Answer -
Disadvantages of fair value accounting -
(1) - Excessive income volatility -
One of the most serious concerns from adopting the fair value accounting is that of excessive income volatility.
(2) - Susceptibility to manipulation -
Fair value accounting would considerably increase the ability of managers to manipulate financial statements.
(3) - Value Reversal -
Fair value accounting can also present challenges to companies and users of reported financial information. Conditions of the markets in which certain assets and liabilities are traded may fluctuate often and even become volatile at times.
(4) - Misleading Information -
It is possible that sometimes the observed value of an asset in the market is not indicative of the asset’s fundamental value.
Disadvantages of air value accounting . discuss disadvantages of fair value accounting. Discuss
disadvantages of fair value accounting through the help of articles.
Review these two articles on the Advantages and Disadvantages of Fair Value Accounting and Fixed Asset Impairment as well as other resources on the topic that you locate. Answer the following questions: In your opinion, why do you think we don't use fair value accounting for fixed assets? Do you think that fixed asset impairment approximates fair value accounting for fixed assets? Why or why not? Are there any key differences? Based on the advantages and disadvantages of fair value...
The "fair value option" in accounting for long-term liabilities a) what is the fair value option to report liabilities? b) Do you think that the fair value option is a more relevant approach to valuing liabilities than amortized costs? Why or why not?
what are the contribution to relevant representing accounting information of fair value accounting.
Based on a review of literature, critically evaluate the accounting standard for fair value accounting.
explain in details advantages and disadvantages of investing in the JSE
diffferentiate historical cost concept from the fair value cost from the fair value cost concept of measurement.State clearly their advantages and disadvantages
“Is It Fair to Blame Fair Value Accounting for the Financial Crisis”. People said, “Once we get beyond the mythmaking and arm waving, it becomes clear that historical cost and fair value accounting are much closer to each other than people think.” Do you agree with this statement? Discuss.
Considerations in determining if fair value accounting is the best decision for the company?