Fair Value Accounting (FVA): An Overview of Key Issues

Elisa Menicucci
Additional contact information
Elisa Menicucci: Polytechnic University of Marche

Chapter 2 in Fair Value Accounting: Key Issues Arising from the Financial Crisis, 2015, pp 17-54 from Palgrave Macmillan

Abstract: Abstract Most of the debates of accounting studies focus on the differences between two alternative accounting methods: the approach based on fair value (FVA) and the model based on historical cost (HCA). Both FVA and HCA are in wide use and have their supporters and critics. Proponents of FVA assert it delivers more timely and relevant market information despite the improved use of estimates and judgments, while opponents argue it provides unreliable market information that can misinform investors. Anyway, FVA is considered a good accounting model to assure more reliable financial information, but the reliability of the FVA measurement depends on the availableness of an active market. When markets are severely illiquid, as they are during a credit crunch, FVA implies significant practical difficulties for preparers of financial statements.

Keywords: International Financial Reporting Standard; Generally Accept Accounting Principle; Financial Account Standard Board; Credit Crunch; Historical Cost (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-1-137-44826-2_2

Ordering information: This item can be ordered from
http://www.palgrave.com/9781137448262

DOI: 10.1057/9781137448262_2

Access Statistics for this chapter

More chapters in Palgrave Macmillan Studies in Banking and Financial Institutions from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().