAS 20 Accounting for Government Grants and Disclosure of Government Assistance †¢ (g) IAS 26 Accounting and Reporting by Retirement Benefit Plans †¢ (h) IAS 33 Earnings per Share †¢ (i) IAS 36 Impairment of Assets †¢ (j) IAS 38 Intangible Assets †¢ (k) IAS 39 Financial In struments: Recognition and Measurement †¢ (l) IAS 40 Investment Property †¢ (m) IAS 41 Agriculture †¢ (n) IFRS 1 First-time Adoption of International Financial Reporting Standards †¢ (o) IFRS 2 Share-based Payment (p) IFRS 3 Business Combinations and the June 2005 Exposure Draft †¢ (q) IFRS 5 Non-current Assets Held for Sale and Discontinued Operations The Board agreed with the staff recommendations (as set out in the observer notes) for each standard except in the following instances: †¢ IAS 18 the staff concluded that in the instances where an entity received services for dissimilar goods or services, the measurement objective is not consistent with the draft FVM standard and therefore IAS 18 should be excluded from the scope. The Board noted this issue but indicated a preference to include IAS 18 within the scope of the FVM Standard as this is a minor part of the fair value requirements in IAS 18. The confusion caused in the market if the Board were to exclude IAS 18 from the project would be undesirable. †¢ IFRS 2 due to the grant date model, the Board noted the issue that may arise where an entity measures a share-based payment transaction by reference to the equity instruments granted, not the goods or services received. However, the Board decided to include IFRS 2 within the scope of the FVM Standard on the same basis as for IAS 18. Standards that require fair value measurement by reference to another standard †¢ (a) IAS 2 Inventory †¢ (b) IAS 21 The Effects of Changes in Foreign Exchange Rates †¢ (c) IAS 27 Consolidated and Separate Financial Statements †¢ (d) IAS 28 Investment in Associates †¢ (e) IAS 31 Interests in Joint Ventures (f) IAS 32 Financial Instruments: Presentation and Disclosure †¢ (g) IFRS 4 Insurance Contracts †¢ (h) IFRS 7 Financial Instruments The Board agreed with the staff recommendation that discussion of the above is not necessary as these standards do not contain any additional requirements to measure assets or liabilities at fair value. Standards that do not require fair value measurement †¢ (a) IAS 1 Presentation of Financial Statements †¢ (b) IAS 7 Cash Flow Statements (c) IAS 8 Accounting Policies, Changes in Accoun ting Estimates and Errors †¢ (d) IAS 10 Events After the Balance Sheet Date †¢ (e) IAS 12 Income Taxes †¢ (f) IAS 14 Segment Reporting †¢ (g) IAS 23 Borrowing Costs †¢ (h) IAS 24 Related Party Disclosures †¢ (i) IAS 29 Financial Reporting in Hyperinflationary Economies †¢ (j) IAS 30 Disclosures in the Financial Statements of Banks and Similar Financial Institutions †¢ (k) IAS 34 Interim Financial Reporting (l) IAS 37 Provisions, Contingent Liabilities and Contingent Assets †¢ (m) IFRS 6 Exploration for and Evaluations of Mineral Reserves With regard to IAS 37, the Board concurred with the staff that the measurement principles therein are consistent with fair value principles in many respects and went further to state that when the amendments to IAS 37 are finalised, it would add explicit reference to fair value to clarify this issue. Discussion at the February 2006 IASB Meeting This was a brief session to inform the Board about recent tentative decisions of the FASB on its fair value measurement standard. No observer notes were provided for this session. The FASB discussed the fair value hierarchy at its last meeting. FASBs exposure draft had proposed a five-level fair value hierarchy. The FASB has come to the conclusion that it is difficult to distinguish levels two to four in the hierarchy. They have therefore reduced the hierarchy to three levels. The FASB has not made other changes to its proposed fair value guidance. The staff said that discussion will continue in March. Discussion at the May 2006 IASB Meeting Principles of the fair value measurement project The following principles were put to the Board as those forming the foundation of the fair value measurement project: †¢ The objective of a fair value measurement is to determine the price that would be received for an asset or paid to transfer a liability in a transaction between market participants at the measurement date. †¢ The definition of fair value and its measurement objective should be consistent for all fair value measurements required by IFRS. A fair value measurement should reflect market views of the attributes of the asset or liability being measured and should not include views of the reporting entity that differ from market expectations. †¢ A fair value measurement should consider the utility of the asset or liability being measured. As such, the fair value measurement should consider the location and the condi tion of the asset or liability at its measurement date. The Board concurred with the staff that the above principles form the foundation of the fair value measurement project. Revised definition of fair value In the staffs view, the FASBs revised definition of fair value is substantively similar to the one tentatively approved by the IASB in December 2005. Based on that, the IASB agreed that the revised definition is consistent with the measurement objective. However, some Board members expressed concern about the change to a price rather than amount. In addition, the revised definition is based on an exit price notion that does not consider prices that exist other than the exit price. As a consequence, other Board members noted that the current definition will require measurement based on a hypothetical market that, for some types of assets and liabilities, cannot be calibrated with reality and in most cases will result in day 1 gains or losses, which constituents are uncomfortable with. Revised fair value hierarchy The draft fair value measurement statement indicates that valuation techniques used to measure fair value shall maximise the use of observable inputs and minimize the use of unobservable inputs. The hierarchy prioritises the inputs to valuation techniques used to measure fair value based on their observable or unobservable nature. The revised three-level hierarchy is summarised as follows: †¢ Level 1 inputs are observable inputs that reflect quoted prices for identical assets or liabilities in active markets the reporting entity has the ability to access at the measurement date. †¢ Level 2 inputs are observable inputs other than quoted prices for identical assets or liabilities in active markets at the measurement date. Level 3 inputs are unobservable inputs, for example, inputs derived through extrapolation or interpolation that cannot be corroborated by observable data. However, the fair value measurement objective remains the same. Therefore, unobservable inputs should be adjusted for entity information that is inconsistent with market expectations. Unobservable inputs should also consider the risk premium a market participant (buyer) would demand to assume the inherent uncertainty in the unobservable input. IFRSs currently does not have a single hierarchy that applies to all fair value measures. Instead individual standards indicate preferences for certain inputs and measures of fair value over others, but this guidance is not consistent among all