Template for Bachelor thesis in International Business
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Fair Value Accounting US GAAP VS IFRS
AbstractFinancial statements play a pivotal role in assessing the quality of investment and provide comparable, effective, and transparent information to the financial markets and investors including academics. These financial statements are compiled based on certain accounting systems such as fair value and historical cost accounting methods. For many practitioners, fair value accounting has provided an alternative method of providing reliable, authentic, current and timely information to the analysts, investors and appraisers to make better economic investment decisions. But fair value accounting has created some serious problems such as increased earnings and cash flow volatilities, use of relative valuation instead of estimating cash flows, procyclicity, increased stock price volatility and lost track of management and financial performance which has reduced its effectiveness. Fair value reporting, revaluations and impairment charges present a distorted image of financial performance. Due to distorted historical performance and fair value charges it is very difficult to compare it with their peers. Hence, considering the current dilemma, it is fair to say that fair value is not so fair unless the problems are carefully removed to enhance practicality compared to the historical cost accounting system. Keywords: Fair Value Accounting, Historical Cost Accounting, Volatility, Relative valuation, Procyclicity, Financial Crysis etc. Download 383.21 Kb. Share with your friends:
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