Fair Value And Financial Statements

Fair Value and Financial Statements The ability of fair nose measurement to satisfy the principle qualitative characteristics of the framework is much a matter of judgment than fact. Fair ranks relevance to users of financial statements is undermined by the lack of reliableness and the softness to satisfy other qualitative characteristics of the framework. The driving force for the death penalty of fair mensurate measurement is that it departs a more applicable picture of an entity. For assets with an prompt market the fair value represents the cash in in inflows of the asset and in that locationfore a more germane(predicate) war machine rank than diachronic cost. Fair value measurement aligns the value of an entity to the occurrent economic climate and thereby makes the information more applicable for end users and their interactions with an entity and satisfies the qualitative characteristics of relevance. The alignment of the entity to the eco nomy reveals the true value of the entity. But this alignment through fair value as stated by Ebling (2001, p24) could be dominated by large, very much meaningless swings in the value of assets and liabilities that could obscure the underlying trends. even fair value presents users with information that is more relevant than historical cost measurement especi all in ally for an entity with majority of assets with an dynamical market. reliability of fair value is the main concern with assets with no active markets. With assets with an active market it can be argued that the markets argon non endlessly rational or perfect and the markets will not be able to supply a true picture for all assets but as stated by Ebling (2001, p24) the JWG believes there is zip false about market prices and relies on the pileus markets to employment as intended and supply fair value for assets. The markets are not restricted to one entity and not subordinate on a small group o f decision makers. Markets provide neutra! lity by ignoring ownership and purchase details and...If you urgency to construct a full essay, order it on our website: OrderEssay.net

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