IFRSs. The Board agreed with the staffs conclusion that the revised hierarchy in the draft fair value measurement statement is consistent with the principles discussed above and that the hierarchy in the draft fair value measurement statement represents an improvement over the disparate and inconsistent guidance currently in IFRSs. Unit of account and fair value measurements The Board agreed that it is not appropriate or practical to provide detailed guidance on the unit of account within the fair value measurement project. Determining the appropriate unit of account is a critical element of accounting and is not always consistent from one asset or liability to another or from one type of transaction to another. Determination of which market The Board agreed with the FASBs conclusion to adopt the principal market view. While this will result in a change from the most advantageous view currently in IFRS, the principal market view more accurately reflects the fair value measurement objective and provides a more representative measure of fair value by giving preference to highly liquid markets over less liquid markets. Transaction price presumption At the December 2005 meeting, the IASB tentatively agreed the fair value measurement objective was an exit price. The December discussion highlighted the conceptual difference between transaction price (what an entity would pay to buy an asset or receive to assume a liability) and an exit price objective (what an entity would receive to sell an asset or pay to transfer a liability). The staff concluded that an entity cannot presume an entry price to be equal to an exit price without considering factors specific to the transaction and the asset or liability. As a consequence, the staff plans to bring a separate discussion of day 1 gains or losses to the Board at a future meeting. The Board shared the concerns of the staff that if a transaction price were presumed to be fair value on initial measurement, entities might not sufficiently consider the differences between an entry transaction price and an exit fair value. As such, IFRSs should require an entity to consider factors specific to the transaction and the asset or liability in assessing if the transaction price represents fair value. Fair value within the bid-ask spread Entities often transact somewhere between the bid and ask pricing points, particularly if the entity is a market maker or an influential investor. However, application of the rule in IAS 39 results in consistency across entities without consideration of entity specific factors that may influence where within the bid-ask spread the entity is likely to transact. Further, the rule creates a bright-line in quoted markets, thus limiting the use of judgement and subjectivity in the fair value measurement. The Board agreed to add a discussion to the invitation to comment that communicates agreement with the principle in the draft fair value measurement statement. The discussion would state that it is not appropriate to use a consistently applied pricing convention as a practical expedient to fair value. This recommendation would result in both a change to existing IFRSs as well as a departure from the FASBs draft fair value measurement statement. Transaction and transportation costs in measuring fair value The definitions of transaction type costs vary in IFRSs, though such costs are consistently excluded from fair value measurements. Currently, IFRSs are not clear (with the exception of IAS 41) whether transportation costs are an attribute of the asset or liability, and as such should be included in the fair value measurement. The draft fair value measurement statement defines transaction costs as the incremental direct costs to transact in the principal or most advantageous market. Incremental direct costs are costs that result directly from, and are essential to, a transaction involving an asset (or liability). Incremental direct costs are costs that would not be incurred by the entity if the decision to sell or dispose of the asset (or transfer the liability) was not made. In the draft fair value measurement statement, the FASB concluded the fair value measurement of the asset or liability shall include only those costs that are an attribute of the asset or liability. The FASB concluded transaction costs are an attribute of the transaction, not an attribute of the asset or liability. Therefore the fair value measurement of the asset or liability shall not include transaction costs. The staff agreed with the conclusions in the draft FVM statement regarding transportation and transaction costs. However, the staff concluded that the discussion of what types of costs are attributes of the asset or liability could be more robust as it is difficult to decipher justification for different treatment of transaction costs and transportation costs in the current discussion in the draft FVM statement. As such, the staff recommended, and the Board agreed that the invitation to comment should include a question on the sufficiency of the discussion of costs that are attributes of an asset or liability, such as transportation costs. Discussion at the June 2006 IASB Meeting The Board continued its discussion of Fair Value Measurements (FVM), and reviewed the current project plan and due process steps. In addition, the Board had a preliminary discussion on accounting for day-one gains. Project Plan and Due Process The Board was briefly updated on the developments from the last FASB meeting at which the Fair Value Measurements project was discussed. The Fair Value Measurement project was added to the IASBs agenda in September 2005. At that time, the Board decided that they would expose the FASBs final FVM standard as an IASB exposure draft, not modifying it other than change US GAAP references to the appropriate IFRS references. Since then, the staff has become aware of concerns raised by IASB constituents. These include: †¢ As the FVM project could change how fair value is measured, some think that proceeding directly to an IASB exposure draft based on the final FASB document could potentially short-cut the IASBs due process requirements. †¢ As the FASB document applies a different concept of fair value from that of older IFRSs, constituents have problems with the conceptual reasons for changing to an exit price objective of fair value, particularly when an entity have no intention to sell an asset. As fair value is being increasingly used, fundamental questions regarding relevance and reliability need to be debated prior to completion of the project. Due to these concerns, the staff presented the Board with two alternative solutions: †¢ The first alternative was a modified plan which still would include issuing the FASB document as an exposure draft, in addition to conducting field visits and round-table discussions to get input from constituents. †¢ The second alt ernative was to issue the FASB document as a discussion paper, deliberate this, and then issue an exposure draft. This would allow the Board more time and more flexibility to address the concerns raised by constituents and hopefully a better standard, even if this route will be a longer one. The Board expressed sympathy for the concerns raised by the constituents, and the majority of Board members agreed that this would require a shift from the current project plan