A
Ambitious
Member
I have read that under Revalorisation method the equity investment is not ideal for the company because the provision of the Terminal bonus is not possible or in other words, the deferral of profit distribution is not possible. Why is profit deferral being associated with equity investment? Given the equities are volatile and as a result the Asset values will be volatile, there should be the need for smoothing of the market values rather than the need for the deferral of profits (deferral may be required as well to absorb the long term losses).
The smoothing under the Revalorisation method can be achieved by writing up and down of the book values of assets(if regulation allows) then what is the need of profit deferral?
It is also said that under Reval method, the company has a floor of 0 on -ve bonus but that is true under any bonus system then why is it specifically mentioned for this method?
Thanks for reading such a lot !!
The smoothing under the Revalorisation method can be achieved by writing up and down of the book values of assets(if regulation allows) then what is the need of profit deferral?
It is also said that under Reval method, the company has a floor of 0 on -ve bonus but that is true under any bonus system then why is it specifically mentioned for this method?
Thanks for reading such a lot !!