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This article examines equipment replacement under the asset depreciation range system and under the accelerated cost recovery system. The main features of both are reviewed and a small and large business replacement scenario is simulated under each. Results indicate that the new approach does not yield faster replacement in all cases. [ABSTRACT FROM AUTHOR]

Our research confirms that book values possess significant ability to explain the acquisition values of oil and gas firms. It also indicates that RRA information provides incremental information over book values in determining acquisition values. However, when analyst information is more current than competing information, analysts' appraisals provide a significant incremental contribution beyond the explanatory ability of book values and reserve recognition data. Current analysts' information provides a stronger basis for predicting acquisition values than any model supplementing analysts' appraisals with additional information. This implies that current analysts' information captures all information sources and is consistent with the findings of "analysts superiority" in the extensive literature on earnings forecasts. [ABSTRACT FROM AUTHOR]

In this study we examine the accuracy and, bias in the accounting estimate of claim, loss reserves of 197 property-casualty insurers (985 insurer-years) during 1979-83. We also test for differences in accuracy and bias as a function of the size of the insurer's auditing firm. Claim loss reserves of property-casualty insurers are used because insurers subsequently disclose estimation error in the originally reported reserves, based on the actual claim losses paid. The accuracy of a reported reserve is defined as the absolute magnitude of the difference between the reported reserve and its ex-post realized value, while bias is defined as the signed difference between the reported reserve and its ex post realized value. Both accuracy and bias are evaluated relative to total assets and in materiality units (a materiality unit is 1.6 × [the, greater of assets or net premiums] ⅔ land errors that exceed one materiality unit are considered material). We demonstrate that claim loss reserve estimation errors in audited accounting information exceed materiality in over 90% of our sample. For errors that exceed, materiality, the average absolute error, determined with the benefit of hindsight, is over 17 times materiality and over 8% of assets. The magnitude of the error reflects both audit judgment and the high level of uncertainty inherent in the estimate. [ABSTRACT FROM AUTHOR]

This paper investigates the information content of two accrual variables which have been central to this debate: these are the current accruals variable, CA, and the noncurrent accruals variable, NA. Each is the aggregate of several accrual items listed separately in financial statements. The current accruals variable is defined here as cash from operations less working capital from operations, while the noncurrent accruals variable is working capital from operations less earnings. The sum of the current and noncurrent accruals variables is referred to as the total accruals variable, TA. This study investigates the relative information content of total accruals and cash from operations. It also considers separately the relative information content of noncurrent accruals and working capital from operations and of current accruals and cash from operations. None of the tests here considers jointly the relative information content of cash from operations, current accruals, and noncurrent accruals. This study differs from previous work by considering the implications of various hypotheses about information content of accruals on the joint behavior of stock returns at two information releases—the Wall Street Journal earnings announcement and the date the annual report arrives at the SEC. A model is introduced which structures the way information about the accrual and cash components of earnings is extracted from earnings when they are published in the Wall Street Journal and links the association between this component information and stock returns at the earnings announcement to the association between stock returns and component information released at a later date when the annual report arrives at the SEC. By restricting the parameters in this model, it is possible to test for the incremental information content of accruals over funds and for the incremental information content of funds over earnings. This study finds that the cash and total accruals... [ABSTRACT FROM AUTHOR]

This study investigates the relations between components of accounting earnings and stock returns by testing two hypotheses. The first is whether six commonly reported components of earnings provide additional information that is not contained in the earnings figure. The second is whether the additional information is associated with the time-series properties of the components. In addition, other results regarding the components' relations with returns and the components' time-series properties are discussed. [ABSTRACT FROM AUTHOR]

This paper conducts a capital market analysis of the oil and gas accounting method, "Reserve Recognition Accounting" (RRA). The Securities and Exchange Commission (SEC) first proposed RRA in Accounting Series Release No. 253 (ASR 253), issued in August 1978. In ASR 253, the Commission noted that "development of an accounting method based on a valuation of proved oil and gas reserves would provide significant useful information." To this end, the Commission required oil and gas firms to disclose RRA data as a supplementary item to their financial statements. [ABSTRACT FROM AUTHOR]