to alternative two which is to issue the FASB document as a discussion paper. However some Board members thought that the second alternative should be avoided as this would delay the issuing of a final standard too long. Alternative two will result in a final IFRS in late 2008 or early 2009. Some Board members thought that it would be crucial to communicate with constituents that this move away from the current project plan and towards the discussion paper route would take more time, but that it would be done to ensure the interest of constituents. The Board voted in favour of alternative two, resulting in a discussion paper being issued based on the FASB document. The Board noted that a final plan could not be put together before the final FASB document is issued. As long as the FASB have not issued their final document including, e. . their application guidance, the IASB will not have a public document accessible for issuing as the IASBs discussion paper. Day-one Gains and Losses Fair value, as defined in the FASBs document is an exit price. As a result of the Boards tentative approval of the exit price definition of fair value, in circumstances where an asset or a liability is required to be measu red at fair value on initial recognition, a day-one gain or loss may be recorded. The staff believes the existing guidance in IAS 39 is inconsistent with the exit price notion as tentatively approved by the Board, and therefore needs amendment. The Board was asked whether they would consider: †¢ To make only consequential amendments to conform IAS 39 with the guidance in the Fair Value Measurement statement and to leave the current guidance on recognition of day-one gains and losses in IAS 39. †¢ Making consequential amendments and change the existing guidance in IAS 39. The Board decided that they would not make any amendments right now, but rather put a question in the discussion paper whether this should be dealt with in a separate project or as a part of the Fair Value Measurement project. September 2006: FASB issues fair value measurement standard On 15 September 2006, the US Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157 Fair Value Measurements. FAS 157 provides enhanced guidance for using fair value to measure assets and liabilities. It applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. FAS 157 does not expand the use of fair value in any new circumstances. Click for: †¢ FASB News Release (PDF 19k) Special issue of the Heads Up Newsletter Summarising FAS 157 (PDF 218k) Some points about FAS 157: †¢ Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. †¢ Fair value should be based on the assumptions market participants would use when pricing the asset or liability. †¢ FAS 157 establishes a fair va lue hierarchy that prioritises the information used to develop those assumptions. The fair value hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data, for example, the reporting entitys own data. †¢ Fair value measurements would be separately disclosed by level within the fair value hierarchy. †¢ FAS 157 is effective for financial statements issued for fiscal years beginning after 15 November 2007, and interim periods within those fiscal years. Early adoption is permitted. †¢ FAS 157 may be downloaded from FASBs Website without charge. The IASB has on its agenda a project on fair value measurement. It is one of the convergence projects with the FASB. This means that the IASB and the FASB plan to have similar, if not identical, definitions and guidance relating to fair value measurements. The IASB plans to issue a discussion paper in the fourth quarter of 2006 that will: †¢ indicate the IASBs preliminary views on the provisions of FAS 157; †¢ identify differences between FAS 157 and fair value measurement guidance in existing IFRSs; and †¢ invite comments on the provisions of FAS 157 and on the IASBs preliminary views about those provisions. Discussion at the September 2006 IASB Meeting The staff noted that FAS 157 Fair Value Measurements was issued on 15 September 2006 (see IAS Plus News Story of 19 September 2006). The IASB staff can now complete the preparation of an IASB Discussion Paper on Fair Value Measurements, which will comprise: †¢ FAS 157; †¢ excerpts of existing FVM guidance in IFRSs; and †¢ an Invitation to Comment that expresses the Boards preliminary views and requests constituent input on certain matters Non-performance risk The Board noted that IFRSs currently do not discuss non-performance risk in relation to the fair value of liabilities. IAS 39 requires the fair value of a financial liability to reflect the credit quality of the instrument. Reflecting credit quality in the fair value measurement of a financial liability effectively causes the fair value measurement to reflect the risk that the obligation will not be fulfilled. FAS 157 extends this principle to the fair value measurement of both financial and non-financial liabilities. It was noted that non-financial liabilities include both credit risk (which related to the financial component) and non-performance risk (which related to the activity). After some discussion, the Board agreed to include a preliminary view in the invitation to comment agreeing with the concept that the fair value of a liability should reflect the non-performance risk relating to that liability (in addition to credit risk). Issues in the Invitation to Comment Entry and exit prices The Board agreed that the Invitation to Comment should discuss the concepts of entry and exit prices without stating a preliminary view. The Discussion Paper will address two views without stating a preference. The discussion note that the notion of a price established between a willing buyer and a willing seller matters only when one is shifting markets. In many IASB standards, fair value is used to mean an exit price; in a few (such as IFRS 3, IAS 39, and IAS 41), the phrase is used to mean an entry price. Board members found using the same phrase to communicate two different measurement objectives confusing. Board members noted that they might need to reassess the measurement objective in IFRS 3, IAS 39, and IAS 41 should they adopt the approach in FAS 157 paragraph 17(d), which allows the use of a price other than the transaction price to represent fair value if the transaction occurred in a market other than the principal or most advantageous market. The staff proposed wording on the fly, which they will bring back to the Board. Principal or most advantageous market IAS 39 requires an entity to use the most advantageous active market in measuring the fair value of a financial asset or liability when multiple markets exist, whereas IAS 41 Agriculture requires an entity to use the most relevant market. By comparison, the FAS 157 requires an entity use the principal market for the asset or liability. In the absence of a principal market for the asset or liability, the entity uses the most advantageous market. The principal market is the market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity for the asset or liability. The most advantageous market is the market in which the reporting entity would sell the asset or transfer the liability with the price that maximizes the amount that would be received for the asset or minimizes the amount that would be paid to transfer the liability, considering transaction costs