Value Of Liabilities Research Articles

Long term projection of the demographic and financial evolution of the parliamentary pension scheme of Uganda

We study the Parliamentary Pension Scheme of Uganda, a hybrid cash balance scheme which is contributory. It has two categories of members, the staff of the Parliamentary Commission and the Members of Parliament. A long term projection of the scheme’s demographic and financial evolution is done to assess its sustainability and fairness with respect to the two categories of members. The projection of the scheme’s future members is done using non-linear regression. The distribution of future members by age states is done by Markov model using frequencies of state transition of the scheme members. We project the future contributions, accumulated funds, benefits, asset and liability values together with associated funding ratios. The results show that the fund is neither sustainable nor fair with respect to the two categories of members.

Odloženi porez na dobitak u multinacionalnim bankama - slučaj Hrvatske, Srbije i Slovenije

Deferred income tax is an important position in financial statements of banks. It is primarily a result of temporary differences between book and tax values of assets and liabilities. Subsidiaries of multinational banking groups that operate in Croatia, Serbia and Slovenia have to report on deferred tax in accordance with International Accounting Standard 12 - Income Taxes. This paper examined the practices related to deferred income tax in such banks. In this regard, there four banking groups were sampled (two Austrian and two Italian) that operate in three observed countries. Research results showed that net deferred tax assets/liabilities do not usually have materially significant share in total assets of banks, though there is statistically significant difference in the materiality between countries. In general, banks recognize deferred tax assets less after the Covid-19 pandemic, due to the growing uncertainty over achieving the future taxable income, though such reduction is not statistically significant. In addition, the sources of deferred income tax significantly vary between countries, though the valuation of financial assets is, in general, the most common source of deferred tax.

Shadow banking and life insurance policyholder protection

This paper develops a life insurance liability valuation model that integrates the balance-sheet insurer loans with the shadow banking entrusted loans in a premature default risk environment. It is shown that the life insurance policyholder significantly benefits from the entrusted loan activities in a less likely premature default risk environment. The policyholder protection is increased in accord with a high guaranteed interest rate, particularly when the life insurance company has ample access to entrusted loans. The policyholder protection is also significantly increased by a high participation level when the life insurance company ‘shrinks away’ from accessing entrusted loans. Overall, the authors concluded that shadow banking entrusted loans help policyholder protection.

Analisis Rasio Keuangan Untuk Memprediksi Financial Distress Perusahaan Manufaktur Di BEI


 This study aims to examine the prediction of the company's financial difficulties using the Altman Z-score 1968 model and the effect of financial ratios including working capital to total assets, retained earnings to total assets, earnings before interest and tax to total assets, market value equity to book value. of total liabilities, and sales to total assets on financial distress. The sample used in this study is a manufacturing company listed on the Indonesia Stock Exchange (BEI) 2015-2019. Sampling in this study using purposive sampling method and obtained 64 companies.
 The results showed that the variables Working Capital to Total Assets (X1), Retained Earnings to Total Assets (X2), Earnings Before Interest and Tax to Total Assets (X3), Market Value Equity To Book Value of Total Liabilities (X4), and Sales to Total Assets (X5) has a positive effect on financial distress, and the most significant effect on financial distress is the variable Retained Earnings to Total Assets. From the results of SPSS 17.0 processing, the equation Z = -1,813 + 1,216 X1 + 1,837 X2 + 0.122 X3 + 0.070 X4 + 0.506 X5 is produced. Meanwhile, the discriminant model that was formed had a high enough validation rate, namely 97.6%.
 Keywords: Financial ratio analysis; Financial distress; Altman Z-score

