Accounting For Financial Instruments For Securities and Investment Companies and Banking Institutions - Term Paper Example

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Accounting For Financial Instruments For Securities and Investment Companies and Banking Institutions

In particular, the use of the SFAS 157 accounting policy differs in its application for the banking industry and investment companies. Recent bouts of credit crises have ended in lasting implications in which financial instruments have stringent regulations. International accounting standards demand that certain procedures get disclosure in the accounting and valuation of financial instruments and securities. The standards are highly specific on fair value measurements for different classes of financial instruments. The objective of this report is to debate the differences in accounting for financial instruments and securities in investment companies and banking corporations with regard to SFAS 175 (ASC 820-20). Advancements in economic perspectives are responsible for the unprecedented increase in the use of financial instruments. Therefore, accounting regulations bodies have had to come up with policy guidelines to keep pace with these changes. Policy changes in regulation of financial instruments will continue to affect the industry for many years to come. An intriguing and somewhat challenging issue pertaining to the use of financial instruments and securities is the difference in their usage across a range of industries. SFAS 157, on fair value measurements, seeks to fill this important role and resolve any obstructing issues. ...Show more

Summary

Advancements in economic perspectives are responsible for the unprecedented increase in the use of financial instruments. Therefore, accounting regulations bodies have had to come up with policy guidelines to keep pace with these changes…
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