in the respective market(s). In either case, the principal (or most advantageous) market (and thus, market participants) should be considered from the perspective of the reporting entity, thereby allowing for differences between and among entities with different activities. The Board reconfirmed their view taken in May 2006, namely: When multiple markets exist for an asset or liability, the fair value measure should be based on the principal market for that asset or liability. If there is no principal market, the most advantageous market should be used. In both instances, the principal or most advantageous market should be determined from the perspective of the reporting entity. A question will be asked on this topic in the Invitation to Comment. Calling level 3 measurements fair value The Board noted that FAS 157 establishes a three level hierarchy for categorising and prioritising inputs for fair value measurements. Level 3 of the hierarchy is unobservable inputs for the asset or liability (that is, they are not observable in a market). Unobservable inputs are used to measure fair value only to the extent that observable inputs are not available. These inputs reflect the reporting entitys own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). When Level 3 measures are used, FAS 157 prescribes additional disclosures. The Board agreed that the disclosure requirements in FAS 157 highlight sufficiently the nature of the fair value measurement so that users of financial statements can develop a view of the potential uncertainty of that measurement. Therefore, it would not be necessary to include in the Discussion Paper a discussion of whether measurements comprised of significant Level 3 inputs should be labelled something other than fair value. Block premiums and discounts The Board agreed to address the issue of whether block premiums and discounts should be discussed in the Discussion Paper. Such premiums or discounts may arise when a larger-than-normal quantity of an asset or liability is being sold in a market. Board members noted that the requirement to use the Price x Quantity formula is limited to Level 1 measures, and that this opens the treatment of block purchases and sales to abuse, since it could be argued that these should be measured using Level 2 or 3 inputs. Board members also agreed that there is a need to distinguish illiquidity caused by the size of the block from that caused by the thinness of the market. The staff will draft a question on this issue for inclusion in the Invitation to Comment. Day 1 gains and losses The Board noted that an exit price measurement objective could have significant implications on certain fair value measurements in IFRSs, particularly in IAS 39 on initial

APES Chapter 5 vocab Essay Example

APES Chapter 5 vocab Essay Example APES Chapter 5 vocab Paper APES Chapter 5 vocab Paper interspecific competition occurs when members of two or more species interact to gain access to the same limited resources such as food, light, or space predatation occurs when a member of one species feeds directly on all or part of a member of another species parasitism occurs when one organism feeds on the body of, or the energy used by, another organism, usually by living on or in the host mutualism an interaction that benefits both species by providing each with food, shelter, or some other resourcea commensalism an interaction that benefits one species but has little, if any, effect on the other predator-prey relationship relationships between a predator and its prey coevolution evolution in which two or more species interact and exert selective pressures on each other that can lead each species to undergo adaptations resource partitioning occurs when species competing for similar scarce resources evolve specialized traits that allow them to reduce niche overlap population dynamics a study of how the distribution, numbers, age structure, and density of populations change in response to changes in environmental conditions age structure the proportions of individuals at various ages biotic potential capacity for population growth under ideal conditions intrinsic rate of increase (r) the rate at which the population of a species would grow if it had unlimited resources intrinsic rate of increase (r) the rate at which the population of a species would grow if it had unlimited resources carrying capacity (K) the maximum population of a given species that a particular habitat can sustain indefinitely without being degraded logistic growth involves rapid exponential population growth followed by a steady decrease in population growth until the population size levels off (S-shaped curve) r-related species species that have many, usually small, offspring and give them little or no parental care or protection K-related species tend to reproduce later in life and have a small number of offspring with fairly long life spans. They also tend to mother and protect their young population density the number of individuals in a population found in a particular area or volume ecological succession during which, some species colonize an area and their populations become more numerous, while populations of other species decline and may even disappear primary succession involves the gradual establishment of biotic communities in lifeless areas where there is no soil in a terrestrial ecosystem, or no bottom sediment in an aquatic ecosystem secondary succession in which a series of communities or ecosystems with different species develop in places containing soil or bottom sediment tipping point where any additional stress can cause an ecosystem to change in an abrupt and usually irreversible way that often involves collapse

London city Essay Example | Topics and Well Written Essays - 1000 words - 2

London city - Essay Example Although most nations were comfortable with the logo, Iranian reaction provoked intense debate and this attracted contribution of scholars, political leaders and the general public. This became a pressing issue that was likely to escalate to the extent of affecting participation of all countries in the Olympics. It is evident that such a logo can be of great socio-political insinuation if not well taken care of. The 2012 London Olympics logo is a jagged emblem that came in a series of colors. This included shades of pink, orange, blue and green. According to the chairman of the London 2012 Olympics organizing committee, the logo’s number 2012 was designed with the intention to make it appeal to the internet generation of today. The logo designed by Wolf Olins had the number 2012 jagged in a particular font that the designer deemed impressive (Garcia,7). However, this logo elicited a lot of debate over its design. This was owing to the different perceptions people had about the image. From Wolf Olins’ angle he just jagged about the number 2012 to get an impressive image attractive to the internet using generation but from other people’s perception, the logo had different meanings depending on their school of thought or rather their visual reasoning skills (Garcia, 9). First is the perception of the logo by Iranians. Iran was too taken by the 2012 London Olympics logo. Almost four years after the logo was designed a new perception by an Iranian athlete brought a twist to the perceptions about the logo. Tehran an Iranian athlete threatened boycotting the race unless the organizers moved with speed to change the logo. In his view or understanding, the logo depicted the word â€Å"Zion†. It should be noted that it was a jagged font that represented the four figures 2012 (Nudd, 1). The Iranian government on the other end had its perception of the same. According to