INSURANCE VALUATION: A TWO-STEP GENERALISED REGRESSION APPROACH

AbstractCurrent approaches to fair valuation in insurance often follow a two-step approach, combining quadratic hedging with application of a risk measure on the residual liability, to obtain a cost-of-capital margin. In such approaches, the preferences represented by the regulatory risk measure are not reflected in the hedging process. We address this issue by an alternative two-step hedging procedure, based on generalised regression arguments, which leads to portfolios that are neutral with respect to a risk measure, such as Value-at-Risk or the expectile. First, a portfolio of traded assets aimed at replicating the liability is determined by local quadratic hedging. Second, the residual liability is hedged using an alternative objective function. The risk margin is then defined as the cost of the capital required to hedge the residual liability. In the case quantile regression is used in the second step, yearly solvency constraints are naturally satisfied; furthermore, the portfolio is a risk minimiser among all hedging portfolios that satisfy such constraints. We present a neural network algorithm for the valuation and hedging of insurance liabilities based on a backward iterations scheme. The algorithm is fairly general and easily applicable, as it only requires simulated paths of risk drivers.

Discounting and the market valuation of defined benefit pensions

AbstractWe investigate how defined benefit pension (DB) schemes of the Financial Times Stock Exchange (FTSE) firms are valued by the equity market, focusing on how future liabilities are discounted (because UK data allows us to estimate the duration of pension liabilities fairly accurately). Our primary sample of FTSE 100 constituents includes mostly large DB sponsors with mature schemes, primarily closed to new entrants but still active for current employees. We find that equity market valuation of pension liabilities is consistent with discounting without allowing for credit risk, thus incorporating a valuation closer to their settlement value. This differs from the approach used in published accounts for which IAS 19 (and SFAS no. 158, its US equivalent) allows for discounting with a corporate bond yield. The difference is significant, as credit‐risk‐free discounting would decrease the reported value of FTSE 100 firms by about 7%.

Financialization revisited: the economics and political economy of the vampire squid economy

This paper explores the economics and political economy of financialization using Matt Taibbi's vampire squid metaphor to characterize it. The paper makes five innovations. First, it focuses on the mechanics of the ‘vampire squid’ process whereby financialization rotates through the economy, loading sector balance sheets with debt. Second, it identifies the critical role of government budget deficits for the financialization process. Third, it identifies the critical role of central banks, which are the lynchpin of the system and now serve as de facto guarantors of the value and liquidity of private sector liabilities. Fourth, the paper argues financialization imposes a form of policy lock-in. Fifth, it argues financialization transforms popular attitudes and understandings, thereby generating political support despite poor economic outcomes. In effect, there is a politics of financialization that goes hand-in-hand with the economics. The paper concludes with some observations on why mainstream macroeconomics has no equivalent construct to financialization and discusses the disquieting unexplored terrain that the economy is now in.

Total Actuarial Liabilities and Normal Costs Using The Unit Credit Method

The pension fund program requires an actuarial calculation, such as the amount of actuarial obligations and normal costs for each pension fund participant. Total actuarial liabilities are calculated to show the company's liability for pension benefits for pension fund participants. Funding in pension funds is obtained from the normal costs or contributions paid by participants to the pension fund. By using the unit credit method, the total value of actuarial liabilities at 1/1/2020 is IDR 405,338.5. Then by using the unit credit method, it is projected that the normal cost on 1/1/2019 is IDR 1,071.43. The calculation method on funding aims to ensure that the collected pension plan funds will be sufficient to pay pension benefits to participants when they retire.

