Report to the Board of Directors - 3M Company Coursework

Report to the Board of Directors - 3M Company - Coursework Example In case of determination of impairment of assets, the management has adopted separate measurement techniques of evaluating the different units by categorizing them as profit making or loss making. The price-earnings ratio method has been used for profit-making units, the discounted cash flow method has been used for the loss-making units and the relative fair value method has been used for the changes in products offerings of the different units (Sofat and Hiro, 2008, p.84). The influence of the institutional context and the social context on the measurement choices for accounting treatment have been considered in the process of financial reporting. The necessary changes in the accounting treatment of the company to comply and align with the norms under IFRS have been suggested to improve the process of accounting and financial reporting. ... The contingent assets are also considered for PPE valuation. The management takes into account the historical experiences in evaluating the property, plant and equipment of 3M Company (Khan, 2004, p.49). Based on the past experience and reasonable justification of the related factors, the PPE valuation is carried out by the management. The management, however, believes that the accounting of PPE and the reporting of PPE valuation may differ from the actual value of the total property, plant and equipment. The determination of the value of property, plant and equipment takes into account, the related losses and depreciation of the assets. The valuation of the asset includes the cost of purchase and the cost of installation and other expenses incurred in bring the fixed asset to the location of usage. The cost of maintenance and losses if incurred are also adjusted to determine the value of PPE (Baker and  Powell, 2009, p.68). Apart from the cost or risks, the management also takes i nto consideration the expected flow of money from the use of fixed assets. The reward or the benefits of the assets are also taken into consideration for the purpose of PPE valuation. Evaluation of selected measurement model 2: Differences permitted in Asset Impairment methods and accounting treatment The asset impairment is recognized by the management of 3M Company when the reported value of the assets of the company is greater than the intrinsic values of the assets. The impairment method includes the determination of fair value of assets of the individual units of 3M Company and then comparing with the reported value of the assets of the individual units. The method