Relevance of Fair Value Accounting: An Appraisal



Abstract: Fair value accounting is a concept that has attracted international attention regarding its appropriateness in financial statements. Fair Value Accounting (FVA) is an accounting approach which aims to evaluate assets and liabilities at values which characterize their fundamental values and thus furnishes a fair view of an entity’s financial position. The foundational ideas of fair value accounting are to compose financial statements easier to compare and balance sheets more reflective of real values. In view of the above discussion, while understanding the concept of fair value, three interconnected elements – concept of fair value accounting, rationale of fair value accounting and arguments against fair value accounting are useful to our discussion. This article makes an appraisal regarding concept of fair value, its relevance on the stability of financial institutions in present day accounting scenario, especially with the initiation of IFRS and its drawback.


Key Words: Fair value, Accounting,FASB, Historical Cost Accounting, US GAAP.

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