The effect on the 1990 Clean Air Act on the Twin Cities Research Paper

The effect on the 1990 Clean Air Act on the Twin Cities - Research Paper Example Air Quality in the Twin Cities Midway through the 20th century, the United States started growing concerned with air quality, especially in larger cities. Beginning with the Air Pollution Control Act of 1955, the government would continue to pass Acts that would help research and regulate air pollution. In 1963 the first version of the Clean Air Act was passed following the research gained by the 1955 Act. This CAA set up regulations and standards to monitor air pollution, giving the newly formed Environmental Protection Agency the power to enforce these standards. Today, our focus will be a later version of this Act. The Clean Air Act of 1990 and the subsequent tighter standards for air quality set by the EPA caused the state of Minnesota to fall out of compliance. This paper will discuss the effect of the 1990 Clean Air Act on the Twin Cities. History of the Clean Air Act Beginning first with an overview of the Clean Air Act’s history, the Clean Air Act of 1990 was a set of amendments added to the already recognized piece of legislation from 1963. The 1963 legislation created a special section of the United States Public Health Service that would focus on air pollution research, monitoring and regulation techniques. Following research done, the 1967 Air Quality Act was passed which furthered government attention to both interstate transports’ effect on air pollution and ways to monitor air pollution in an ambient or localized way. In 1970 several amendments were added to the Clean Air Act of 1963 which greatly expanded federal authority. All of this authority was actually transferred to the newly created Environmental Protection Agency, or EPA. The EPA, an agency under the jurisdiction of the U.S. Public Health Service, was backed by governmental funding and authority to control air pollution from both mobile and stationary sources, in private and public industries (Gerbec, et al., 1995). For example, after the CAA of 1970, the EPA began regulat ing industries that were shown to be the causes of most public pollution. It began requiring auto makers to create emissions traps, in the form of catalytic converters, to ensure pollutants that create smog would not be unleashed(Smith, 1993).. The EPA also targeted the oil refineries who sold gasoline, requiring them to sell purer gasoline to higher risked areas – along with banning many types of gasoline that are leaded. Finally, the manufacturing sites of coal had to alter their smokestacks and install â€Å"scrubbers† that would prevent pollutants from being released into the atmosphere (Cooper, 2000). By targeting these industries, the EPA hoped to greatly reduce the amount of air pollution near these industrial centers. However, the EPA did not stop with industrial regulation. The agency also gave responsibility to state governments to regulate and enforce pollution-reducing methods. In the 1970 Clean Air Act, the EPA was given greater authority over state govern ments to mandate four new mandatory regulation programs that were mainly focused with air pollution. These four programs included the National Ambient Air Quality Standards, or NAAQS, the State Implementation Plans, or SIPs, the New Source Performance Standards, or NSPS, and finally the National Emission Standards for Hazardous Air Pollutants, or NESHAPs. Therefore a system of localized authority was created. Each

Relationship Between The Catholic Church And Chivalry

Relationship Between The Catholic Church And Chivalry Except for the occasional knighting conferred by the Queen of England, actual knights in shining armor are basically extinct. Despite this, the principles that govern chivalry, a defining quality of knighthood, merit closer inspection to understand the relationship between chivalry and the Catholic Church and the sociological impact on the Medieval Era and on society today. In no order of precedence, I will explore the seven of the principles that help to define chivalry as practiced by Epic (definition) or Chivalric Heroes (definition), compare those principles to some of the basic principles of Christianity as practiced by the Catholic Church, and weigh the sociological impact on both the Medieval Era and Society today. The first of the seven principles is fair play. According to dictionary.com fair play is just and honorable treatment, action, or conduct (dictionary.com). It was an expected custom for knights to show chivalry. One way in which a knight demonstrated chivalry was to show fair play when participating in jousting. Under the rules of fairplay knights were expected to show self discipline, practice mercy and justice, and never attack an unarmed enemy. Because jousting, also known as tournament, was a very bloody sport which often resulted in death or dysentery, the Statue of Arms for Tournaments was established in 1292. In the article The Historical Sport of Jousting Dmedley states: they were required to abide by the ideas of chivalry and fair play reducing the abhorrence of the church considerably (Medley). The second principle for consideration is valor. Valor is typically identified with heroism. To further understand valor, it serves to understand who was considered a hero during medieval times. According Anniina Jokinen in the article Heroes of the Middle Ages Morton W. Bloomfield said: the original hero in early literature was probably based on the king who died for his people, the warrior who defeated the tribes enemiesà ¢Ã¢â€š ¬Ã‚ ¦these men were celebrated in song and story and presented again to the people so that they could participate in their magic (Jokinen). The custom of celebrating heros through song and story gave rise to what we know today as Epic Literature. According to Jokinen, Bloomsfield went on to say: Epic literature is a stately, solemn celebration of national life in the heroic age. Its heroes are simple men, versed in the activities of common lifeà ¢Ã¢â€š ¬Ã‚ ¦they are leaders not through class status or wealth or even birth, but through the excellencies of heart and mind and hands. Their motives are linked with the practical necessities of life (Jokinen). Men of valor were expected to inflict harm or pain as an act of revenge on behalf of those who were wronged or in defense of the weak and innocent. They were also expected to be courageous and not to abandon a friend, an ally, or a noble cause. Good examples of heroes who epitomized valor are Beowulf and Sir Gawain of Sir Gawain and the Green Knights. Beowulfs noble cause was the fight for the survival of his tribe or nation. Sir Gawains fight was not for a tribe or nation, but was a fight for his ideal. Though Beowulf knew that he might not return from his fight with the dragon, he did not let that fact sway him from his cause. Though Gawain was weary, he traveled through the land for a year in search of the green knight. Both men showed courage even though the stakes were