This paper shows that the spread between the 3-month Treasury bill and the federal funds rate has significant predictive power for the future change in the federal funds rate during the volatile nonborrowed reserves operating regime, but it has less and no predictive power during the borrowed reserves regime and the federal funds targeting regime, respectively. These findings suggest that Treasury bill rates forecast future federal funds rates most accurately when the Federal Reserve follows a well-defined rule that does not smooth the impact of shocks on the federal funds rate. [ABSTRACT FROM AUTHOR]

This paper investigates the shortcomings of the AISC 360–22 and Eurocode 3–22 provisions for calculating the plateau and lateral-torsional buckling (LTB) flexural resistance of thin-web singly-symmetric steel I-section members with the larger flange in compression. In addition, the paper proposes and evaluates corresponding newly recommended AISC 360 procedures, which eliminate the tension flange yielding (TFY) limit state check and implement a more mechanistically-based solution accounting for the inelastic reserve strength associated with flexural yielding in tension. The recommended procedures incorporate other recently proposed improvements to AISC 360, solving substantive LTB overprediction problems for certain types of built-up I-section members. The results from six large-scale experimental tests, associated finite element analysis (FEA) simulations, and parametric FEA simulation studies are considered. The results demonstrate improved accuracy and substantial gains in the predicted strengths by the recommended procedures relative to the AISC 360–22 and Eurocode 3–22 calculations for a significant range of geometries and loadings. In addition, the recommended methods address LTB overprediction problems exhibited by AISC 360–22 for a limited range of the member types studied. • Experimental evidence shows current flexure design codes can be overly conservative. • Accounting for tensile yield in flexure can result in substantial strength gains. • Codes do not calculate the true stain distribution for larger flanges in compression. • Experimental evidence shows current flexure design codes can overpredict capacity. • Improvements can be made to the design codes through simple modification. [ABSTRACT FROM AUTHOR]

Countries are showing interest in accumulating foreign reserves to ensure macroeconomic stability. There has been some debate whether to beef up the level of nations' foreign reserves or make it lower, especially in developing countries like Nigeria. Whereas some argue that the foreign reserve determines the country's rating in the global market, others hold opposing views. In this light, this paper examined the interactive influence of foreign reserve (FRS) on some macroeconomic variables such as: economic size (GDP); trade; level of capital inflows (KFL); exchange rate (EXR); and inflation. Analyzing secondary data from CBN statistical bulletins (1970–2007), the econometric results obtained from cointegration test, vector error correction (VEC) within the framework of autoregressive distributed lags (ARDL) revealed the following: (1) existence of a long-run relationship between the variables and two cointegrating equations; (2) possibility of convergence of the variables from the short run to the long run with slow speed of adjustment. It is thus the conclusion of this paper that accumulation of large foreign reserves is not very productive in Nigeria due to its inability to induce some of the macroeconomic variables. [ABSTRACT FROM AUTHOR]

Presents a methodology that analyzes alter ego to find hidden assets in family law matters. Characteristics of a parent company used to determine alter ego; Characteristics of informal alter ego; Challenges in alter ego investigation.

The article starts with Haslag's (1998) model of the bank's demand for reserves and reformulates it with a cash-in-advance approach for both financial intermediary and consumer. This gives a demand for a base of cash plus reserves that is not sensitive to who gets the inflation tax transfer. It extends the model to formulate a demand for demand deposits, yielding an Mi-type demand, and then includes exchange credit, yielding an M2-type demand. Based on the comparative statics of the model, it provides an interpretation of the evidence on monetary aggregates. This explanation relies on the nominal interest as well as technology factors of the banking sector. [ABSTRACT FROM AUTHOR]

The article examines the problem of the coexistence of reserve currency and substitute dollar reserves (SDR) in the United States. It is explained that there are two important considerations regarding SDRs, which the coexistence problem does not acknowledge. The first consideration is that no attention is given to the question of just how large the amount of SDRs created ought to be. Another consideration is the "link" proposal, which is the idea to have new SDR allocations placed first in the hands of developing countries.

