Fair value accounting and the present value fallacy: The need for an alternative conceptual framework

R.A. Rayman

The British Accounting Review, 2007, vol. 39, issue 3, 211-225

Abstract: The major functions of company accounting identified by the IASB and the FASB are (1) reporting on ‘the custody and safekeeping’ of the company's resources and (2) reporting on ‘their efficient and profitable use’. The joint IASB/FASB project for improving the conceptual framework for financial reporting is directed towards better performance of both functions within the conventional ‘accrual’ system of accounting through the use of ‘fair value’. Although the disclosure of fair values is a development to be welcomed, the requirement that changes in fair value should be reported as ‘gains’ or ‘losses’ appears to rely on the ‘Hicksian’ concept of income as a theoretical ideal.

Keywords: Fair value; Present value fallacy; Conceptual framework, Segregation of funds and value; Income theory (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:bracre:v:39:y:2007:i:3:p:211-225

DOI: 10.1016/j.bar.2007.03.006

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