![]() ![]() Then, especially in the aftermath of the global financial crisis in 2008, the urgent need of common fair value measurement and disclosure requirements in the International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles in the United States (US GAAP) has led to a start-up for fair value measurement within the convergence project of International Accounting Standards Board (IASB) and FASB (collectively, the Boards). 157: Fair Value Measurements in September 2006. In this context, the deficiencies in the value relevance of financial information based on the historical cost method and therefore the urgent need of fair value measurement have been widely discussed by the academics and the preparers of financial information in the past 20 years.įirst, Financial Accounting Standards Board (FASB) issued Financial Accounting Standard No. Mark-to-market (M2M) or Fair Value Accounting (FVA)-the measurement of assets and liabilities at the prevailing price in the market-is considered superior when compared to cost-based accounting for both the initial recognition and the subsequent valuation of economic transactions. The purpose of this paper is to comprehensively explain the fair value accounting in accordance with IFRS 13 and describe the types of assets and liabilities that are subject to fair value accounting and their accompanying measurement principles with reference to other IFRSs and the Exposure Draft Conceptual Framework for Financial Reporting. On May 12, 2011, when the IASB issued IFRS 13 Fair Value Measurement, it appears that there has been substantial convergence between IFRS 13 and FASB 157. 157 Fair Value Measurements in September 2006 and then the initialization of fair value measurement project by the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board in 2006 within the convergence project. The ongoing debate over the shortcomings of historical cost for ascertaining the worth of assets and liabilities and the rapid spread of fair value measurement for financial reporting has first led to the issuance of Financial Accounting Standard No. Is the amount at which an asset could be exchange, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction, which may involve either market measures or present measure.Since the past 20 years, the value relevance of financial information based on the historical cost method has been widely criticized among the academics and the preparers of financial information. ![]()
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