Английский язык для экономистов - Малюга Е.Н.
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Instead of holding assets and liabilities at historic cost, and depreciating assets by a set amount each year, they maintain that companies should in future be required to mark them to market at the end of each reporting period. Big swings in values will then be passed quickly through the profit-and-loss account or through the shareholders' equity. Inevitably, profits will become far more volatile.
Derivative Issues
Using market value for all assets and liabilities will make some difference to how fixed assets are valued. But by far the largest impact of "fair-value accounting," as the use of market value is called, will be to bring the volatility of financial markets into companies' results. Fair-value accounting, therefore, will affect banks and insurance companies far more than others, because they have the highest proportion of financial assets.
The slow march to market value is probably unstoppable in the long run, because so many accountants now believe that it is the most intellectually valid way to value assets. But nobody knows what will be the consequences of the volatility that would inevitably follow. In the worst case, large numbers of investors could be frightened away from equities.
In future, accounts are likely to become more volatile, more complex and more subjective. Overall, standard-setters admit that people who are 106
Английский ЯЗЫК ДЛЯ экономистов
not trained in how to read them will have to rely more than ever on experts. But to help readers cope with the complexity of fair value, they intend to introduce a new way of showing companies' income — instead of a single column with turnover and so on, the profit-and-loss statement will be presented in the form of a matrix, in three columns. One column will show gains and losses from changes in fair value, another would show old-fashioned costs and revenues, and the last would show the total of the two.
C.2. Decide whether these statements are True (T) or False (F).
1. The fact that companies confessed having lied in their reported accounts led to accounting reform.
2. Accounting exactitude always collapses during times of economic strain.
3. Special-purpose entities allow companies to reveal hundreds of millions of dollars of liabilities.
4. As pension schemes of some companies are in deficit they are recording losses.
5. Profits will become more volatile because of big swings in values.
6. In the long run the march to market value is inevitable.
D. Vocabulary
D.I. Learn the vocabulary and make up your own sentences, volatile (adj) — of a quickly changing, undependable nature, especially easily becoming dangerous
keep up with (phr v) — to prevent something from falling to a lower level
choke off (phr v) — to stop, get rid of, or prevent market value — how much people would be willing to pay for something, rather than a value calculated as a summary of costs
historic cost — the price paid for an asset when it was bought, rather than what it is worth now
shareholder's equity — the difference between the value of a company's assets and its liabilities other than those to shareholders. In principle, this what the company would be worth to shareholders if it stopped trading, its assets were sold and its debts paid
swing (v) — to change from one level, rate, or position to another so that a situation is the opposite of what it was before
arrive at (phr v) — to reach, especially after much effort or thought; come to Unit 6. Accounting
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pro-forma (adj) — pro-forma figures, results, etc. which are not complete or final, but show what is expected to happen
reconcile (v) — to make two accounts or statements agree or add up to the same total
off-balance sheet — off-balance sheet items, activities, debts, etc. are ones that a company does not show on its balance sheet, but in notes added to it
stock option — an option to buy shares at a particular price. The pay of a company's top managers often includes stock options in the company they work for
litigious (adj) — too willing to take complaints to a court of law book value — the value of an asset or group of assets in a company's accounts, not necessarily the amount they could be sold for fiddle (v) — to prepare (accounts) dishonestly to one's own advantage profit-and-loss account — a financial statement showing the financial results of a company's normal activities for a particular period of time, usually the financial year
fair value — the value of a business's assets based on the amount of money that could probably be obtained if they were sold
D.2. Give English equivalents to the following words and expressions:
¦ мошенничать, совершать махинации;
¦ первоначальная стоимость актива;
¦ обоснованная стоимость;
¦ неустойчивый;
¦ балансовая стоимость активов;
¦ соблюдать, придерживаться;
¦ счет прибылей и убытков;
¦ достигать;
¦ акционерный капитал;
¦ устранить;
¦ предварительный;
