ACCT 405 Accounting Worksheet

Q1) Fair Value Accounting is argued to be conceptually and practically preferable to Amortized Cost Accounting for most financial instruments. But there are some arguments that are against fair value accounting. Understanding these arguments are important because they speak directly to the strength and weakness of fair value accounting. You are required to discuss these arguments in detail. Q2) Mortgage banks are exposed to interest rate risk on their mortgage-related asset through prepayment and discounting effects that are not entirely distinct. Discuss the Prepayment and Discounting Effects of Mortgage Banks in detail.Q.3) Accounting for Securitization under SFAS No. 140 (2000) is a limited attempt to describe complex transactions that are structured to yield desired economic and accounting outcomes. This accounting raises three issues for users of financial reports. State these three issues.