The debate over financial reporting approach to measurement known as the fair value was already in full swing by the time the last economic crisis. This event only served to add fuel to the fire, as some critics have argued that fair value measures heavily discounted assets in exceptional period of forced sales have actually made the situation worse. The author questions the analysis. Far from being the culprit, she argues that the fair value is sufficiently reliable method of measurement, which embodies some basic principles underlying the accounting. As well as the allocation of the relative merits of fair value, the author responds to the main issues put forward by critics, showing that if one keeps the error estimates, profits and losses, earnings volatility, management or industry, the fair value of proving their worth. In many cases, the old favorite historical cost-based measures is poor. Before the International Accounting Standards Board (IASB) and the U.S. Financial Accounting Standards Board (FASB) to complete their joint conceptual framework project, this article will help clarify some of the contentious issues that continue to plague the profession. Rather than fight against it, accounting experts would be better to devote their energies to ensure that fair value is used in the most effective manner. "Hide
by Mary E. Burt Source: IESE-INSIGHT MAGAZINE 7 pages. Publication Date: December 15, 2010. Prod. #: IIR041-PDF-ENG
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