The article focuses on comparative merits of fixed exchange rates as compared to flexible exchange rates. It suggests that with a constant price level, equilibrium between the markets is ensured because of the interdependence of markets and the operation of budget constraints. It states that the margin of safety can be significantly increased with reserve pools that are at the disposal of a nation more or less automatically. It suggests that the stability of the world economy on the domestic economy can be imposed through short-run fixity of the parity.

The general absence of legal reserve requirements upon the reserves of non-U.S. banks offering dollar-denominated deposit facilities (hereafter Eurobanks) provides a unique opportunity for analysis of reserve determination by a fractional-reserve financial intermediary. This paper presents evidence that the reserve ratio in the Euro-dollar system is low and falling and is in fact determined by behavior which is consistent with the hypothesis that Euro-bank dollar deposits in U.S. commercial banks (excluding loans to home offices) are held as precautionary reserves. The demand for such loans to home offices largely determines their level. Since the theory of precautionary balances held by commercial banks is consistent only with the profit maximization principle of commercial banks' asset management, where commercial banks' responses to market forces determines portfolio behavior, we shall be concerned here primarily with the determination of Euro-banks demand deposit claims on U.S. commercial banks, exclusive of loans to home offices. Evidence reported below does in fact suggest that the behavior of liabilities to foreign branches of U.S. banks is not consistent with the profit maximization principle. [ABSTRACT FROM AUTHOR]

Money supply control and behavior are importantly influenced by the institutional and legal framework in which money is produced. An important change in that framework was activated on September 12, 1968 when drastically revised procedures for calculating and meeting the Federal Reserve's reserve requirement (Regulation D) were put into effect. The implications of these rule changes have been examined elsewhere; it is the more limited objective of this paper to examine the evidence for what I call the vault cash game. Under the new rules of 1968, reserves eligible for meeting the current week's reserve requirement consist of the current week's average daily deposits at the Fed plus the average daily vault cash held two weeks ago. This provision inadvertently introduces a source of potential reserve adjustment not present under the earlier rules where vault cash was not lagged in the reserve calculation. Although shifting reserves from vault cash to deposits at the Fed does not affect the level of reserves (R), it does affect the volume of reserves eligible for meeting the reserve requirement in the current period (R[sup a]). This occurs because vault cash in the current period is not counted toward the current reserve requirement while deposits at the Fed are. The purpose of the 1968 changes in Regulation D was to improve the reserve adjustment mechanism, and thereby smooth the behavior of the money markets where reserves are traded, and improve the Federal Reserve's control over the relation between reserves and deposits, and hence over the money supply. The particular contribution of lagging vault cash was that its fairly regular monthly cycle then tended to offset the similar monthly cycle in Federal Reserve Float. The vault cash game, however, tends to weaken the Federal Reserve's control over reserves (R[sup a]), hence over the money mechanism. [ABSTRACT FROM AUTHOR]

This paper analyzes the role of the Federal Reserve to money markets and bank management regarding their reserves. The author outlines three goals: to test the applicability of a model that views bank borrowing from the Reserve's discount window as a buffer to short-run reserve flows; to examine how the price of Federal Funds is influenced by the eight large money market institutions; and to investigate the existence of structural changes in the market. Weekly data from 1960-1968 is used throughout the paper.