high with little or no chance of overcoming them, both men worked toward the noble causes without retreating. Next, is the characteristic of honor. It was customary for a man of chivalry to keep his word since any departure from the principles of chivalry was uncharacteristic. Men of chivalry did not betray the trust of a friend. Honor is one of the cornerstones of chivalry. For example in Beowulf and in Sir Gawain and the Green Knight, they were both committed to keeping their words. Beowulf took on the challenge of helping King Hrothgar defend against the terror inflected by Grendel. Despite the challenges that Beowulf met, he remained committed to his word. The same is true for Sir Gawain. In his quest to keep his promise and meet the Green Knight a year and a day later, Sir Gawain, though there were temporary setbacks designed to stop him from showing up at the Green Chapel, remained committed to his word. The fourth characteristic of chivalry is Courtesy. Today, we use the word courtesy to characterize the expressions please, thank you, excuse me. We also use it to describe the practice of holding doors open and shaking hands. However, in the 14th Century the word courtesy was used to define much more. According to the article Important Ideas, Concepts and Terms in Sir Gawain and the Green Knight because the root of the word is court the word courtesy is deeper than its modern use as we know it. The article states: To be courteous means to uphold and demonstrate all of the high values and virtues of the Kings court. Therefore, courtesy means to be faithful, virtuous, a defender of truth, a fighter of the devil, and a resister of temptation (Masterworks of British Literature). Interestingly, most people today misinterpret courtly love. In this era, courtly love is commonly associated with basic gentlemenly overtures that are superficial compared to what courtly love represented in medi eval times. For example, today, a man is generally expected to fall in love with a woman who is not already engaged or married. The man will show his intentions by doing nice things for lady. Generally, sexual relations should not take place before the wedding, however, it is customary for the couple to show affection by a kiss or holding hands; some couples engage in sexual activities as part of their courtship. Paradoxically, in medieval times, and during the fourth period of chivalry the knights generally fell in love with ladies who were already taken. These knights showed courtesy by doing nice things for the lady, just as men do today, but these knights could at no time disgrace themselves, the women, or the king, by having any level of sexual contact. Sir Camelot is famously known for violating this principle of chivalry because he had sexual contact with Genevere. It can be surmised that courtesy as a characteristic of chivalry held a strong christian value as it showed the strength of the men to keep themselves from yielding to temptation. The fifth characteristic for evaluation is loyalty. In the poem Sir Gawain and the Green Knight, when the Green Knight showed up in King Arthurs court the Knights around the table were clearly scared. The Green Knight teased the Knights of the Round Table. In Beowulf, Grendel terrorized the King and his people. The teasing by the Green Knight and the terrorizing of Grendel represented tests of loyalty for the Knights. One of the first expectations of loyalty was loyalty to God, the Sovereign Kingdom, and the Code of chivalry. Both Beowulf and Sir Gawain epitomized loyalty when they rose to defend the Sovereignty of the Kingdom. Next, men of chivalry were expected to be generous and to show hospitality to strangers. Lord Bertilak showed hospitality to Sir Gawain. Of course, Sir Gawain did not recognize Lord Bertilak as the Green Knight. So for all intents and purposes, Gawain believed that he was being treated with generosity and kindness because to Lord Bertilak, Sir Gawain was a stranger. Incidentally, the practice to generosity and hospitality to strangers are common to chivalry and to Christianity. The seventh and final principle of chivalry for consideration is Piety. Men of chivalry were grounded in their faith, dependant on God, the saints, and Mary, and opposed the infidel. The Code of Chivalry is a fusion of Christian values and Military practices. Christian values are interwoven in the fiber of chivalry. For example, jousting or tournament was not acceptable until the sport adhered to the Statue of Arms of Tournament which allowed it to garner the favor of the Catholic Church. As with chivalry, the spiritual principles of the Catholic Church are based on their belief in God, the Virgin Mary, and the Saints. As a result of their spiritual beliefs the Catholic Church has a strong core of moral values. The value system include the principles of human dignity, respect for human life, association, participation, protecting the poor and needy, solidarity, human equality, common good, stewardship, and subsidiary. Basically all of the moral principles are self explanatory. What may not be so obvious is how some of the principles work in concert for the common good of humanity. For example, the principles of solidarity and subsidiary provide a balance in working for the common good of all the people. Solidarity works best when a higher authority is in control as in the case of law. If every man in a society was left to police himself, undoubtedly that society would be chaotic. However, my having a central law enforcement agency, the common good of that society is taken care of by the higher authority. In the case of subsidiary, the people of the society are generally left to make the decisions that would best serve that community. For example, it is the people of a community who generally name a street within their community. Therefore solidarity and subsidiary work to bring about the common good. Another set of Catholic values that work together are those of human dignity, respect for human life, and human equality. While human dignity and human life are derivative of Godly principles that give rights to individuals that humanity should not violate, the principle of human equality are of the laws of the land that should be available to every citizen of the nation. As with the first set of principles mentioned, these three principles work to ensure the overall common good of humanity. For these reasons the Catholic Church is against social issues such as abortion, euthanasia, and the death penalty. The principles of association and participation recognize individuality while seeking to promote unity. The principle of association holds that an individual is not only sacred but also social and as such is better off relating to others than being alone. The principle of participation requires that all people take active roles in shaping the socio economic, political and cultural values in their community. Indisputably, there are more similarities between the Catholic Faith and chivalry than there are differences. The similarities are as prominent as they are because the Catholic Church played an important role in the development of chivalry. The role of the Catholic Church is very apparent in the the first two of the four periods of chivalry. The major differences between the Catholic Church and chivalry are in the latter periods of chivalry