In the year 2012, an equity research firm based in California accused Singapore-based Olam International Limited (Olam) of participating in accounting practices that were possibly misleading and dangerous. The company - Muddy Waters Research - further said that Olam was on the brink of insolvency. The primary criticism made against Olam by Muddy Waters was that Olam purportedly made aggressive use of "non-cash accounting gains," especially when reporting on Olam's biological assets. Olam's share price declined after the accusations were made public.
Olam Accounting for Biological Assets Case Study Solution
Olam defended itself by claiming it had employed Singapore Financial Reporting Standard (FRS) 41 – Agriculture, suitably and that the fair value gains of the biological assets were justifiably derived. FRS 41, comparable to International Financial Accounting Standards 41 - Agriculture, required Singapore-listed businesses to use rational value in the measurement of biological assets. This case examines the intricate challenges that valuators face when presented with different valuation models, the use of financial reporting standards along with the balance between reliability and relevance in the bookkeeping of assets in the real world. Yew Kee Ho is affiliated with National University of Singapore.
PUBLICATION DATE: August 25, 2015 PRODUCT #: W15369-PDF-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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