Dr. W. Bruce Johnson
Participation year
Project title

How Fair is Fair Value Accounting

Quantitative financial reporting of asset values and liabilities using a single financial instrument has been debated and brought to the Financial Accounting Standards Board's (FASB) attention for a number of decades. FASB's mission is to improve and establish new standards of financial accounting and reporting. The debate of fair value versus historical cost accounting is intrinsic to the evolution of financial reporting. Historical cost accounting requires that the numbers reported on accounting financial statements be recorded at the amount actually paid for an asset. Opponents question the relevance of this measurement convention. Fair value accounting, on the other hand, reports the current market values of assets and liabilities. Opponents of fair value question the reliability of the measurements. The purpose of this research is to present the opposing views on this important accounting policy debate, due to the trend of America's economy and its increasing demand on fair value measurements in financial reporting. The debate involves conflicting views pertaining to the more accurate measurement of financial assets and liabilities. The research encompasses an array of literature regarding the debate of fair value measurement and it will be left for readers to decide which measurement convention better suits America's companies.
Cyprian  Alaribe
Truman State University