in which there was a clear departure from many of the ideals of the Catholic Faith. The four periods of chivalry are time of The Crusades , of Military Orders, of Secular Chivalry, and of Court Chivalry. The first period of chivalry, The Crusades, lasted from 1095 to 1099. During this crusade, Knights rescued holy places from Moslem dominiation in Palestine. In exchange for this protection, the church took care of knights by conferring on them special privileges which protected them from the law of the land. The second period is the time of Military Orders which dates from 1147-1149. Out of the necessity of continual protection of the Holy City, knights vowed perpetual warfare against the infidels. Religious and spiritual laws were fused and chivalry reached the level of its highest acclaims. The third period was the era associated with the practice of Secular Chivalry and lasted from 1189 to 1192. In this period chivalry lost its religious ideals and became more of a romantic overture. It is said that Literature contributed to the decay of chivalry. Knights were mo re concerned with the love of a woman than with the love for country or for God. The fourth and final period is that of Court Chivalry . In this final period which lasted from 1202 through 1204, chivalry became a court service. Knights were no longer crusaders, they became courtiers and instead of making oaths in chapels and on crosses, they now made vows on emblemic birds. Chivalry was reduced to a futile pasttime and an empty promise, a staunch departure from the principles that were foundational to the order of chivalry. Undeniably, there is as much irony in the practices of Chivalry and of the Catholic Church as there is in any other practice. The irony of chivalry is woven in some of the very principles that guided Knights. For example, Knights were expected to protect the weak so of course, the peasants were protected. Wrong! The principles of chivalry did not extend to the common people known as peasants. In the Chivalric Code the word weak was a description ascribed to the women and children of nobility not the poor and needy as many might be inclined to believe. As a matter of fact, the relationship between Knights and peasants was that of servant and master or predator and prey. Knights often slaughtered peasant men by the hundreds and young peasant girls were often sexually exploited by Knights. In an article entitled Chivalry during the Reign of King Edward III Rich Larson writes: Between the warlike, religious, and courteous aspects of chivalry, there were many inherent contradictions within the ideals of chivalry. Even though these contradictions existed, it seems as if they were often ignored. à ¢Ã¢â€š ¬Ã‚ ¦For example, in his description of the siege of La Reole, Froissart writes that the towns-people suffered greatly, but he does not speak negatively of those attacking the town (Froissart 49). In this, just as in other descriptions of Froissart, the ferocity of warfare and any negative effects it may have do not seem to be attributed to chivalry, even when it was chivalric knights who were contributing to the death and destruction that took place (Larson). The peasants during medieval times were enslaved not only by virtue of their class, but also by virtue of the crippling fear caused by the violence that surrounded them. In exchange for protection, for a very long time, peasants accepted the exploitation of the Lords and of the Knights. Accordingly to the article The Barbarian West on Honolulu.hawaii.edu which states: It is important to understand why people would enter into this kind of unequal relationship. The answer is simple only by giving into the demands of the military elite, only by agreeing to this exploitative reciprocal agreement, could a defenseless peasant hope to survive the violence of this age. To survive, to achieve some kind of stability, millions of people suffered repression, impoverishment and exploitation (honolulu.hawaii.edu). Like the Code of Chivalry, the Catholic Church was also oxymoronic in its virtues. Peasants, the poorest of people, were expected to pay taxes to the church; the tax was called a tithe equal to 10% of their earnings and they also worked the land owned by the church. It seems that the church should be giving to and providing for the needs of the peasants, not taking what little they had from them. Another criticism of the role of the Church during Medieval Times was that the church condoned bloodshed. Heretics and infidels were killed to protect the teaching and the property of the church. Though the end does not justify the means, it was believed that the killing was for the greater good. During Medieval Times the church offered forgiveness of sins and protection to knights for killing in their line of duty to protect the Church and State. Given the irony in the Chivalric Code and in the Catholic Church, It is hard to ignore the sociological impact of both of these establishments during the Medieval Period and how the effects of those principles helped to shape our society today. Both are in some way responsible for the creation and or, the enforcement of the Class System and Slavery, Torture, Unfair Labor Practices, Taxation, and Civil Wars. The Feudal System or the Class System which included military, social, and political power structures had five divisions of people; there were Kings, Bishops, Barons, Lords, and Peasants. Peasants were the farmers of the land and boons that did other manual workers. While the overt practice of the Class System is taboo, there are still remnants of the Feudal System in Germany. The similarities of the Feudal System and the Caste System which exists in places such as in India and in Haiti are remarkably close. Though in todays societies there are laws that abate many of the injustic es of human rights such as unfair labor practices and excessive taxation, and limit the practices of inhumane treatment such as torture, there are many who are still considered second class citizens, many who are overtaxed without proper represented, and just as many who experience torture in more sophisticated manners and by more structured means. In summation, one could argue that the contributions of the Knights under the Chivalric Code and those of the Catholic Church based on its christian values are substantial enough to overlook the misdeeds since the bad practices are no longer condone. Equally, one could argue that because the Catholic Church supported chivalry, and because the Catholic Church is responsible for mass murder by approving the Crusades during which times many lives were lost, and because the church had unfair labor practices by requiring the peasants to pay taxes in the form of tithes, just as the Vassals required them to do, that the church is hypocritical in its teachings that call for respect and protection of human life. It is true that understanding history is important in understanding the present. Undoubtedly, the principles of the Catholic Church and of Chilvary may be compared to a coin, each having two sides. Which ever side of the coin one may examine, one thing is clear, all things considered, in every good there is some bad and in every dark cloud is a silver lining, therefore it is important for one to know what is important to him or her and find a way to keep a balanced perspective.

