Best Case Solution: Olam: Accounting for Biological Assets

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Olam: Accounting for Biological Assets
Case Study Analysis Solutions
This Case is aboutĀ INTERNATIONAL BUSINESS, ACCOUNTING
PUBLICATION DATE: August 25, 2015 PRODUCT #: W15369-PDF-ENG
In the year 2012, an equity research company located in California accused Singapore-based Olam International Limited (Olam) of participating in dangerous and possibly misleading bookkeeping practices. The business – Muddy Waters Research – additionally said that Olam was on the brink of insolvency. The principal criticism made against Olam by Muddy Waters was that Olam supposedly made competitive usage of “non-cash accounting gains,” especially when reporting on Olam’s biological assets.
Olam defended itself by claiming that it employed Singapore Financial Reporting Standard (FRS) 41 – Agriculture suitably and that the biological assets reasonable value increases were justifiably derived. FRS 41, comparable to International Financial Accounting Standards 41 – Agriculture, needed Singapore-listed firms to make use of reasonable value in the measurement of biological assets. This case analyzes the complicated challenges that valuators face when presented with distinct valuation models, the use of financial reporting standards as well as the balance between relevance and reliability in the bookkeeping of assets in real life. Yew Kee Ho is affiliated with National University of Singapore.

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