TITLE

The Fairness of the Fair Value Concept

AUTHOR(S)
Kaur, Jasmine
PUB. DATE
November 2013
SOURCE
International Journal of Business & Commerce;Nov2013, Vol. 3 Issue 3, p1
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
In recent years, international standard setters and regulators such as the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have begun to favor the use of fair value accounting over historical cost accounting in financial reporting. A key reason for this shift in methodology is to improve the relevancy of the information contained in financial reports. The general principle underlying the shift is that up-to-date information improves investors' and regulators' abilities to make informed decisions. To date, the fair value concept is applied in several IASB standards such as IAS 16Property, Plant and Equipment; IAS 37Provisions, Contingent Liabilities and Contingent Assets; IAS 38Impairment of Assets; IAS 39Financial Instruments; IAS 40Investment Properties; IAS 41Agriculture;IFRS 2Share-basedPayment; and IFRS 3 Business Combinations. In principle, fair value accounting sounds attractive - surely if something is 'fair' then it must also be good? The implications for accounting practice, however, are huge and highly controversial. Amongst the questions being debated are: how reliable are fair values?; how easy is it to audit fair values?; will fair value accounting work in practice?; and what are the implications for performance measurement? Such a controversial topic is worthy of consideration by all practising accountants and the aim of this article is to discuss briefly the main issues relating to fair value accounting.
ACCESSION #
97719907

 

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