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Essay / Research Paper Abstract
This 8 page paper looks at the concept and use of fair value accounting, considering it’s used, along with the advantages and disadvantages of the practice including the way financial instruments are valued and the use of fair market valuation on other assets. The bibliography cites 7 sources.
Page Count:
8 pages (~225 words per page)
File: TS14_TEFVacct.rtf
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Unformatted sample text from the term paper:
use of this approach may be seen as having an impact on the balance sheet and has a number fo advantages and disadvantages which may indicate it is not necessarily
suitable for all assets. A major benefit of this and why it is called fair value is that it gives the fair
value using market value at the point of the accounts. This is the value that would be gained if the assets were to be sold that day. For some assets
this may be argued as giving a better picture of the real value of a company, especially where there is the desire to assess the level of security in a
company by a lender or investor. This approach may also be more valuable for those who lend money to the company and are interested in the short term value for
repayments or the use of security. However, it can also be argued the value given to the company in terms of assets
is more realistic rather than theoretical. In addition to this we can also argue that the use of fair value also goes against concepts such as the historic accounting concept
and the matching. In many cases the assets are not there to be sold. The assets real value is not reflected in the market price and as such they can
be undervalued. There are many arguments in favour of the use fair market value, especially when it relates to financial instruments. Fair value is seen in may accounting standards
including IAS 19, IAS 36, IAS 38, IAS 39, IAS 40, IAS 41, IFRS 2 and IFRS 3 concerning the valuation of different assets groups. Fair value can be defined
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