A NEW LOOK AT BANKRUPTCY MODELS

New models for bankruptcy prediction are constantly being formulated and tested against the current ones and current ones are tested to assess their current accuracy and to allow users to determine the reliability of the results when using the model. These models use accounting information as input data. Accounting systems, for example, US GAAP, or IFRS, contain rules that may be applied differently from one company to another without being breached. This leads to input data uncertainty. Likewise, uncertainties may arise due to errors in recording and transcribing input data or in translating the values of assets, equity or liabilities in foreign currencies. This research was focused on the effect of entry data uncertainty on models’ ability to accurately predict bankruptcy. The initial assumption was that raising the number of input values would increase the error rate probability in entry data, thus also heightening the uncertainty of the results in the given bankruptcy prediction model. The data set of tested companies contained 1,220 non-bankrupt and 285 bankrupt Czech companies. The tested models – Z’ score, Model 1, and Ycz – were applied to this sample, and in all cases, the resulting accuracy was lower than the accuracy declared by their authors. A procedure was created for the inclusion of entry data uncertainty in the practical application of a model. This procedure consists of changing the limit value of the model that separates bankrupt and non-bankrupt companies to an interval that “absorbs” such uncertainties. The model cannot classify the companies in this interval. The research shows that the inclusion of uncertainties in entry data further reduces their accuracy. However, the reduction in accuracy between the individual models varies significantly from 2.2% to 39.4% for bankrupt companies, and from 3.5% to 91.8% for non-bankrupt companies, respectively. The analysis of the entry data uncertainty effect shows the need to create models with high precision and minimum of input values because the model error rate grows the higher their number. The findings of this research can be applied in the creation of new models for predicting bankruptcy not only in the Central Europe but globally.

Incisor liability and its effects among East Asian children

Incisor liability is the discrepancy in the sum of the mesiodistal crown width between the primary and permanent incisors. Incisor liability affects the integrity and eruption of the permanent incisors during the transition from the primary to permanent dentition. This study investigated the incisor liability in the primary dentition of Taiwanese children. The digital periapical films of 203 upper arches of 105 boys and 98 girls and 195 lower arches of 119 boys and 76 girls aged between 3 and 6 years were selected in this retrospective study. The mesiodistal crown widths of the primary and permanent incisors were measured using the medical imaging software for both arches. Differences in incisor liability values were statistically analyzed. The mean±standard deviation of the incisor liability values were 8.32±1.88 and 6.91±1.13mm for the upper and lower arches, respectively, in all children. The incisor liability was closely related with the total crown widths of the permanent incisors for upper and lower arches. The incisor liability values were higher among boys than girls for the upper but not lower arch. Incisor liability differs depending on ethnicity. In Taiwanese children, incisor liability was closely related with the crown widths of the permanent incisors. The incisor liability values of boys were higher than those of girls in the upper arch but not the lower arch.

Working Capital

The simplest net working capital can be defined as the difference between the value of current assets and short-term liabilities together with other short-term accruals. It is equivalent to the part of the current assets financed with equity, provisions for liabilities, long-term liabilities, and the remaining part of accruals. Therefore, it is the capital that finances only that part of the current assets that are not financed with short-term liabilities. This amount is financed with fixed capital. Summing up, net working capital is the fixed capital that finances the company’s current assets.

Par Munis: Sub-Par Performance

It is well recognized that institutional municipal portfolio managers prefer premium bonds to those selling near par. This article shows that such aversion to par bonds is justified because they are expected to underperform comparable premium or discount bonds in the near term. The extent of the underperformance depends on the shape of the yield curve and is positively correlated with the level of expected interest rate volatility. The underperformance is attributable to tax considerations. When an investor purchases a municipal bond (muni) below par, the resulting gain is taxed at maturity, and the price is depressed by the present value of the tax. This tax effect amplifies the interest rate sensitivity of discount munis. Munis selling near par are also negatively convex; the potential decline attributable to higher interest rates exceeds the increase stemming from commensurately lower rates. The underperformance of near-par munis relative to those selling at a high premium (or at a deep discount) arises from the resulting combination of extended duration and negative convexity. The changing value of tax liabilities creates a unique challenge in determining interest rate sensitivity and expected return—which conventional analytics fail to recognize. The tax-neutral analytics used in this article not only incorporate the value of future tax costs but also provide an accurate method for predicting muni price changes and investment returns. <b>Key Findings</b> ▪ Because of their negative convexity, municipal bonds (munis) selling near par perform poorly relative to comparable premium and discount bonds. Negative convexity arises from the so-called de minimis tax effect, which further depresses the price once it falls below par. ▪ The expected underperformance depends on the shape of the yield curve and the volatility of the interest rates. Portfolio managers whose performance is based on market prices should avoid par munis in favor of those selling at a high premium. ▪ Tax-neutral option-adjusted spread (OAS) technology is essential for the proper analysis of near-par munis; conventional OAS underestimates their duration and completely misses their negative convexity.

