In the last years the spotlight has been on the debate over fair-value accounting that is blamed to generate no correct financial information about the public companies. On an hand, the profits arising from value changes may not have been realised and recognition of unrealised gains goes against the traditional prudent approach to accounting. On the other hand, the use of fair value accounting for measuring the value of financial instruments has been a source of controversy that has highlight, among others, the difficulty of applying fair value (“mark-to- market”) accounting especially in illiquid markets. In the two key bodies of accounting standards - US Generally Accepted Accounting Principles, commonly abbreviated as US GAAP, and International Financial Reporting Standards or IFRS - the concept of fair value has become more predominant: more standard require the use of fair value measurements when presenting and disclosing certain assets, liabilities, and components of equity in the financial statements. In particular, this paper intends to increase awareness regarding fair value accounting and to clarify some of the underlying arguments like the Fair Value Hierarchy and the new disclosure claim and their impact on the usefulness of fair value information for investor’s decision-making.
The fair value accounting for the usefulness of financial information
TAFURO, ALESSANDRA
2011-01-01
Abstract
In the last years the spotlight has been on the debate over fair-value accounting that is blamed to generate no correct financial information about the public companies. On an hand, the profits arising from value changes may not have been realised and recognition of unrealised gains goes against the traditional prudent approach to accounting. On the other hand, the use of fair value accounting for measuring the value of financial instruments has been a source of controversy that has highlight, among others, the difficulty of applying fair value (“mark-to- market”) accounting especially in illiquid markets. In the two key bodies of accounting standards - US Generally Accepted Accounting Principles, commonly abbreviated as US GAAP, and International Financial Reporting Standards or IFRS - the concept of fair value has become more predominant: more standard require the use of fair value measurements when presenting and disclosing certain assets, liabilities, and components of equity in the financial statements. In particular, this paper intends to increase awareness regarding fair value accounting and to clarify some of the underlying arguments like the Fair Value Hierarchy and the new disclosure claim and their impact on the usefulness of fair value information for investor’s decision-making.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
