Preparers must be concentrating on adjustment of overall economic value when measuring economic growth and productivity. In practical terms, that generally means reporting the fair value of –or marking to market—assets and liabilities whenever it can be re论文范文http://www.chuibin.com/ liably determined. Due to the whole attraction of market value accounting, many balance sheets items already are carried at fair value, and some, such as property, plant, and equipment, probably should be. it is hard to argue with the theoretical qualities of fair value as the most relevant measurement attribute. But to those who say that accounting should better reflect true economic essence, fair value, rather than historical cost, would generally seem to be the better measure.本文来自辣.文,论-文·网原文请找腾讯324-9114
The relevance and reliability of fair value also defending by criticizing that historic cost numbers “are reliable and relevant only on the day they are recorded.” Bear in mind that in the fair-value debate, each side agrees both qualities are important, but fair-value supporters emphasize relevance, while historical-cost supporters place greater weight on reliability. Reliability is as important as relevance because relevant information that is not reliable is useless to an investor. Reliability, therefore, should not be the dominant characteristics of financial statement and at least have an equal standing with relevance.
Nonetheless, relevance and reliability of fair value measures is often held back with difficulty for publicly traded companies whereby some might require to disclosing hundreds, if not thousands, of valuation assumptions and how they were derived. In addition, there is also a trouble in the possibility of underlining total company value at the expense of measuring management performance.
The other unspoken argument against fair value is that regularly measuring the effect of market movements on a company's assets and liabilities can introduce huge volatility into financial statements. Fair-value proponents, by contrast, believe volatility may be the price of investor confidence.
In order to create fair value accounting to have reliable information for decision-making, markets has to be transparent for all assets and liabilities. However, because many assets and liabilities do not have an active market, the methods for es论文范文http://www.chuibin.com/ timating their fair value are more subjective and, therefore, the valuations less reliable. If this is the case, the concept, 5measurement and interpretation of fair value accounting will remain highly discussed till to-date but poorly understood on how the measurement can be set.
Another issue that adds to our concerns about reliability is the management integrity in the judgment of the valuation process. Management bias, whether intentional or unintentional, may result in inappropriate fair value measurements and misstatements of earnings and equity capital. The possibility for management bias exists today. We continue to see news stories about how management communicates with shareholders by obscuring the facts instead of demonstrating the full transparency, even under the historical cost accounting framework. Ultimately, without reliable fair value estimates, the potential for misstatements in financial statements prepared using fair value measurements will be even greater.5. fair Value Measurements and its Caveats
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