ПОНЯТИЕ СПРАВЕДЛИВОЙ СТОИМОСТИ И ПЕРСПЕКТИВЫ ЕЕ ПРИМЕНЕНИЯ ДЛЯ ОЦЕНКИ АКТИВОВ И ОБЯЗАТЕЛЬСТВ В УЧЕТНОЙ ПРАКТИКЕ

The article discusses a method for assessing the assets of an organization at fair value. The concept of fair value is given. The prospects of its application for the valuation of assets and liabilities in Russian accounting practice are examined. The author proves the necessi-ty of taking a number of measures on the part of the state and firms to approve the fair value standard in the Russian accounting system. For some assets and liabilities, observable market transactions or market information may exist. For other assets and liabilities, observable market transactions or market information may not be available. However, the objective of measuring fair value in both cases is the same - to determine the price at which an orderly transaction would take place to sell an asset or transfer a liability between market participants at the measurement date under current market conditions.

LABOUR MARKET REFORM: GENERAL TRENDS, EXISTING CHALLENGES, DIRECTIONS OF ADVISORY SUPPORT

Introduction. The article describes the concept of valuation of assets, liabilities and capital, as well as the presentation of the information received in the accounting and financial statements. Methods. Methods of structural and logical analysis, comparison and generalization of requirements of national and international accounting standards and current legislation are used in this article. Results. The economic content of the assessment of objects at the reporting date as an important methodological tool of accounting is in-depth. The principal difference between the fundamental principle of accounting - monetary valuation and evaluation as a procedure performed for the purpose of obtaining the real (fair) value of the property of the enterprise as of the reporting date is set out. The expediency of using historical value in current accounting and fair value is substantiated - when the information about the property of the enterprise in the financial statements is displayed. It has been proved that the assessment as one of the fundamental principles of accounting and assessment as a procedure that is carried out in order to obtain the real (fair) value of the property, liabilities and capital of the enterprise as of the reporting date should be distinguished. The expediency of using historical value in current accounting and fair value has been substantiated - when the information about the property of the enterprise in the financial statements is displayed. The assessment has been designated as the principle of accounting and as a procedure performed to establish the fair (fair) value of the property, liabilities and capital of the enterprise at the reporting date. To do this, the balance sheet proposes to reflect the results of their accounting for historical cost, and in the statement of financial position present information about the financial position, taking into account the fair value of assets, liabilities and equity as of the reporting date. Discussion. The difference between the indicators of these reports is recommended to be presented in the notes, accordingly, it will provide interested parties with reliable information about the financial position and will give reasons to recognize the extent to which the revalued methods of revaluation of assets, liabilities, capital and management effectiveness are used. Keywords: accounting, assessment, financial reporting, accounting principles, fair value, accounting procedure.