The analysis of the graduated reserve proposal, the present city-country bank classification system and the uniform reserve plan reveals that none of them would have made control of total demand deposits or the money supply by the Federal Reserve more difficult. The absence of a Federally controlled, single reserve ratio applied to the demand deposits of non-member banks has resulted in a few fairly large errors of prediction, but these may be a function of discontinuous reporting by non-member banks rather than their non-control. The analysis of reserves on time deposits shows that, for shifts in time deposits to be neutralized, the required reserve ratio should be either zero or equal to that on demand deposits, depending upon what one wants to neutralize. But since the effects of changes in time deposits appears predictable, the ratio can be whatever is desired for reasons other than monetary control.
The question of which required reserve plan is optimal thus comes down to the question of equity among institutions. The analysis shows that the present system and the graduated reserve plan, which impose higher reserves against larger banks, reinforce the bias against larger banks that already exists. The different Federal and state reserve requirements impose a bias against member country banks. And reserves required against time deposits represents a bias against commercial banks. [ABSTRACT FROM AUTHOR]

The authors respond to comments about their article "The Determinants of Member Bank Borrowing: An Econometric Study," concerning perceived flaws in the empirical research in the article. They discuss concerns about their use of unborrowed reserves and their inclusion as independent variables in their regression equations and admit that their original explanation of the role that unborrowed reserves plays is incomplete but still necessary. They state that criticisms concerning seasonal-adjustment procedures, the justification of lagged borrowings, and the failure to take account of reserve requirement changes have no merit.

The arrangements for international trade and payments embodied in the Bretton Woods agreements reflected two aspects of the experience of the interwar period. On the one hand, many economists felt that a domestic policy aimed at full employment, could at times, be inconsistent with fixed exchange rates and a liberal trade policy. On the other hand, the attempts of individual countries to free domestic policy from the constraints of the balance of payments, by unilateral devaluations, or by protectionist devices, led to retaliation, competitive devaluations, and competitive increases in trade restrictions, which disrupted international trade. [ABSTRACT FROM AUTHOR]

The article examines the impact of monetary policy on commercial bank demand deposits, focusing on the time lag involved between changes in unborrowed bank reserves and changes in demand deposits. A close relationship between changes in bank reserves and earning assets is present from 1954 to 1963. The author tests if changes in demand deposits of the banking system are the result of the change in aggregate unborrowed reserves during the same time period. Virtually no lag in the response of banks to changes in their unborrowed reserves was observed.

The article discusses how anti-recessionary policies involving low interest rates might put pressure on the foreign reserve position of the United States by bringing about a conversion of foreign-held dollar balances in gold. The article also examines the influence of monetary and fiscal measures on current account. The article's general conclusion is that those movements in foreign holdings between gold and dollar assets throughout the years, which could be attributed to interest-rate changes, account for only a small fraction of total foreign dollar holdings.

The article provides an outlook for federal reserve and treasury policy in the U.S. for 1959. The author discusses the economic trends of 1957, citing the large capital investment boom and the inflationary pressures of that year. The author discusses the state of credit policy in 1959. He examines the decline in yields which he states have been in a fast decline since 1953-54. The author states that during the increase in business in 1959, fiscal policy had not been used to any important magnitude.

The article presents comments of the author on the paper "A New Dimension to Breakeven Analysis," by Rene P. Manes that was published in Spring 1966 issue of the periodical "Journal of Accounting Research." The author states that Manes attempted to integrate breakeven analysis with the techniques used in capital budgeting. He explains that Manes' example shows how to calculate the total net present value and the equivalent annual profit of a machine at various levels of output. He also states that Manes' example illustrates how each of the following may be incorporated into the analysis changes in the discount factor, changes in the method used to calculate depreciation for tax purposes, a steady rate of change in sales volume, and a steady rate of change in prices.

