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Public Goods, Common Inputs, and the Efficiency of Full Allocations.

Susan I. Cohen; Martin P. Loeb
The Accounting Review 1982 57(2), 336-347
Abstract ABSTRACT: This paper addresses the simultaneous problems of determining input levels in a multidivisional firm and allocating the input costs to the divisions. A distinction analogous to that in economics between pure public goods and pure private goods is made between pure common inputs and pure private inputs. It is shown that for a pure common input, decentralization utilizing a full cost allocation can result in an efficient allocation of the input. Although efficient decentralization is possible in this case, the "free-rider problem" suggests that such an outcome is unlikely. In addition, it is shown that recently suggested allocation schemes based on game-theoretic concepts may not lead to an efficient allocation of pure common inputs.

Auditing (Book).

Philip E. Meyer
The Accounting Review 1982 57(4), 851-852
Abstract Reviews the book "Auditing," 3rd ed., by Jack C. Robertson and Frederick G. Davis.

Alternative Accounting Treatments for Pensions.

Lee J. Seidler; Katherine Schipper; Roman L. Weil
The Accounting Review 1982 57(4), 806-824
Abstract ABSTRACT: Actuarial cost methods designed for funding decisions about pensions are not necessarily designed for use in accounting reports about pensions. Various actuarial cost methods are explained and illustrated, with particular attention to varying treatment in these methods of "actuarial accrued liability," formerly called "prior service cost." Some actuarial cost methods generate actuarial accrued liability, while others do not. The FASB has required pension plans to use an actuarial cost method that in many cases reports a lower present value for the pension obligation in the early years of a pension plan than had been reported by the actuarial cost method formerly used by the employer. The degree of reduction in net present value of the pension obligation is reported for a sample of companies.