CONCEPT OF ASSESSMENT OF ACCOUNTING OBJECTS AND THE INFORMATION DISPLAY IN ACCOUNTING AND FINANCIAL STATEMENTS

Introduction. The article describes the concept of valuation of assets, liabilities and capital, as well as the presentation of the information received in the accounting and financial statements. Methods. Methods of structural and logical analysis, comparison and generalization of requirements of national and international accounting standards and current legislation are used in this article. Results. The economic content of the assessment of objects at the reporting date as an important methodological tool of accounting is in-depth. The principal difference between the fundamental principle of accounting - monetary valuation and evaluation as a procedure performed for the purpose of obtaining the real (fair) value of the property of the enterprise as of the reporting date is set out. The expediency of using historical value in current accounting and fair value is substantiated - when the information about the property of the enterprise in the financial statements is displayed. It has been proved that the assessment as one of the fundamental principles of accounting and assessment as a procedure that is carried out in order to obtain the real (fair) value of the property, liabilities and capital of the enterprise as of the reporting date should be distinguished. The expediency of using historical value in current accounting and fair value has been substantiated - when the information about the property of the enterprise in the financial statements is displayed. The assessment has been designated as the principle of accounting and as a procedure performed to establish the fair (fair) value of the property, liabilities and capital of the enterprise at the reporting date. To do this, the balance sheet proposes to reflect the results of their accounting for historical cost, and in the statement of financial position present information about the financial position, taking into account the fair value of assets, liabilities and equity as of the reporting date. Discussion. The difference between the indicators of these reports is recommended to be presented in the notes, accordingly, it will provide interested parties with reliable information about the financial position and will give reasons to recognize the extent to which the revalued methods of revaluation of assets, liabilities, capital and management effectiveness are used. Keywords: accounting, assessment, financial reporting, accounting principles, fair value, accounting procedure.

Property tax capitalization, a case study of Dallas County

We estimate the degree to which local property taxes are capitalized into house prices using administrative data from the Dallas Central Appraisal District (DCAD) from 2014 to 2016. Capitalization rates are measured using a hedonic price regression model. To control for unobservable neighborhood characteristics, we employ a border discontinuity research design, restricting our sample to homes within half-mile blocks of jurisdictional boundaries. With respect to school district taxes, we estimate that more than 70 percent of the increase in the present value of property tax liabilities resulting from a tax increase is capitalized into current house prices. The null hypothesis of full capitalization cannot be rejected. For city taxes, capitalization rates are even larger. We also estimate the willingness to pay for public schools, finding that a one standard deviation increase in test scores results in a roughly four-percent increase in house prices.

REFLECTION OF THE BANK’S CREDIT ACTIVITIES IN ACCOUNTING

In the conditions of market economy development the money and money capital markets, the main subjects of which are banks, are of particular importance. First of all, credit institutions are intermediaries in the implementation of settlements between economic entities of market relations. In this regard, the organization of an effective system of accounting for credit activities is one of the urgent tasks of any banking institution, the quality of the solution of which significantly depends on the successful operation of the bank. The article identifies the theoretical features of the reflection of the bank’s lending activities in accounting, analyzes the modern methodology of accounting for credit operations of the bank. An economic and legal analysis of the regulatory framework for lending to a banking institution was conducted. The principles of reflecting the main credit operations of the bank are studied. The organization of effective reflection of the bank’s credit activity, first of all, depends on the principles used by the banking institution in accounting. In particular, such as: prudence, accounting stability, transaction dates, division of reporting periods, valuation of assets and liabilities, separate reflection of assets and liabilities. Accounting for credit activities of the bank refers to the accounting of interest and commission income; accounting for the face value of the loan and changes in the principal amount of debt. Paying attention to the current state of accounting for credit operations, society will require much more information about their activities to restore confidence in banking institutions. This can be achieved through the developed recommendations for improving the method of accounting for credit activities of banks, namely: the introduction of methods for accounting for deferred debt on credit operations, indicating in the Chart of Accounts of banks of Ukraine accounts for deferred debt depending on the date of its occurrence.