Wasteful :: essays research papers

Wasteful Repetition 12 years of our lives are spent learning the basics, 12 years. Yet, after those twelve years of near continuos education, colleges require us to relearn what we already know, knowledge that may be irrelevant to our chosen major. Core Curriulumn is a waste of time and money. Each year for twelve years we wake up on a day around August in order to attend required schooling. We learn english, mathematics, sciences, health, and history. School becomes our lives, almost a career that lasts approximately 120 months. For those 120 months we are taught the same subjects, not a year goes by that we were not required to take an English, Math, Science, and History courses. After successfully completing our â€Å"lower learning† studies and recieving our much awaited diplomas almost two thirds of us go on to college.1 Upon arrival at these institutions of higher learning we come to realize that our â€Å"Basic† learning is not over and we must extend our knowledge of said material before we can move on to things that more directly concern our majors. Colleges are asking us, rather, telling us to relearn the knowledge we, for the most part, already pocess. There are several things we lose when we agree to, or rather are required to retake the basics in college. Most likely foremost of what we lose,in students minds ,espeacially in todays society, is money. We spend outrageous sums of money to attend college for 4 years, individually the cost of tuition possibly ranges between 50,000 to 100,000.As a whole the nation spends in excess of $175 billion each year.2 Money wasted on learning the same material we were educated in for 12 years of our lives. Money that many of us do not have and if we are not fortunate enough to recieve a scholarship or any type, we must look towards students loans. By definition a loan is something that is lent on condition of being returned.3 Zachary Karabell,author of the book What’s College For?, wrote that: In the 1990’s alone, the average debt burden for a   Ã‚  Ã‚  Ã‚  Ã‚  college student grew from 8,200 to 18,800. Given that   Ã‚  Ã‚  Ã‚  Ã‚  these students, once they graduate, tend to earn   Ã‚  Ã‚  Ã‚  Ã‚  between $20,000 and $30,000 a year, those debts are   Ã‚  Ã‚  Ã‚  Ã‚  heavy, and some schools have begun efforts to limit   Ã‚  Ã‚  Ã‚  Ã‚  borrowing by students. In addition to loans,   Ã‚  Ã‚  Ã‚  Ã‚  three-quarters of all students work part time during   Ã‚  Ã‚  Ã‚  Ã‚  the school yea, and more than 15 percent work   Ã‚  Ã‚  Ã‚  Ã‚  full-time.* For their money, for their investment, for   Ã‚  Ã‚  Ã‚  Ã‚  the hours they work in order to pay for their classes,   Ã‚  Ã‚  Ã‚  Ã‚  these students expect to be taught something they don’t   Ã‚  Ã‚  Ã‚  Ã‚  already know. They expect to learn. And at the end,

Critically evaluate the impact behaviourism has had on psychology Essay

Critically evaluate the impact behaviourism has had on psychology  For hundreds of years philosophers speculated about â€Å"the mind† and in around the 1880’s the popular method of psychology dealt only with the conscious mind. The experiments carried out at this time were criticised for their lack of objectivity and by the 1920’s a new brand of psychology emerged in the form of behaviourism. Psychology became a recognised discipline in around 1897 when Wilhelm Wundt started the first psychology lab in Germany. Wundt, along with others, attempted to investigate the mind through introspection, and observed their own conscious mental processes. While analysing their thoughts, images and feelings, they recorded and measured their results under controlled conditions and aimed to sort conscious thought into its basic elements as a chemist would with a chemical compound. This theory was known as structuralism. A particular critic of this method, in the early 1920’s was John Broadus Watson (1878-1958), who felt that introspection was subjective and therefore erroneous. He also felt the only way forward was by using methods that could be observed by more that just one person and this could be achieved by studying behaviour. He wrote that â€Å"Behaviourism claims that ‘consciousness’ is neither a definable nor a usable concept; that it is merely another word for the ‘soul’ of more ancient times.† (Watson 1924) Behaviourist theories of learning are often called â€Å"stimulus-response† (S-R), and though only classical conditioning fits the S-R model, the other major form, operant conditioning, is often included under the same heading, though it is significantly different. Classical conditioning is triggered involuntarily by a particular environmental stimulus. This means that a stimulus that does not normally produce a particular response can be paired with another stimulus that does, eventually resulting in both stimuli inducing the same effect, even when used separately. A good example of this was shown in the first experiments by Ivan Petrovich Pavlov (1849-1936) in the early 20th Century. During other research work he noticed that dogs often salivated before they were given any food, and even when they looked at food. This sometimes went as far as the dog salivating when he heard the approaching footsteps of the laboratory assistant bringing the food. Pavlovs observations used food as an unconditional stimulus and the salivating was an unconditioned response, an automatic reflex response. During the experiment a bell was paired with the food and referred to as a conditioned stimulus. It was neutral to begin with and got no response from the dog except for a passing interest. After the bell and food had been paired for some time the dog began to salivate at the sound of the bell and before the food was shown. The salivation was then a conditioned response as it was produced by the bell (conditioned stimulus). In 1920 Watson took this work further when he attempted a similar study on an 11month old boy called Albert. He used a rat as the original stimulus, and Albert showed no fear of it. He paired the rat with an unconditioned stimulus, which in this case was a hammer hitting a four foot steel bar close to Alberts head, which frightened the child and made him cry. After about 50 pairings Albert was afraid of the rat which had by this time become the conditioned stimulus. The conditioned response (fear) spontaneously transferred to other items which included a white rabbit, a sealskin coat, cotton wool, Watsons hair and a Santa mask. Though it was less severe, the conditioning persisted even after a month and Albert’s mother removed him from the hospital.