The article investigates the feasibility of measuring current cost depreciation. The authors discusses the basis of the minimum variance test and the consideration of the concept of fair market value. The authors state that the results of this study it can be concluded that historical costs are more objective but are not univocal or verifiable and the current values are probably no worse with regard to these latter two characteristics. The article also discusses the disadvantages of an alternative valuation. [ABSTRACT FROM AUTHOR]

The article examines the relationship between double-declining-balance depreciation and sum-of-the-years-digits depreciation. The author discusses the determination of infinity values and the inclusion of the taxable payer. The author states that the depreciation methods can be classified as either biased or neutral with respect to asset lives. The article states that a method is biased if it permits more rapid depreciation for assets with some useful lives than for others, and neutral if it does not. The article also discusses the consideration of the accumulated depreciation. [ABSTRACT FROM AUTHOR]

This article discusses the correlation between accelerated depreciation and deferred tax allocation. The author states that firms which elect to use accelerated depreciation for tax purposes while using straight-line for reporting purposes have only one approved method for recording the difference between book tax expense and the tax liability. He explains that this method relies on a deferred credit account in which the difference between the tax expense and the actual tax paid is recorded. The article says that the reported net income resulting from this procedure is the same as it would have been if straight-line depreciation were taken for tax purposes.

This article discusses the concept of least squares allocation model. The authors explain that the model offers one approach to the unification of a broad class of allocation problems and provides a basis for summarizing, comparing, and evaluating diverse allocation schemes. They state that first, the model formally unifies a number of accounting problems so that methods that have been proposed to account for joint product costs, depreciation and installments sales, share a common allocation model. The article says that this unification of different accounting problems gives insight into their comparative nature.

The article informs that accounting needs a framework within which alternative proposals can be evaluated. The author states that the dispersion criterion is particularly useful since it conforms to at least one use of the term objectivity, i.e., verifiability. He explains that the displacement criterion cannot be applied until the attribute that is being measured is clearly specified and that both the cost and the timeliness criteria are sufficiently familiar to require no comment. The article says that the empirical data reported for automobiles provide evidence that direct reference to available market price indicators results in less disperse measures than those now obtained under "generally accepted accounting principles."

The article evaluates the theory of depreciation argued by O.G. Ladelle. Ladelle derived a general formula to determine the annual amount of depreciation chargeable against an asset's life provided the expectations that are held during the period of purchase are fulfilled. He also claims that there is no effect on the annual depreciation charges determined at the point of purchase when the expectations are not fulfilled. This was done through the theory that a specific asset was purchased by multiple persons in a joint venture and each person has the right to the net services of that asset for a single year.

After declining steadily from 1974 to 1994, the U.S. dollar share of international currency holdings has been rising dramatically over the past few years, making the dollar the primary vehicle for liquidity in global markets. This article will argue that dollar usage is founded on the overwhelming military and economic power of the United States, making it unlikely that there will soon be a flight from the dollar. [ABSTRACT FROM AUTHOR]

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Argues that reserve requirement ratio changes should not be viewed simply as a tool for monetary policy or as a tool used to directly alter the liquidity of financial institutions in the U.S. Criticism of the notion that higher reserve requirements lead to greater safety and lower default risk for depository institutions; Evidence on the 1992 reserve requirement ration changes and perceived bank safety; Relationship between reserve requirement changes and monetary policy.

Presents charts depicting international transactions of the U.S. Statistics on foreign trade; Data on the reserve assets; Liabilities to other countries.

Presents charts on financial statistics in the U.S. Tables depicting the federal reserve and money stock; Absorption of reserve funds; Statistics on interest rates.

Presents domestic financial statistics compiled by the United States Federal Reserve as of October 2000. Reserves, money stock and debt measures; Reserves of depository institutions and reserve bank credit; Federal Reserve Bank interest rates; Reserves and borrowings; Federal Reserve open market transactions; Reserve requirements of depository institutions.

Focuses on the controversy concerning the implementation of the fractional reserve banking in Austria. Advantages and disadvantages of fractional reserve banking; Reasons behind the rejection of fractional reserve banking; Implications of the fractional reserve banking for business enterprises.

Presents statistics pertaining to domestic finance in the United States as of February 2000. Includes reserves, money stock and debt measures; Reserves of depository institutions and Reserve Bank credit; Federal Reserve Bank interest rates.