A Multi-Objective Risk Return Trade off Models for Banks: Fuzzy Programming Approach

The main focus of banking sector is on the risk management. Asset liability management (ALM) is one of the key processes to manage the risks. The objective of this paper is to develop a multi-objective asset liability optimization model for banks with the maximization of market value of equity and minimization of duration gap as the objective function. Several liquidity ratios, concept of duration and convexity are considered to manage the risk properly. Interest rate risk and liquidity risk are two major considerations in both the regulation and management of a bank. As we know that, with the fluctuation of the market interest rate, the market value of assets and liabilities of a bank changes and that affects a change in owner’s equity. In order to overcome such type of situation here we will use the concept of duration and convexity to manage the interest rate risk. In case of liquidity risk the shortage of liquidity may also put that bank in risk and simultaneously it is very crucial to manage the cash flow properly. So here we will use some major liquidity ratios to manage the liquidity risk. We will take the help of fuzzy programming technique to solve our model properly. A numerical example is given to illustrate our model by considering a hypothetical bank balance sheet. Also we will compare the result obtained by fuzzy technique with result obtained by a non fuzzy based technique.

ФОРМУВАННЯ ОБЛІКОВОЇ ПОЛІТИКИ ЗА ПРИНЦИПОМ БЕЗПЕРЕРВНОСТІ ДІЯЛЬНОСТІ ПІДПРИЄМСТВ

Formulation of the problem. Based on the study, the prerequisites, features and components of the formation of accounting policies in the context of business continuity are revealed. The purpose of the article is to substantiate the theoretical and methodological and organizational provisions of accounting policy formation in the context of the implementation of the concept of continuity. The object of research is the process of formation of accounting policy and its impact on the quality of corporate financial reporting information. Methods used in the study: scientific knowledge, method of generalization, comparison, logical - meaningful, methods of induction and deduction. The main hypothesis is that the formation of accounting policies aimed at determining the regulations of accounting and reporting from the standpoint of reflecting complete and reliable information about the real value of assets and liabilities will help reconcile the interests of all stakeholders. Presenting main material. The article identifies the prerequisites, directions and elements of the formation of accounting policies on the principle of continuity of enterprises. Provisions on the development of theoretical and methodological foundations for the formation of accounting policies of enterprises on the basis of risk-oriented approach are revealed. The necessity of valuation of assets and liabilities according to the criteria: fair, discounted and market value of enterprises is substantiated and the methodological support of valuation of financial instruments in accounting is revealed. Originality and practical significance are proposals for the formation of methodological and organizational support and recommendations for the measurement of assets and liabilities at fair value in order to improve the quality of financial statements. Research findings. The formation of accounting policy in the context of the principle of continuity is based on the requirements of International Accounting Standards and National Accounting Standards and depends on the needs of management, methods and techniques of accounting. In the process of developing an accounting policy, it is necessary to take into account the information needs of various stakeholders to disclose information in corporate financial statements. The introduction of theoretical and methodological provisions for the formation of elements of accounting policy on the principle of continuity will meet the information needs of different users, improve the quality of financial reporting and assess the impact of accounting policies on the real value of enterprises in the future.

Analisis Prediksi Risiko Kebangkrutan Berdasarkan Nilai Aset dan Liabilitas Menggunakan Metode Altman Z-Score: Studi Kasus Jiwasraya (Periode 2014, 2015, 2016, 2018, dan 2019)

Jiwasraya is on the incisive edge. Based on 2019 Jiwasraya financial report, Jiwasraya’s ratio of solvency reached -18886.10% as of December 2019. By using the value of Jiwasraya's assets and liabilities based on the Jiwasraya Financial Statements for five periods (2014, 2015, 2016, 2018, 2019), the author used the Altman Z-Score analysis tool to measure the risk of Jiwasraya's bankruptcy. From the calculations using the Altman Z-Score, it can be concluded that Jiwasraya's Altman Z-Score is in the category of bankruptcy risk in 2014, 2018 and 2019 periods, while in 2015 and 2016, Jiwasraya's Altman Z-Score is in Grey area or it can be interpreted that Jiwasraya experienced financial distress in the 2015 and 2016 periods while there is still a possibility to avoid potential bankruptcy and the possibility of bankruptcy with the same magnitude.Keywords: Jiwasraya, Altman Z-score, kebangkrutan, Aset, Liabilitas.