Session 12: Equity Investments: Valuation Models
Reading 43: Residual Income Valuation
LOS o: Discuss accounting issues in applying residual income models (e.g., clean surplus violations, variations from fair value, intangible asset effects on book value, and nonrecurring items) and the appropriate analyst response to each issue.
Reported accounting data are most likely to bias an estimate of residual income when:
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A) |
the clean surplus relation holds. | |
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B) |
standards allow charges directly to stockholders' equity that are also reflected on the income statement. | |
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C) |
standards allow charges directly to stockholders' equity while bypassing the income statement. | |
Bias is likely when standards allow charges directly to stockholders’ equity while bypassing the income statement. Both remaining responses are consistent with the use of data that will not introduce a bias. | 
发表于 2010-4-20 11:15
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